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18 Nov, 2022
8 mins read
The past few years have seen the Indian economic diaspora changing dramatically. And in no time, the world will see the rendition of the Indian economy climbing to the top of the ladder of the largest economy in the world. Along these very lines, we won’t be surprised to see NRIs rigorously investing in India. This blog traces why NRIs around the globe should opt for an investment in India, the lucrative gains they can make, and much more.
An investment is a transposition of numbers done either favorably or unfavorably. Hence, numbers have a lot to say when it comes to the history of investments in India. Back in 2021, the Indian equity markets got a whopping rise of 20%. The fixed-income instruments, back then, fetched a return of 5 to 6 percent. And the price of gold had deteriorated by 7.5%. All these have attributed to a brighter and more informed investment scenario in the 2022 Indian markets.
To the immense surprise of financial experts, NRIs and their remittances have had a crucial role to play in all this. The populace of NRIs accounts to 15 million who send an annual remittance of about 85 billion dollars. The trade deficit encountered by our economy got financed from these very remittances. On top of that, NRIs have been investing largely in the real estate sector which accounts for 15% of the annual real estate sales equivalent to 8 billion dollars.
While the statistics say it all, we will be exploring in detail what reasons account for having an NRI investment in India.
There are umpteen reasons why an NRI prefers investing in India. Not aware of them? Well, this section aims at bringing light to the major reasons for having an NRI investment in India.
1. Promising Economic Rise.
As mentioned above, India has a promising economy. In the next three decades, the world will be seeing India as one of the top two economies. This also indicates that the economy is stable and fetches good gains by reducing the risk of investment.
Another point to be noted here is that although we are progressing in terms of economic rise, the Indian rupee still stands stagnantly in comparison to its USD, Pound, and Euro counterparts. Hence, an NRI dealing with these currencies is likely to mint gains by investing in India.
2. You Can Make Your Portfolio Diverse.
When it comes to the Indian markets, you have an array of assets to invest in. Starting from mutual funds to CFDs, from bonds to dividends, you can easily optimize the returns and reduce the risk associated with the investment. On top of everything, the minimum requirements to invest in an asset in India are quite low, thus making an investment for NRIs a lucrative and easy-going option.
3. Appealing Interest Rates.
When it comes to interest rates, India stands out to be far better than it’s other developed and developing friend nations. In investment arenas where the US only fetches a meagre 0.25% of interest rate and the UK just 0.10%, India becomes the apple of every investor’s eye by yielding a 4 to 7 percent of interest rate. So, being an NRI, you can get great gains if you invest in India.
4. Sharp Growth in the Mutual Funds Industry.
The Indian Mutual Funds industry has grown tremendously in the past 10 years. Back in May 2011, this industry was worth 7.31 trillion INR and reached a magnanimous 33.06 trillion INR in May 2021. This indicates that it has grown 4.5 times in the past decade. So, if you are an NRI who is looking for some source of wealth accumulation, then India is your go-to destination.
Considering the aforementioned reasons, India is the ultimate one-stop-shop for NRI investment. Wondering what financial instruments can you invest in? Let’s explore that in the subsequent section.
NRIs have a vast number of financial instruments to invest in. However, the most gainful of these financial instruments are as follows:
1. Fixed Income Investment
As per money and financial market experts, short-term debt funds have ruled the roost in 2022. This is because inflation has risen sharply. And in such circumstances, investments in long-term securities are not advisable.
2. Stocks
Indian stocks have always been promising. With the right knowledge and regular monitoring, stocks can be immensely gainful. With changing times, nowadays, you can hire a professional manager who can keep an eye on the fluctuations and can advise on the next route to take.
3. Real Estate
With the prices being low and the dollar still appreciating, this is the right time to invest in real estate. If you are an NRI, this is the optimal time to purchase a property on Indian soil.
4. Equity
Indian markets have been known to tempt investors globally with their alluring equity market. Here, investment can be made in all cap sizes. But since the past decade, the Small and Mid-caps (SMID) segment of this equity market has been garnering unprecedented attention. This is because these cap segments come with umpteen listed companies that work on diverse models.
One can plunge in for direct investment but will require the need to regularly monitor it which can be a daunting task. In such a case, you can heavily rely on professional assistance by investing through Alternative Investment Funds (AIF) or the Portfolio Management Service (PMS). Now, you can invest in the thriving blob of Indian start-ups with an ace. It’s great to start exploring by investing in the aforementioned financial instruments. But diving deep with a cautionary note is advisable.
Before you go on an investment spree, it is advisable to hear what we have to advise. Here’s the word to the wise:
1. Learn to Distinguish Between a Process and a Product.
A process and an actual product are different. While stock trading is a process, a real estate purchase is a potent product. Why so?
When you trade, you decide to invest every month via a Systematic Investment Plan (SIP). You aren’t purchasing an actual product but are simply initiating a process. This is entirely different from purchasing a piece of land that once bought, remains yours until you sell it to somebody else.
2. Keep an Eye on Where the Money is Going.
Once you put in some money, keep an eye on where it is going and where it ends up. While it is reliable, in most cases, to invest as per what your broker advises but keeping your eyes and ears open won’t do any harm. Make sure that you run a background check of the fancy investment options proposed by your broker. When you are about to invest in stocks, a company’s core principle can help you in picturing out all you need to know before sealing the deal. This can help you to make more enlightened investment decisions.
3. Opt for a Reliable Broker.
Usually, NRIs are approached by many brokers. A considerable number of them could be scammers. So, before you hire somebody to assist you in financial matters professionally, check their authenticity and whether they can be relied upon or not. These days, many brokers operate their companies via the help of a website. You can go through it to have a better idea of them as well as their company. Make sure that you don’t hand over your precious trading account to an unverified broker. Always remember when it comes to the money and financial markets, the stakes are high. So, be careful!
4. Clarify All Your Doubts.
There is no iota of doubt that investments can generate a passive income for you. Since this can help you in paving the way toward financial freedom, it’s important to clarify your doubts and queries. Be it about the broker or the future returns, the investment plan or the past performance, seek clarification on anything and everything. Do not put doubt or a question to sleep.
There might be times when landing on a lucrative NRI investment will seem a little difficult, but you always have the option of brokers like FYERS, apps, and much more to seek the right advice. Make sure that you clarify everything and give yourself a crystal-clear path to kickstart your investment journey. If you or any of your NRI friends, or family members are interested to invest in India, visit our FYERS NRI page to know more.
Good luck! Happy investing in India
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