What NRIs should know about mutual fund investment in India

What NRIs should know about mutual fund investment in India

Investing in mutual funds: Mutual funds are a great way to achieve long-term growth, and investing in India gives greater returns and diversification advantages. Regulatory constraints, complicated documentation, and restricted access to experts are some of the difficulties NRIs must deal with.

What NRIs should know about mutual fund investment in India
Decoded: Indian mutual fund investments for non-resident Indians

India is considered the country to gamble on because it has one of the world’s fastest expanding economies and rising per capita investments. Non-resident Indians (NRIs) and those who invest in India may experience enormous wealth creation in the years to come.

The potential for greater returns and access to what may be the world’s fastest-growing market are the two main benefits for NRIs planning to invest in India. A profitable chance to diversify their investment portfolios is provided by investing in India.

According to a recent Jefferies estimate, India’s GDP is expected to grow to the third largest in the world by 2028. With an estimated equity market valuation of over $5 trillion, India ranks fifth globally in terms of equities market size. By 2030, this is anticipated to reach $10 trillion.

Mutual funds are now the perfect investment vehicle for NRIs wishing to build a portfolio that will generate long-term returns, given India’s enormous development potential. Living overseas and without access to real-time market information can also be a barrier, which is why having a qualified fund management staff oversee a mutual fund is so beneficial.

Mutual fund investing: prerequisites and difficulties for NRIs

Limited access to expertise: Most NRIs who live abroad find it difficult to connect with investment specialists who can work together, customize, and jointly make well-informed investment decisions via virtual meetings.

Dedicated service support: An investment platform can significantly improve the investing experience for NRIs by offering a dedicated support staff that is skilled in managing the intricacies of NRI documentation for tasks like KYC registration, bank detail updates, or nominee updates in investment folios.

Smooth investment platform: NRIs need a tech investment platform that is reliable, effective, and streamlines the investing process while providing a smooth transaction experience. Documentation, transactions, and simple portfolio rebalancing procedures should all be integrated into such a platform. The investing process for NRIs may be made healthy and value-driven with a dependable tech-driven platform that facilitates easy onboarding, safe transactions, and individualized support.

Rules pertaining to NRIs’ taxes, regulations, and repatriation

NRIs should understand the tax regulations before making a mutual fund investment. Both short-term and long-term capital gains taxes are imposed, and they are the same as those paid by residents. The applicable slab for long-term capital gains tax on equity funds is 12.5%, whereas the applicable slab for short-term capital gains tax is 20%. Debt is taxed according to the individual’s current income tax slab. Any short-term or long-term capital gains tax is withheld at source at the time of redemption for NRIs in particular.

There are also several country-specific limitations for NRI investors. For instance, there may be limitations on US and Canadian NRIs’ ability to invest in particular fund firms. To provide accessibility for NRIs based in certain nations, several mutual funds do, nonetheless, permit investments under specific circumstances.

Regarding repatriation regulations, NRIs are permitted to make either repatriable or non-repatriable investments in mutual funds. All investment proceeds are fully repatriable if made through an NRE account. The maximum amount of money that can be repatriated from an NRO account is $1 million for all NRO accounts held in India during the fiscal year.

The value of an investing specialist

The majority of robo advising platforms have addressed the issues of transaction convenience and geographic reach, but they lack the consultative process and group decision-making that an individual requires to tailor their investments to their own requirements in order to attain their financial objectives.

At this point, having the top investing professionals and a reliable, process-driven technology platform supporting you along the way becomes very important.

It can be like a doctor providing medication without first identifying the symptoms if you invest without a personalized investment plan. A reliable investment specialist would assess the portfolio on a regular basis and be able to offer suggestions on any gaps that should be filled in order to reach the desired outcome.

Since most investing platforms do not offer an expert who can manage their connection electronically, extend service support, and facilitate paperless transactions, NRIs who are not in India ultimately compromise on customization and human expertise. It should be impossible to compromise on any of these fundamental needs as doing so can ruin someone’s investing and wealth-building endeavors.

The author is the CEO and co-founder of FinEdge.

Disclaimer: Moneycontrol experts’ opinions and financial advice are their own and do not represent the opinions of the website or its administrators. Before making any investing decisions, Moneycontrol recommends customers to consult with qualified professionals.

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