NRIs usually don’t prefer to come back to India but all of them pay a short visit to their homelands once in a while for personal or professional reasons. When NRIs visit India it is only natural for them to get attracted by the various investment options available in the country due to their attractive and lucrative trappings. However, they need to tread with caution in matters of investments or else they can only regret later on about the losses they suffered. In this write up we will touch upon the financial risks or pitfalls they would do well to avoid while locking in their fortunes earned abroad in India.
Be Updated With Rules And Regulations
The rules and regulations regarding investment instruments keep changing all the time. For example, NRI Demat account must be converted to NRO Demat account and stock trading activities should be conducted via a Portfolio Investment Scheme account. Hence, NRIs should be aware of these things while opting to invest their wealth in India. Lastly, NRIs should not forget to convert their present bank accounts to NRE, NRO or FCNR accounts. Both NRE and NRO accounts can be transacted with rupees and they are repatriable as well.
Some Investments Are A Strict No
If an NRI happens to be in the US, then there are some embargoes regarding the mutual fund houses through which they are permitted to route their cash to India. The restrictions are a result of the rigid guidelines of the USA and Canada’s regulatory system FATCA. To avoid any kind of inconvenience only a few MF houses take NRI investments. For NRIs belonging to other countries, a status change in the existing MFs should be performed by submitting requisite documents. So, NRIs need to be aware of these aspects of mutual funds.
Refrain From Putting All The Eggs In One Basket
This is a risky proposition and the majority of the NRIs indulge in the same as well. In order to avoid hassles or complexities over rules and regulations of various investment instruments, NRIs usually invest in fixed returns assets like FDs and physical ones like properties and gold. This is something they should avoid as they have plenty of other options like mutual funds, PPF, direct equity etc to explore. These are risky but secured as well. Hence, NRIs should not opt for zero diversification with regard to their financial portfolios.
Be Cautious With Digital Assets
We are already in the era of NFTs and cryptocurrencies and the allure of these platforms is too hard to ignore. Most millennials swear by these digital assets and put in substantial amounts in these instruments. However, NRIs should know that these things are yet to be legalized in India and lacks legal support. So, they should show some kind of restraint while using these digital assets as investment vehicles because investing a big amount in such unregulated platforms can prove fatal in the end.
