Financial Advice for NRI
Being a non-resident Indian comes with its own set of financial challenges and opportunities. Financial advisers can help you make the most of your NRI status. We understand the complexity of an NRI investment portfolio. We curate customized and comprehensive solutions for NRI. We have an in-depth understanding of NRI requirements and follow a transparent and professional approach to addressing them. Our team of financial advisers offer expert advice on tax planning, insurance, and investments. An NRI has investments in India and abroad. We can constantly review and monitor your assets and advise on them. We can help you handle the transition from a Resident Indian to a Non-Resident Indian and vice versa. We have helped NRI investors construct a plan to retire in India. Our NRI clients are based out of the US, UK, Germany, Netherlands, UAE, Singapore, China, Japan, Australia, and Malaysia.
Financial Planning For NRI
Here are five things NRIs need to think about more than resident Indians:
- How will your assets be taxed in India and your resident country?
- Do you want to retire in India or abroad?
- What are the best investments for non-residents?
- Do you have enough insurance and are you covered across the globe?
- Would you like your children to study in your resident country, India, or elsewhere in the world?
Tax Planning for NRI
Tax is the one question on our minds when it comes to making investment decisions. Nobody likes surprises or wants to be slapped with a penalty for an honest mistake. Does that mean an NRI should limit their investment options to the obvious ones? When an NRI work with a financial adviser in India, a world of tax-compliant opportunities opens up.
The number one myth about taxation: tax rules depend on your citizenship status. The truth is that tax rules are applied based on your resident status. For instance, if you are an Indian citizen residing in the USA, you are subject to tax rules in the USA and India. Similarly, if you are a US citizen and an Indian resident, then the tax rules of both countries apply.
Determining your resident status is crucial, especially during transition periods. As a global citizen, you want to be ahead of the curve and know which tax laws apply and how you can structure your investments.
An NRI's income in India is taxable. The taxation of income from another country depends on the agreement between the two nations. DTAA (Double Tax Avoidance Agreements) between India and other countries ensure that this income is taxed only once.
An NRI may pay higher TDS on their investments but may be subjected to lower tax rates. For example, the TDS on capital gains from equity mutual funds is 30% but capital gains themselves are taxed at 15% (short-term capital gains) and 10% (long-term capital gains).
A common misconception is that an NRI need not file tax returns in India because there's no income to declare. Hiring a financial adviser could guide you towards the right tax decisions.
Retirement Planning For NRI
The question of retirement has multiple dimensions. For starters, NRIs must decide whether they want to retire in India or abroad. This is a significant decision because it influences your global asset allocation and retirement corpus calculations.
Should an NRI retire in India or abroad?
TThe decision to retire in India or abroad is deeply personal. After spending decades away from home, NRIs may either decide that they prefer the ex-pat life or that they want to spend their golden years in a place that has always been home.
From an economic perspective, retiring abroad may mean you don't have to worry about inflation as much as you have to worry about returns. On the other hand, retirees in India may be able to lead a good lifestyle at a lower notional cost, but inflation and currency depreciation will remain points of concern.
What's the number one factor that drives an NRI's investment decisions? The exchange rates. Most NRI investors believe that they get the best outcomes if they get the best currency conversion rates. However, financial planning delivers the best outcomes by looking at the bigger picture. What matters more than the exchange rate is the structure of your global asset allocation. Knowing what percentage of your assets should be in each asset class and each country is essential. Working towards that target guarantees more holistic outcomes for your financial wellbeing.
Investments For NRI in India
NRI's can choose between real estate, equity shares, mutual funds, and fixed deposits. Countries like the US have restrictive rules on investing outside the country for tax residents. Whereas other countries may be more liberal. Some general rules may apply to NRIs, but their resident and tax status determine the most suitable products.
Here’s a quick reckoner on the advantages and disadvantages of the different asset classes.
||Low volatility or change in price. Traditional investment choice
||Illiquid, high maintenance, and opaque price discovery mechanism.
||Safe and scarce. Traditional investment choice.
||Long investment cycle
||Long-term wealth creation under professional guidance. Transparent price discovery.
||Volatile instrument in the short to medium duration.
||Liquid with transparent price discovery. Most suitable investment for asset allocation.
||High TDS and several options to choose from.
||Fixed regular returns which are usually guaranteed.
||May not beat inflation in the long run
||Limited scope for returns
A financial adviser can help NRIs make the most use of the:
- Non-Resident (Ordinary) Rupee Account – NRO Account
- Non-Resident (External) Rupee Account – NRE Account
- Foreign Currency Non-Resident (Bank) Account – FCNR (B) Account
Insurance Planning For NRI
The most common insurance product in an NRI portfolio is a ULIP. ULIPs are expensive products. Unit-Linked Insurance Plans deliver modest returns and insufficient insurance. Non-resident Indians need to rethink their risk management strategies. Most NRIs don't know the financial value of their lives despite having financial dependents in India and abroad.
Financial risk manifests in many forms. A layoff or pay cut in a foreign country can be more stressful. Healthcare systems vary significantly across the world. NRIs need to plan their insurance policies to receive worldwide coverage against the biggest financial risks.
Most NRIs migrate in search of a better future for themselves and their children. An NRI based out of the middle east may aspire to send their children to the US or UK for higher studies. This adds a new dimension to their global asset allocation. The financial planning process makes you cognizant of inflation rates, prepares you for currency movements, and sets saving targets for your children's future needs.
Financial Planning For High Net Worth Individuals (HNI)
As wealth creation objectives grow, new challenges surface for an HNI. Their investments are often spread across various asset classes. Their portfolios are managed by a host of brokers, wealth managers, and advisers. They lack an overarching investment plan. Over time, monitoring and tracking portfolio performance becomes cumbersome without an investment plan. An HNI is likely to explore more exotic investment avenues. As investors move to more bespoke portfolio management solutions, careful and objective evaluation of potential, associated risk, and costs is necessary. Our financial advisers help HNI investors address evolving aspirations, build a legacy, or plan their estate.
Organising the financial affairs of an HNI requires cross-disciplinary competence that our financial advisers possess. Our financial advisers are equipped to handle the demands of advising HNI investors. We can assist in reviewing, analyzing, and consolidating assets. We also evaluate portfolio management and design a customized investment plan for every HNI. Our financial advisers are partners in our HNI clients’ investment journeys.
Financial Planning For Trusts
Trusts bear a fiduciary responsibility in protecting the interest of another party. Trusts may have varied objectives, requirements, and approaches to portfolio management. Our financial advisers specialize in understanding the core philosophy and needs of trust to design a customized investment plan.
An investment plan fulfils responsibilities through sound guidelines, established portfolio management principles, and consistent measurement of metrics. As financial advisers, we prepare a robust investment plan that lays the foundation for financial decisions and allows for the wiser allocation of capital through investment advisory services. When our financial advisers draft an investment plan, risk management is achieved by rebalancing asset allocation and identifying suitable investment avenues. Our financial advisers use investment advisory principles to protect and productively deploy capital.