NRI short term investment options

POSTED BY Ponna Subbu ON March 14, 2012 1:14 pm COMMENTS (9)

Hello, I am NRI and have some funds parked in my NRE account for investment in India.

I have moved a portion of this into the NRE deposits at attractive interest rates (9%+).

The remaining amount I earn 4.5% in the NRE savings account. I would like to know if there are alternate short term investment options that I can explore (period < 1 year).

Thank you!

9 replies on this article “NRI short term investment options”

  1. Ratan.R says:

    Many banks offer various lucrative options for nri investment like foreign currency deposits, equity etc. However to know which one will suit your neighbour’s son depends on his needs. He should check the bank’s website to know more @ http://www.dbs.com/in/treasures/non-resident-deposits/default.page.

  2. Abhishek Srivastava says:

    For NRI’s short term investment options are as follows:
    1. Fixed income mutual funds,
    2. Bond funds/longer-duration gilt funds, and
    3. NRE deposits

    Investment opportunities available in India are manifold for best advice’s try http://on.fb.me/MX9J1Z

  3. TheZionView says:

    @ponna subbu

    You are getting a 9% tax free returns in NRE deposits..Why not park the maximum in there to get the benefit as long as it lasts

    Also there are no other debt option where you will get 9% post tax returns as of my knowledge..

    I am not aware of any restriction for the NRE Deposits amount. So please enlighten me for you reason for looking other avenues

    1. Dear TheZionView, the 9% or higher interest rate is not available for FDs of less than 1Y duration in most of the banks. So for the given query – Short Term NRE FDs are out of question.

      Thanks

      Ashal

  4. Ponna Subbu says:

    Thank you, all.

  5. BanyanFA says:

    Hi,
    The biggest challenge for NRIs while parking their funds in India is 30% TDS rate which gets automatically deducted from any income which you have (other than interest on NRE saving account or NRE Deposits). So if you park your funds in a Liquid fund which may give you around 9% return these days, after tax deduction, you would get only 6% return.

    The best bet hence is to avoid any investment which shall involve any thing such as Interest (except tax free) or Capital Gain.

    You can try investing into HDFC Cash management Fund – Treasury Advantage Plan – Dividend Option. This is a liquid cum debt fund giving returns around 8.5%. Dividends declared by the fund attract around 15% Dividend Distribution Tax and after that you enjoy tax free returns of approx 7%. You can withdraw the funds at any time and the risk is closer to zero. We have got most of our NRI clients on this mode to park their liquid funds.

    Regards
    Banyan Financial Advisors (BFA)

  6. shitanshu says:

    Dear Ponna Sabbu,

    NRI can invest without limit in following investment avenues:-

    • Mutual Funds.
    • Bonds issued by a public sector undertaking (PSU) in India.
    • Equity Markets – Shares and convertible debentures of Indian companies.
    • Exchange traded derivative contracts approved by the SEBI
    • Bank Fixed Deposits.
    • Company Fixed Deposits.
    • Non-Convertible Debentures of Companies.
    • Real Estate. (Not in Agriculture Land)
    • Government Securities/ Treasury bills.
    • National Savings Certificates.
    • Deposits in Indian Bank Accounts.

    You can invest this amount in either Good Mutual Funds.

    As you are planning to keep investment less than 1 year you have to pay Short term capital gain tax on Mutual Funds Gain.

    You can try Bank Fix Deposit for Short term return will be (7 to 7.75 %).

    You can refer to Article written by me :-

    http://strategic-growth.in/finance/index.php/investment-options-available-for-nris-in-india/

  7. Dear Ponna Subbu, you may invest in debt funds. Although there is no guarantee of returns but you have a better chance of getting high returns as the interest rates are now at peak & any decline ‘ll be good for debt funds.

    Thanks

    Ashal

  8. You can look for Short term FDs (say 180 days or 270 days) – these should be around 7% I guess. You can look ar parking money in Liuid Mutual funds Growth option. The final money earned will be taxable but since your income earned in India will be lower you need not pay tax.

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