Why NRIs should invest in Mutual Funds in India?

Mutual funds are one of the most preferred investment avenues among the NRIs. Due to its higher return on investment and lesser personal involvement, mutual funds are an ideal choice for NRIs.

Aug 01, 2018 05:08 IST India Infoline News Service

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Most of the NRIs (Non-Resident Indians) who live overseas have the thought of making investments in India at one time or another. As India is growing at a steady pace and is one of the fastest growing economies in the world, more and more NRIs are turning towards their homeland to make investments in order to secure their future financially.
 
Mutual funds are one of the most preferred investment avenues among the NRIs. Due to its higher return on investment and lesser personal involvement, mutual funds are an ideal choice for NRIs.
 
While a large number of NRIs prefer investing their surplus funds in mutual funds in India, some of the NRIs are still confused regarding investing in mutual funds in India. With such an opinion Ravi, an NRI asked his other NRI friends why he should make investments in mutual funds in India.
 
To this, one of his friends, Aditya replied that there have been a few potential reasons which make an investment in mutual funds a decisive choice. Here are a few reasons why NRIs should be investing in mutual funds in India: 
  • India is one of the fastest growing economies of the world: Since India is one of the fastest growing economies of the world, the different sectors of businesses have seen an upward growth with rising prices. This has helped a lot of investors earn a fortune by investing in India.
    The effect of this price rise can be clearly seen on the stock market where if you have made investments in fundamentally strong stocks the long-term return on investment could be very helpful in accumulating wealth.
    Unlike other countries where the market is facing a slowdown Indian market is still seeing due action, which is making it one of the markets for investors from different parts of the world.
  • Mutual funds demand lesser attention: You need not actively manage your investment portfolio and thus mutual funds are very favourable for NRIs who are busy with their work and cannot make enough time to dedicate to investments.
    For mutual funds, you need to just choose the right portfolio which meets your financial requirements, and that’s all! Rest will be managed by the fund managers. But choosing the right portfolio is an important decision which must be taken due diligently with utmost care.
  • Mutual funds are managed by expert fund managers: Since the mutual fund portfolios are managed by expert fund managers, their expertise helps in navigating the risks and increasing returns. Also, you need not worry to keep up with the market updates as all that is being taken care of.
  • Mutual funds carry lesser risk: As the risk is dispersed with the diversification of the portfolio, mutual funds carry lesser risk with a higher return on investment as compared to other investment avenues. In mutual funds since a single portfolio is build up with a number of different stocks from different sectors, the chances of losing all your money when any sector hits a rough patch are low.
  • Tax benefits: When you invest in ELSS (Equity Linked Saving Scheme), a mutual fund investing in equities, you get tax benefits of up to Rs. 1 lakh in long-term capital gains. While long-term capital gains above Rs. 1 lakh, is taxed at 10%, short-term capital gains are taxed at 15%. This is better than other heavily-taxed investment avenues.
  • A strong back-up: If you are anytime planning to move back to India, mutual funds investment in India creates a strong financial back-up for you, which will be very helpful upon your return. 
 
With the above reasons making an investment in mutual funds is a good option, and NRIs should invest their surplus funds in mutual funds in India.

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