Best No-Risk Investments for NRIs in India

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Risk Investments

No-risk Investment is generally considered a myth in the investing world. However, investing prudently through specific plans can help you retain your capital and continue earning high returns. The interest rate scenario globally is weak and India is also affected in the chain reaction. This has pushed the banks to cut their interest rates periodically and currently, the rates stand in the vicinity of 6% or so for the highest tenor.

Let us look at the few no-risk investments for NRIs –

NRI  FDs -The best NRI accounts are those which help you invest easily, earn high interest and also reduce tax.  Generally, the NRE account is considered lucrative as it can accept foreign earned deposits which can be converted into Indian rupees. You can also earn higher interest in fixed deposits in an NRE account when compared to an NRO account. Also, the principal and interest are completely repatriable. NRE FDs are also tax-free.

Public Provident Fund (PPF) – While as an NRI you are not allowed to open a new PPF account, you can continue servicing your pre-existing one[1] which had opened before you became an NRI. This can be done on a non-repatriation basis until the maturity of the fund. You can continue enjoying the tax-free and high rates as announced by the Government of India.

NPS – NRIs[2] can open an NPS (New Pension Scheme) account with tax breaks of up to Rs 1.5 lakhs under Section 80 C and additional Rs. 50,000 under Section 80 CCD(IB). NPS though invests in equity market offers high returns consistently depending on the type of scheme you have opted for. For details, you can refer to the NPS website.

Real Estate – While real estate seems an unwieldy and difficult investment, NRIs can think of purchasing houses/flats and commercial properties for renting out which can be a no-risk proposition apart from the administrative hassles. While RBI allows you to purchase such properties, you cannot purchase agricultural lands and farmlands in India.

Company FDs -These are one of the most underrated and low or zero risk options. Companies with high credit ratings like Bajaj Finance FD offer interest rates ranging up to 8.05% for a 4-year tenor. You can enjoy high rates if you are a senior citizen or an existing customer. You can also avail TDS on FD as below –

If annual interest on deposit is less than Rs.50 lacs If annual interest on deposit is more than Rs.50 lacs, but less than 1 Cr If annual interest on deposit is more than Rs.1 Cr
31.2% 34.32% 35.88%

Always choose company FDs with stability and guarantee of returns. Bajaj Finance Fixed Deposit has the highest safety ratings of FAAA/Stable by CRISIL and MAAA/Stable by ICRA. You can also avail of additional features such as the multi-deposit facility to ladder your investments across multiple FDs so that you can have a steady stream of maturities once the tenor starts getting over.  Simply explained, laddering means, instead of investing all the available capital (let’s say Rs. 5 Lakhs) in one go, break the investment into various deposits (say, 3 deposits) having different maturity timelines and keep renewing the matured amount. As the FDs matures each year and bring in regular income, there is a substantial degree of flexibility and liquidity available. Using the auto-renewal option, you can also earn an additional interest rate benefit upon each renewal.

[1] https://www.financialexpress.com/money/public-provident-fund-account-for-nri-can-you-invest-rs-1-5-lakh/1716812/

[2]https://economictimes.indiatimes.com/wealth/invest/how-nris-can-open-nps-account-online/articleshow/69172928.cms?from=mdr

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