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all NRIs should know while investing in MFs in India

Why Should NRIs Invest in MFs in India?

By admin_mutual | Jan 31, 2023

Many people living in the United States and other developed nations are highly skilled professionals, businesspersons or even students, but they have left their home country and acquired citizenship of that nation. Non-resident Indians may experience more difficulty accessing credit and moving up the economic ladder than natural citizens of those countries. If you are a non-resident Indian living abroad and are facing challenges, or would simply like to benefit from the improved investment scenario in India, you should consider investing in India. Mutual Funds can be one of the best investment options for you. Mutual Funds in India offer many benefits. That is why Foreign and NRI Investors should consider Mutual Funds when looking to invest in India.

Top Reasons for NRIs to Invest in Mutual Funds in India

Mutual funds have been around for many years and there is a good reason for it – they work! Mutual funds offer a great way to grow your money while protecting your investment. These are a type of investment vehicle that allow you to pool money with other people and buy securities such as stocks, bonds, etc. from a fund manager and hold on to them permanently. In India, mutual funds are regulated by the SEBI (Securities and Exchange Board of India) which insures fair dealing, shareholder protection and efficient capital markets.  

If you are a NRI, there are several reasons why you should invest in mutual funds in India.

  1. Firstly, mutual funds offer tax benefits over traditional investments like debt or equity certificates. If your investments are in a FD (fixed deposit) account or Bank fixed yield Savings account, the interest earned on the corpus is taxed at the basic rate of 10%. However, if investments are in Mutual Funds, they get taxed at the long term capital gains rate of 20%. This means that if you own mutual fund shares that have increased by 10% in value since you purchased them, you will only pay taxes on 8% of that gain – which is really quite beneficial!
  1. Secondly, mutual funds come with ensured liquidity levels- this means that irrespective of how volatile the stock market may be at any given point in time, your money will always be available to withdrawal without penalty. This is an important safeguard especially for investors who may be sensitive about risks.
  1. Mutual Funds can help investors stock up on a variety of different assets so that their portfolio has a wider range of exposure to the market risks. Mutual Funds typically invest in a mixture of baskets, which gives investors access to a number of different types of investments.
  1. Mutual funds have a good history in India, and these are currently one of the most popular investment options for both individuals and businesses. These offer a way to diversify your portfolio, offer exposure to a wide range of markets, and can offer low-cost investment options to domestic as well as foreign investors. Mutual Funds typically include lower fees than traditional investment options like stocks and bonds.
  1. Last but not least, investing through mutual funds allows for ad-hoc asset allocation changes which can help ensure consistent returns regardless of market conditions.

Clearly, there are a number of reasons why you might want to invest in mutual funds as an NRI.

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