Debt MFs : NRI Investment
Sunday, June 6, 2010
For person of Indian origin
Need an Indian passport or apply for an OCI (Overseas Citizen of India) card, or a PIO (Person of Indian Origin) card. For this he needs to show that he was born in India, or any of his previous two generations (parents and/ or grandparents) were born in India.
The process takes anywhere from 3 weeks to 2 months. Simultaneously, the person looking to invest in India needs to apply for a PAN (Permanent Account Number) online.
For NRIs, the cost of transacting directly stocks is higher than that for resident Indians.
NRIs must use their equity accounts to build a long term portfolio as active trading turns out to be expensive.
While every NRI seems to be focusing on equities, they seem to miss out a simple trick of improving their returns without enhancing risks considerably. The long-term trend for the rupee is expected to be stronger. The investor is sitting with थ्10,000 in his bank earning less than 2% pa. In fact, yields on 5-year bonds are 2.25% pa.
At the current exchange rate, Rs 6.75 lakh will be transferred to India and can be invested in 5-year government bonds which yield 7.40% pa. At the end of 5 years, the Indian investment will be worth Rs 16.27 lakh, and the UK investment of थ्10,000 will have risen to थ्21,175. That essentially means that, even if the exchange rate was to weaken for the rupee to Rs 76.84, the investor will have achieved break even.
Need an Indian passport or apply for an OCI (Overseas Citizen of India) card, or a PIO (Person of Indian Origin) card. For this he needs to show that he was born in India, or any of his previous two generations (parents and/ or grandparents) were born in India.
The process takes anywhere from 3 weeks to 2 months. Simultaneously, the person looking to invest in India needs to apply for a PAN (Permanent Account Number) online.
For NRIs, the cost of transacting directly stocks is higher than that for resident Indians.
NRIs must use their equity accounts to build a long term portfolio as active trading turns out to be expensive.
While every NRI seems to be focusing on equities, they seem to miss out a simple trick of improving their returns without enhancing risks considerably. The long-term trend for the rupee is expected to be stronger. The investor is sitting with थ्10,000 in his bank earning less than 2% pa. In fact, yields on 5-year bonds are 2.25% pa.
At the current exchange rate, Rs 6.75 lakh will be transferred to India and can be invested in 5-year government bonds which yield 7.40% pa. At the end of 5 years, the Indian investment will be worth Rs 16.27 lakh, and the UK investment of थ्10,000 will have risen to थ्21,175. That essentially means that, even if the exchange rate was to weaken for the rupee to Rs 76.84, the investor will have achieved break even.
0 comments:
Post a Comment