Financial Planning for NRIs

Everyone needs to have a financial plan in place but is it any different for NRIs? Are there financial directions open to an NRI that aren’t viable for many others? Here are the comprehensive answers to these questions.

As a Non Resident Indian, you are entitled to a multitude of options that can set your finances on the path of long term security. Living in another country and acclimatising with a foreign culture can be difficult for most people. The truth is, compared to the promise of a better life and eventual prosperity that the first world offers, these hardships are not even worth careful contemplation. A typical NRI will have very sound liquidity for his finances. His assets and investments would be astutely laid out with focus laid squarely on family. Even so, it would still be a good idea to have a solid understanding of what financial planning should look like for a Non Resident Indian.

Sustainable Income Sources

There isn’t anything quite as reasonable as property assets when it comes to reliable monetary transactions that are singularly focused on the direction of your wallet. Renting out property is a good way to make sure that the market can’t realistically depreciate the value of your initial investment. This, of course, comes with a very distinct set of reservations. Firstly, building real estate assets should be based on local knowledge. A three story mansion build a few meters away from a 60 foot bog, wouldn’t be doing anyone any favours. Building real estate assets that justify a high price tag requires imaginative use of the knowledge you possess about the area you are planning on investing on. As an NRI, it is always a good idea to develop local contacts you can rely on for this specific purpose. Secondly, there is reliability and safety in renting out office spaces. This is especially true with state run mechanisms such as ATM outlets and public sector banks. The Indian government is constantly on the lookout to add more public utilities that can make life easier. Making use of this can have very real long term profits.

Understand That India is Changing

A whole new business class has emerged in India that is ruthless and highly service oriented. It is very important to have an objective perception on what the Indian business market looks like, before you take the plunge with a new business proposition. A saturated market used to once represent an absentee market leader, but today it means that there are too many quality products accumulating in each segment of the market itself. Startup culture has grown sinews  and connected products and services to the public in ways that were not possible a few years back. Intricate customer service models are being aggressively used to retain clients. There are complex market analysis models in play for most organisations working out of the public sector markets in relation to the products they sell. If as an NRI, the underlying incentive for you to be part of the business culture that is thriving currently thriving in India. Through research would be the right place to start. Have implicit understanding of what has the potential to work and be constantly aware that the competition you will be facing every step of the way will be immense.

About Those NRE Deposits

Right now Dollar is valued at 65 on the Rupee. The valuation used to be placed at 55 around two years back. An NRE account is a good way to make use of the currency disparity to your advantage. Since NRE accounts are not taxed in India and are considered to be income earned from abroad, it is a very attractive option for NRIs to simply chuck money into NRE deposits back in India. This way capital accumulation is guaranteed. A little prudence need to be exercised as far as indulging in this behavior is concerned. When dealing in financial mechanisms like NRE accounts, you need to understand that these are economically oriented instruments which are easily prone to market fluctuations. As a prudent human being, it is always wise to not indiscriminately rely on something in the hopes of earning profits. Something else to consider would be the fact that, currency exchange rates are artificially regulated by governments all the time. Strategic economic policies the Indian government decides to adopt could one day easily hurt your cash reserves securely placed in India.

Retirement Objectives

Planning on retirement is often an intricate step to take when the assets you have accumulated over the years are huge. This is why, liquidity should be on top of your agenda long before you are even considering retirement. Having assets at hand in the shape of bonds and securities might turn out to be a good idea because they are easily converted into cash. Achieving your retirement objectives, be it a luxurious vacation home or variable income streams that could be passed on to your own immediate family, the bottomline should be laid out in stone: Self awareness about what next. Depending on who you are, forgoing the idea of regular employment can either be a disappointment to you or a sweet relief. Chart your retirement angles according to what you know you want. If a second career that can compliment your accumulated wealth is something that you are genuinely interested in, make ideas that have maximum tangibility. If a well deserved rest is what you are ambitious about, make a course that will fit that lifestyle. Either Way, it is very important to have a head start in planning, if settling back in India is part of your long term goals.

The financial advantage of working for economies which are better placed than our own is not a small one. As an NRI, shrewd planning can have financial incentives for you and your family that will secure you for life. Upward financial mobility is usually guaranteed in these instances but wealth accumulation is not the same as focusing your assets intelligently for the purpose of generating future income streams. This should, in fact, be of primary importance moving forward.