How can US-based NRIs invest in India?

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My son shifted to the US three years ago and now he is an NRI. He is earning well there and wants to have some investments in India. He was very keen to invest in PPF, but I got to know that NRIs can’t invest in PPF in India. Please suggest what all he can invest in?

-Name withheld on request

Yes you are right. Non-resident Indians (NRIs) cannot invest in PPF accounts in India. They also cannot invest in floating rate saving bonds.

However, you may ask your son to start investing in mutual funds in India. Please note that NRIs can freely invest in any of the mutual funds schemes. The best way to create wealth is to start investing in MFs through SIPs, or systematic investment plans, with a time horizon of 7-10 years, or even longer. While investing in MFs, your son must ensure that the money is prudently divided between large cap funds, mid cap funds, flexi cap funds, and some thematic funds like FMCG, international equity or special situation funds, etc. Also, your son can open an NPS account in India and start contributing there, whatever amount is convenient, maybe 1 or 2 lakh per year with higher exposure to equity & remaining balance into corporate bonds & government securities. This investment in NPS will grow to a sizeable amount in 10-15 years and if he decides to come back in India, he will not only get decent lump sum amount, after 60 years of age, which will be tax exempt, but he can also enjoy regular monthly income for the rest of his life.

I am planning to invest and save for my kid’s education. She is planning to go to the US in 2026 for higher education. I have kept 15 lakh in savings for this. Please elaborate where should I invest to fulfil my goal.

-Pankaj

Hi, I am glad to know that you are planning and saving for your daughter’s higher education. However, you have to keep in mind that your goal is sacrosanct and you cannot afford to take any risk as it will directly impact her future. Since you already know the year in which you will need the funds, the best solution is to invest in target MFs.

(Queries answered by Sanjiv Bajaj, Jt. Chairman & MD, Bajaj Capital Ltd. Please send your personal finance queries to [email protected])

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