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How can NRI invest in mutual funds in India?

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20 Dec 2021 | 3 min read

The Indian stock market offers an excellent chance for NRIs to reinvest their money in India. Although NRIs with the necessary experience can invest directly in stocks, mutual funds are a sensible and cost-effective option for all sorts of investors. We will look at how NRIs can invest in mutual funds in India, as well as the process and rules. 

How can NRIs invest in mutual funds in India? 

Even though many NRIs are investing in the Indian market, some people still wonder if they can participate in Indian mutual funds. Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) can invest in Indian stocks and mutual funds if they follow the Foreign Exchange Management Act's restrictions (FEMA). However, due to the time-consuming procedures required by the Foreign Account Tax Compliance Act, several mutual fund institutions refuse to accept mutual fund applications from NRIs living in the United States and Canada (FATCA). 

What are the advantages of NRI mutual fund investments in India? 

In India, mutual funds are one of the most popular financial mechanisms for NRI investment. Let's have a look at some of the advantages that investing in mutual funds in India might provide for NRIs. 

  • Several schemes are available 

NRI mutual fund plans are tailored to meet the demands of non-resident Indians. In India, NRI mutual fund investments are divided into three categories: equity funds, debt funds, and hybrid funds. Stock mutual funds, often known as equity securities, are mutual funds that invest primarily in stocks. Debt funds are mutual funds that invest in bonds and other debt instruments such as government bonds, corporate bonds, and municipal bonds. 

  • It's simple to buy and handle money online from any location 

NRIs can acquire and manage mutual funds from anywhere in the globe using the internet. NRIs can use their NRI accounts to buy and sell mutual funds online. Investors can also move units across mutual fund schemes and arrange for automated transfers or withdrawals via the internet. There is no need to send checks or DDs, nor do you need to be physically present in India. You can keep track of your money online and receive consolidated account statements in the mail on a regular basis. 

  • Diversification of your portfolio 

In general, NRIs invest disproportionately in fixed-income assets like bank FDs, gold, and real estate. In terms of portfolio diversification and income creation, NRI investments in mutual funds, ETFs, direct stock, and other securities are a wise choice. Mutual funds invest in a variety of financial instruments, including stock and fixed-income securities. Investing in mutual funds in India provides diversification benefits to investors. 

  • There's a chance you'll make more money if the rupee rises 

If the value of the Indian rupee rises against the currency of the country where you live, you will profit more. For example, if a US-based NRI puts 1000 USD in an Indian mutual fund at Rs. 75 to 1 USD exchange rate, the NRI will benefit if the INR appreciates against the USD. 

Conclusion  

NRIs must consult market specialists before investing in the Indian market in order to make informed selections. At Afinoz, you may get detailed mutual fund advice from professionals. You may ask any queries about mutual funds, NRI account opening online, and tax filing in India by downloading the Afinoz App from the Google Play Store or App Store. Click the button below to ask any inquiries about mutual funds. For additional information, visit Afinoz.com

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