Working overseas is a great opportunity to explore the world and get exposure to a new culture. Your earning potential may also have been enhanced if the exchange rate works in your favour. Hence, it is a smart idea for you to take advantage of this move. As you live and earn overseas, you can continue to save and grow your investment portfolio in India. Access to an NRE Savings Account allows you to start investing seamlessly and securely, within India, while working abroad.
What is an NRE Savings Account?
An NRE Savings Account is a type of account specifically designed to help NRIs grow their savings in India. When you deposit foreign currency in your NRE Savings Account, the bank automatically converts your deposit into Indian currency. One of the most attractive features is that these savings do not attract any taxes.
At the same time, your savings will earn interest over time. Additionally, you can start building an investment portfolio, which helps you achieve your financial goals —from retirement to funding your child’s education. Axis Bank facilitates the easy opening of an NRE Savings Account. You can apply online via the Internet or mobile banking. You can manage your account digitally while living abroad. You can build tax-free savings, and start investing in a mix of instruments that help you balance risks with returns. These features have collectively made NRE accounts a popular choice among NRIs.
Also Read: Which bank account should you open as an NRI?
Key investment options for NRIs
Here are some investments you can make directly from your NRE Savings Account digitally from any part of the world:
Mutual Funds
Mutual funds enable you to leverage the benefits of taking managed risks, based upon your risk profile. You can invest in a mix of equity, debt, hybrid, solution-oriented, index and liquid funds. Rest assured, that your funds will be professionally managed and optimised for higher returns. Mutual funds also come with easy liquidity, in case you need access to funds during an emergency.
Also Read: Mastering SIPs for long-term financial success
National Savings Pension (NPS)
This is an equity-based pension scheme, to which you can contribute up to the age of 60. The government-sponsored Pension Fund Regulatory and Development Authority (PFRDA) regulates and manages NPS. Investing regularly enables NRIs to grow their retirement corpus, and purchase an annuity to earn an income post retirement. The returns are as per the market performance, which grows significantly over the long term. NRIs can invest in Tier I account of NPS.
Public Provident Fund (PPF)
If you have opened a PPF Account, you can continue investing in that as an NRI. This is yet another opportunity to grow savings by regularly investing up to ₹1.5 lakh per annum for 15 years, with an interest earned of 7.1%. Another attractive feature is that the principal and interest amount are not taxed, once the lump sum goes back into your Savings Account. Hence, try to max out your PPF account each year to reap the highest returns from this government-backed instrument.
Key investment tips
As you start the investment journey, you can practice some quick tips to optimize the returns:
- Earmark a fixed amount in your monthly budget, and start investing across various instruments.
- Make sure you invest across multiple instruments, which balance risk with returns. For instance, a mix of debt and equity helps reduce risk, while also creating opportunities for a higher returns rate.
- Leverage technology to automate investments. For instance, you can start a Systematic Installment Plan for your Mutual Funds, and build an investing habit. You will also never miss a payment.
- Use tools such as a retirement and SIP calculator, to help predict how much to invest. Such tools can help you plan better, and increase your savings rate.
The takeaway
As an NRI, you will need to shift from a resident Savings Account to an NRE Savings Account, to take advantage of its benefits. Opening an NRE account is a great way to capitalize on growing your savings while working abroad. Remember, the earlier you start investing, the quicker you can meet your life goals.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. *T&C apply
