NRIs – Retirement or Early Retirement Planning, Plan Well

Do NRIs need special consideration towards retirement planning?

Financial planning is needed in order to access the financial goals of an individual, to determine the goals of life at every stage, and how to achieve them? The necessary steps to be taken in a specific period of time determine its success to a large extent. We try to quantify money in terms of requirements, at different stages of life we have to fulfill different needs such as a vehicle, home, education, travel, and retirement. The purpose here is to make life more enjoyable in the present and future.

 

There are many things we need to sort and consider while making decisions about your financial future, as it is based on long and short-term goals. There are many aspects of financial planning such as savings, spending, budgeting, and financial investments.

In this segment, we will be focusing on the investment planning aspect for Non-resident Indians in order to map out an investment strategy to meet the goals such as retirement. It is important to order to take into account risk tolerance, diversification, and asset allocation, only then can a carefully crafted plan can be designed to invest in India. Planning for retirement is one of the most important aspects for NRIs.

Retirement planning is a very individualistic thing and unique, everyone has different goals, where they want to retire, what lifestyle will they adopt, and accordingly what retirement plan is preferred.

A few things an NRI has to think about before planning on retirement are:

• You have moved to the host country for a job and also for a better lifestyle. Would your retirement plans help you maintain the chosen lifestyle?

• What will be the rate of inflation, the exchange rate will it impact your retirement fund?

• The tax implications imposed by the government and how will it impact your retirement fund.

• It is important to know, what are the options of investment as an NRI and makes sure to have a Diversified Portfolio?

Read More: 7 Super Retirement Income Tips for NRIs

Try and consider a customised retirement plan keeping your goal in mind and discuss the financial plans with your financial advisor. Some of the notable options for investing in India are to build a retirement fund.

 

Real Estate:

This has been most sought after for many decades now, clearly, due to the investment returns, it offers. There are commercial as well as residential sites to consider, it has low risk as you can always have buyers for your property or even lease it or rent it out for long-term gains. I will continue the inflow of cash. One of the assets is that it does not depreciate but appreciates.

Stocks and Security Bonds:

This is a good option for people who have a continuous and thorough study of the Indian Stock market, as they contain higher risk compensated by higher returns. Expert advice can be sorted for guidance. Government securities and Bonds are also good options to look at.

National Pension Scheme:

Early investment will fetch you gains and less risk, provided you go in for the long term rather than the short term which will be profitable. You can also gain tax benefits on this type of investment.

Mutual Funds:

This type of investment is quite popular among investors. Especially post Covid times the market dynamics have changed, and investors in this segment have increased due to higher returns. However, they come at different risk levels associated with them, and also which type of fund you invest in such as debt or equities, the ones that give you tax benefits will determine the returns. This is highly market volatile and needs motoring and done monthly to gain benefits.

Fixed Deposits:

If you are a resident who is looking at maximum safety then this is the type of investment that caters to your needs, however, the rate of interest is not very high and also depends on the tenure chosen.

Read More: NRI Retirement Planning – Time is Money

There are many investment options available, once you have details of how you and where you want to plan your retirement it will be easy to choose.

The key here is to start an early retirement investment plan so that you are covered up maximum to bear the expenses, which when under-estimated leads to a deficit. Also, an estimated high and low-risk portfolio will yield different results, when you have to be safe during retirement you will have a well-balanced risk portfolio for a consistent inflow of cash.

One of the illustrations worth considering, when we say early planning is, consider Shruti is a chef who is in her late 20’s, considering her family duties and the long hours of labour involved she plans to work till around say 45 years of age and then plans on early retirement to invest time in family and lead a relaxed life. In this case, if there is an early plan it will help realise her dreams and release the roadblocks which would hamper her plans to retire early! Experts advise that contribute about 10% of your monthly income towards retirement planning. 

We all know that saving in foreign countries is not easy, not many understand this concept well when you send your savings back to India.

At this point, do you think it will be helpful to take advice from an expert who understands the risk factors that go into retirement saving plans, also to make sure your figures of savings actually match the planning criteria to make this a reality rather than only a dream?