While the basic steps of financial planning are similar for most people there are certain situations which are exclusive to NRIs. What I have seen from interactions with a few of them are as follows.
Are you sure about retiring in India?
While most NRIs are very clear that the children will be educated abroad and in all probability, will never return to India, they are unsure about their intentions of settling back in India post retirement. This can be challenging for retirement planning and deciding if it makes sense to hold on to real estate assets accumulated in India.
Have you insured your health adequately?
Most NRIs have huge global cover currently and hence are in a good position to take care of any medical emergencies should they arise. These are typically provided by the company and hence it can be a cause for worry. What would happen in case of a sudden loss of job? It would mean you dip into your savings for medical emergencies.
In most cases, while people are aware of the need for a personal cover, they have put it off till they retire. Health insurance is available only to healthy people. It is possible that by the time you retire, there is some ailment which has crept up. This will make it difficult to get insured or at the least have undesirable exclusions in the policy.
Have you taken Critical Illness insurance?
Health insurance will cover your medical bills. What happens if you are unable to retain employment due to a critical illness? While this is an important insurance for everyone, all the more so for NRIs, since losing income in an alien land can be even more traumatic. Also note that, while this is expensive in India, it may be affordable in other countries. Do check and ensure you take adequate CI cover. For more details on this subject, you can read an earlier blog of mine.
Have you done Estate Planning?
Again, this is true for most clients, since somehow coming to terms with the fact that death is inevitable is never easy. But in the case of NRIs, this is crucial, especially, when you have assets as well as dependents in multiple countries. Do understand that assets in different countries are governed by different laws. Hence, make a will in India for your Indian assets. Separately, consult with specific experts in countries where you have properties and other assets and plan for them as well.
Have you considered tax implications outside India while making Indian Investments?
As an NRI you may be paying tax on your global income. What is tax free in India need not necessarily be tax free in the country where you reside. It is very important therefore to consult with both your Indian advisor and your advisor in the place of your residence. It is important to seek and heed to the advice of both professionals before you decide on a particular investment.
Do you believe investing in India can only be done in INR?
There are attractive options available in India to park currency of your choice. Check what these are and compare return and risk before you choose your instrument of choice.
Have you closed your EPF account on leaving your Indian employment?
Since it is etched into us that EPF investments give tax-free assured-returns, there is a lot of inertia in taking any action on this. In most cases its good and ensures a huge corpus gets accumulated for retirement. But as per new rules, interest paid on EPF accounts once there is no fresh contributions is fully taxable.
Have you taken care of these minor but time-consuming changes?
If you have multiple bank accounts as a resident, you need to review and close them or convert them to NRO or NRE status. Schemes like Sukanya Samruddhi which is available for residents is not for NRIs, hence you will have to look at closing such schemes. It may be a good idea to have a check list of things to be done on your next visit to India and keep adding to it.
Managing all of this remotely on your own can be challenging if you are an NRI and having a trusted financial advisor who can advise you on these matters as well as execute, will help manage the situation.
Finwise is a personal finance solutions firm that helps both residents and NRIs plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at firstname.lastname@example.org or +91 9870702277/9820818007.
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