By Manalee Verneker, (CFPCM)
Financial planning is all about preparing for future financial goals today. It’s an exercise of analyzing your current financial state looking at your income, your expenses, your dependents, your liabilities, and your financial goals to create a roadmap to achieve your financial goal. Earning good money is one of the prerequisites of a good financial life. However, if the money is not channelized properly in the right investment in a planned manner, an investor can create a messy and bad financial life. As an NRI, you need to make sure that you are investing your money in the right financial product, with the the right advice and proper financial planning.
Here are 6 reasons why NRIs should be more serious about their financial plan.
1. Higher Income Earned
As NRIs earn well and they have higher amounts to invest every month, it’s important to handle it with care and have a financial planning approach for investing. Most NRIs have plans for early retirement. Hence starting investing early and investing in the right avenue plays a key role. As most of the NRIs have their bankers advising on financial products it’s advisable to have a plan-based approach rather than a product-based approach to avoid financial disaster.
2. Complicated Taxation
NRI taxation is more complicated compared to resident taxation and it depends on various things like products and country of residence. NRIs can end up paying lots of taxes in India due to wrong investment choices. An NRI has to optimize his taxes along with an increase in investment returns and timely use of his money.
There are a lot of things that can be done to save taxes. Some of them are:
1) Using cross-country double taxation treaties.
2) Utilizing the gift tax laws in India and saving tax by investing in the parent’s name.
3) Using investment products like equity and debt mutual funds and deferring taxes for the future until withdrawal.
3. Compliance
As an NRI, you have to follow all the laws related to NRI investments and should comply with the rules. The documentation to start your investments is a bit more compared to a normal resident but it’s just a one-time documentation after that the investment process is exactly as a normal resident.
4. Lack Of Time
NRIs visit India for a very short period of time. They don’t have unlimited time to plan their finances and investments. There are also NRI-specific rules and regulations which are very confusing. Even if they understand these rules and try to create their own financial plan, the problem is that these rules need to be updated regularly. It also becomes very hectic and impractical to keep track of all financial-related plans. Therefore, it is better to have the Financial Planning done by certified experts who are always well-informed with all recent updates related to finances.
5. Better Use Of Money Earned
Most NRIs want to return back to India in a few years and want to plan their finances from that perspective. Hence Retirement Planning is their top priority, also planning for their Child’s Education, Building a house, going on a vacation, and buying a car, an Emergency fund follows next. Creating a comprehensive financial plan can help NRIs address their financial goals and create a roadmap to achieve them.
6. Buy Health Insurance
With the cost of medical care rising, health insurance is essential. As an NRI, you have health insurance. Let’s say you are planning to return to India after retirement. Then you will need health insurance in India. When you return to India, you may not be eligible for health coverage as you may have pre-existing diseases. Therefore, you should plan ahead and take out health insurance. Otherwise, you can try to build a decent medical fund.
About the Author:
Manalee Verneker is the founder of Financial Wisdom, a privately established financial services firm based in Goa, India. Financial Wisdom was founded by her in 2021, after just less than a decade of experience in the field of personal finance.
She is a Certified Financial Planner (CFP CM ) from the Financial Planning Standard Board India and a Chartered Wealth Manager (CWM) from the American Academy of Financial Management.
Her experience includes working in Mutual Fund Companies, Wealth Management, and Financial Planning Companies and she understands both Indian and International markets and products.
She is passionate about personal finance management, and financial literacy and is a strong advocate for financial advice that focuses solely on the individuals.
For any kind of advice related to managing your finances and investments, contact Manalee on:
WhatsApp: 8378080888
Website: www.financialwisdom.co.in
Email: [email protected]
Instagram: @_financial_wisdom_
Facebook: @financialwisdom2021
