If you are a Non-Resident Indian with plans to invest in India, you should be celebrating. The Government of India, as indeed all of corporate India, has big plans for a billion-strong country growing at a blistering 8 per cent today. And the government is extremely keen that you and the now 6 million-strong Diaspora of NRIs continue to play an important role in the growth story of the country.
You would be happy to know that the floodgates are opening for myriad India-investment options. So, let's put pen to paper and see how you would like your India strategy to work for you.
Today, information is everywhere. Your favourite relationship manager from your favourite bank may have met you already at your San Antonio home and discussed anything from the suddenly-rocketting demand for low-cost housing in Ahmedabad to the prospects of urad daal gaining over the next few months from a lower-than-usual summer harvest. . . to how with a mix of global bonds and equity or a specific structure with an option for leverage you can 'sophisticate' your portfolio immediately.
But before you are impressed enough to write out a cheque to fuel your India-strategy -- and especially if your investment has so far been confined to a bank deposit -- do ask yourself these questions:
- Are your expectations realistic? Do you understand the inimical relationship between risk and return?
- Can you write out your India-money strategy on a napkin? Simple one-word answers to questions like, would you like to preserve, create or enhance your wealth in India?
After you're clear on your investment approach, you need to select a bank to facilitate your India -- investment plan. Consider these while choosing your bank:
- Ideally, your bank should offer you both -- local and international banking, with relationship managers or India desks in your city to understand and cater to your India-investment decisions. This way you can move money between countries, asset types and periods you choose to make investments for, quickly and at low cost.
- While your bank may be a strong international presence with a reputation built over the years, it also needs to have a good India presence in terms of distribution points and INR (Indian rupee) products. The larger the canvas, the more are your options. A little independent research by looking up Web sites will benefit you.
- Do find out more about critical elements such as customer service and servicing channels. Chatting up with a good NRI friend or relative who may be banking already may be a good idea.
- Find out if your bank offers you free counselling on tax planning and insurance-related matters, perhaps someone to help you interpret and even put to good use NRI-specific laws on investments.
- Does your bank allow you to remit funds to India in a cost-effective manner from your city of domicile? That apartment you've liked in an upcoming housing project in Mumbai. . . You should have comfort that your chosen bank can facilitate the funds transfer within the closing date.
There always will be more India products than you can count! Here's a suggested product strategy:
- Products need to suit you: All products are risky -- some more, some less. Indian equity may be growing at a brisk pace, but it may not be good for you to put a bulk of your retirement money should you plan to earn a well-deserved rest and go back to gardening at your Kolkata home next year.
- Start with as wide a canvas as possible: A good range would comprise equity, bonds, commodities, mutual funds, real estate options including, perhaps, a home for you to come back to. Most of these are appreciating today at a fair clip.
- Check performance: Web sites from reputed agencies, who gain little by selling you, may help you arrive at a list of performing products.
- Trust the wise guys: If you cannot follow up on your investments on a daily basis, choose a discretionary (to allow you some control) portfolio management product or a mutual fund and allow your banker to research the category for you.
- Don't get emotional about your investments: This is what every successful wealth creator would tell you. Keep tabs on your portfolio performance at all times and know when to cut losses and relationships if necessary.
After you do write out that cheque, don't stop collecting ideas and insights. Start a file for your India money affairs. Paste your thoughts in it and not just charts on fund performance. Give yourself an otherwise lazy Sunday afternoon to ponder over these.
Always date your ideas. You could even make it a household thing and discuss your plans with your spouse and children.
Above all, sleep well. Remember, not just your bank, but India Inc. is working hard for your India money to deliver.
The author is Business Manager, NRI Services, Standard Chartered Bank.
