Tagged: Saving

ATM :: To realise your crorepati dream, all you need is Rs 5,000 per month

Kshitij Anand | Mar 26, 2017 06:11 PM IST | Source: Moneycontrol.com
A detailed study by Karvy Stock Broking reveals that if somebody who would have invested just Rs 5,000 per month for the last 20 years in these five funds, you would have earned you more than Rs 1 crore now.

ATM

This can’t be true! That would be your first reaction. Making money in the stock market is tough especially when you are a working professional and can’t devote much of your time to read company balance sheets, track quarterly results or learn complicated futures & options.

The simpler way is to give that money on a regular basis via systematic investment plan (SIP) to a fund manager who would use it to invest in stocks, bonds or other fixed income instruments depending on the choice of plan you have taken.

A detailed study by Karvy Stock Broking reveals that if somebody who would have invested just Rs 5,000 per month for the last 20 years in these five funds, you would have earned you more than Rs 1 crore now.

Crorepati1

The math behind it is simple. If you had done a monthly SIP of Rs. 5,000 for the past 20 years, your total investment would be Rs 12 lakh according to Karvy estimates, and your money would have multiplied by:

Reliance Growth Fund 18.27x: Rs 2.19 crore

HDFC Equity Fund 15.68x: Rs 1.8 crore

Reliance Vision Fund 11.81x: Rs 1.4 crore

HDFC Top 200 Fund 11.5x: Rs 1.3 crore

Birla SL Equity Fund 7.58x: Rs 0.9 crore

“We believe SIP is a wonderful tool available for investors who wish to create wealth in the long-run. Investors are already aware of the numerous benefits that it offers to them,” AV Suresh of Karvy Stock Broking told Moneycontrol.com.

“It makes the best use of the power of compounding and creates huge wealth for investors. Apart from this, it also helps one to sail through different market cycles by investing at different market levels,” he said.

If you believe in the power of compounding, then equity markets offer you the best tool to harness such a strong force via mutual funds, which let you create wealth in the long-term.

Einstein once said that ‘Power of Compounding is 8th Wonder of the World. He who understands it, earns it … he who doesn’t … pays it.’ Compounding is the first step towards long-term wealth creation.

The idea is to remain patient and allows your wealth to grow. When you buy a mutual fund, compounding allows you to earn interest on your principal and then again when you reinvest the interest it helps you build a huge corpus over a period of time with the small amount of initial investment.

“You just planted a mango tree and you want fruit tomorrow. Oh no. You just can’t. Similar to your investments. A tree undergoes challenges like pest attack, drought etc. before it yields the first fruit. Similarly, business entities are succumbed to internal and external growth barriers,” Vijayananda Prabhu, Investment Analyst at Geojit Financial Services told Moneycontrol.com.

What type of funds should you consider?

To generate wealth over a period of time, selection of funds is very necessary. If you get stuck with a wrong fund then chances of wealth creation reduce significantly.

Equity funds need a holding period of at least 5 years to avoid negative returns. But the next question is how much to expect from them in the long term. After all, you don’t invest in equity to just preserve capital.

“You invest in building wealth. High return expectations, arising from very short-term abnormal rallies in markets, make investors miscalculate what equity funds can deliver. The result? They save less, hoping that high returns will make up for it,” Vidya Bala, Head, Mutual Fund Research, FundsIndia.com told Moneycontrol.com.

“Large-cap and diversified equity funds deliver superior returns over prolonged time frames. As seen about, there is a 43 per cent chance of this category delivering returns of over 15 per cent over any 7-year time frames in the past 10 years (rolled daily),” she said.

Bala further added that this is simply because, over longer periods, they contain down markets (that would have happened during the period) better than midcap funds. Mid-cap funds’ ability to sustain steady periods of high returns is low at 26 per cent.

Top five funds to consider for next 20 years:

How to pick up a fund is critical. Some analysts advise investors just to choose a fund manager and the rest will be all taken care of. The market always rewards risk and we know that risk and return always go hand in hand; hence, any short terms should not lead you to discontinue your SIPs.

“In mutual funds, it’s not the fund that performs but the fund manager. Just hand pick the top 5 fund managers and choose their consistent funds,” said Prabhu of Geojit Financial Services.

“A few things to look for is the ability to protect the downside during volatility, their information ratio (consistency in beating the benchmark) and market experience,” he said.

But, we all are aware of one fact that all past performance is not an indicator of future performance. Moreover, with ever changing markets, it becomes quite difficult to predict the best performers for the next 20 years.

However, Karvy lists out five funds which have the potential to deliver consistent returns. ICICI Pru Top 100 (G), Birla SL Frontline Equity (G), Canara Rob Emerging Equity (G), Franklin India Prima Plus (G), and ICICI Pru Value Discovery (G).

Source: https://goo.gl/tdwAhC

ATM :: Seven reasons why you should buy a home while you’re young

Buying a home early in life helps home buyers.
Kishor Pate CMD, Amit Enterprises | Retrived on 12 July 2016 | Moneycontrol.com

ATM

There are lots of arguments for and against buying a home early in life, but the rationale for doing so is, in fact, the strongest and most convincing.

1. In the first place, the longer the tenure of a home loan, the lower the EMIs are. EMIs are calculated on the basis of the loan amount and how long the borrower can logically repay the home loan. In India, the retirement age is 60, and banks will consider this as the age by which the borrower must under any case close the home loan if he or she has not done so already. The longer one defers the decision to avail of a home loan to buy a property, the bigger the EMIs become.

Also, it is easiest to get approved for a home loan when one is young. Lenders are eager to provide home loans to young people because they are at the beginning of their careers, and will doubtlessly grow in them over the ensuing years. Their financial viability – and therefore their future ability to service a home loan – is therefore at its highest point.

2. In fact, the eligibility for a home loan is even higher for young married couples taking out a joint home loan. This is by far the most desirable lending scenario for banks. They are assured that two instead of only one income stream will back the home loan proposal, and the fact that two instead of one borrower are involved decreases their risk. Taking a joint home loan also helps a couple to close down the financial commitment of a home loan much faster, allowing them to focus on other investments earlier in life.

3. Another advantage of purchasing a home early in life is that it becomes easier to pay off the outstanding amount on a home loan with accumulated savings later in life. This opens up the opportunity to upgrade to a bigger, better-located home is the future – which is what most Indians aspire to do at some point.

4. Today, many newly-married couples are deferring their plans to have children until they have had a chance to enjoy some unfettered years together. Such a decision also works very well for such couples from the point of view of home purchase. It means that they can make a big down payment on their home before children and their education become an additional financial responsibility. A bigger down payment reduces the EMI burden, meaning that they can close their home loans faster.

5. It is also important to note that the earlier one buys a home, the longer it has to appreciate in value. Given that the annual appreciation of a well-located residential property can be to the tune of 15-20%. This results in a huge incremental increase of the investment value of such an asset.

6. It also makes much more sense to invest one’s hard-earned money in an appreciating asset rather than pay monthly rentals for which there are no returns at all. Repayment of a home loan also brings with it the financial advantage of income tax breaks. These are an added benefit which the Indian Government has provided with the express purpose of encouraging young citizens to invest in self-owned homes and thereby safeguard their and their children’s future.

7. Finally, it makes much more sense to pay monthly EMIs on a home loan, into an investment-grade asset, rather than pay monthly rent which is nothing but an expense with absolutely no returns on investment.

The above reasons should present a convincing argument for making the important decision of buying a home early in life. The New Age ‘logic’ that it is better to live on rent simply does not hold water if one considers the multi-faceted advantages of investing in a self-owned home while one is young. It is true that it requires financial discipline to service a home loan, but this very desirable quality can never come too early.

Source : http://goo.gl/iGEZw9

NTH :: RBI allows pre-mature withdrawal in gold monetisation scheme

In an effort to make the Gold Monetisation Scheme more customer-friendly, the RBI today said depositors will be able to withdraw medium-term (5-7 year) and long-term government deposits (12-15 years) pre-maturely after the minimum lock-in period, though with a penalty.
By: PTI | Mumbai | January 21, 2016 11:07 PM | Financial Express

NTH

In an effort to make the Gold Monetisation Scheme more customer-friendly, the RBI today said depositors will be able to withdraw medium-term (5-7 year) and long-term government deposits (12-15 years) pre-maturely after the minimum lock-in period, though with a penalty.

The Reserve Bank today made a few amendments to its Master Direction on the Scheme.

The modifications, it said, have been made in consultation with the government to make the Scheme “more customer-friendly”.

The rate of interest on the deposits will be decided by government and notified by the RBI from time to time.

The current rate of interest as notified by the government on medium term deposit is 2.25 per cent per annum and on long term deposit is 2.50 per cent per annum.

“The depositors will be able to withdraw medium term and long term government deposits pre-maturely after the minimum lock-in period of three years in the case of medium term deposits and after five years in the case of long term deposits,” it said.

However, there will be penalty in the “form of lower rate of interest for premature withdrawals” depending upon the actual period for which the deposit has run.

Further in the case of large tenders of gold, the RBI said the metal can be deposited directly with refiners wherever they have the assaying capacity.

“This will reduce the time lag between the time the raw gold is deposited and it starts bearing interest,” RBI said.

RBI also clarified that government will pay the participating banks a total commission of 2.5 per cent (1.5 per cent handling charges and 1 per cent commission) in the first year.

The Scheme will be reviewed regularly based on feedback so as to address any implementation issue and to make it more customer friendly.

Last week, Economic Affairs Secretary Shaktikanta Das had said under the Gold Monetisation Scheme more than 500 kg of gold has already mobilised and the Scheme was picking up.

Under the Gold Monetisation Scheme (GMS), 2015, banks will collect gold for up to 15 years to auction them off or lend to jewellers from time to time.

In November last year, Prime Minister Narendra Modi had launched a scheme to channelise gold worth over Rs 52 lakh crore lying with households into the banking system and floated paper bonds to curb its imports that have made India the largest buyer of gold in the world.

India imports a staggering 1,000 tonnes of gold every year, draining out foreign exchange and putting pressure on the fiscal deficit. An estimated 20,000 tonnes of gold worth over Rs 52 lakh crore is lying with households and temples.

The RBI further said the principal and interest on Short Term Bank Deposit (STBD) would be denominated in gold.

In the case of Medium and Long Term Government Deposit (MLTGD), the principal will be denominated in gold.

“However, the interest on MLTGD shall be calculated in Indian Rupees with reference to the value of gold at the time of the deposit,” the RBI said in its amended circular.

Resident Indians (Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the Gold Monetisation Scheme.

Joint deposits of two or more eligible depositors are also allowed under the scheme and the deposit in such case would be credited to the joint deposit account opened in the name of such depositors.

The existing rules regarding joint operation of bank deposit accounts including nominations would apply to these gold deposits.

All deposits under the scheme would be made at the Collection and Purity Testing Centre (CPTC).

“Provided that at their discretion, banks may accept the deposit of gold at the designated branches, especially from the larger depositors.

“….banks may, at their discretion, also allow the depositors to deposit their gold directly with the refiners that have facilities to carry out final assaying and to issue the deposit receipts of the standard gold of 995 fineness to the depositor,” the RBI circular added.

The government will notify the list of BIS certified CPTC / refiners under the Scheme and would be communicated to the banks through Indian Banks’ Association (IBA).

Source: http://goo.gl/gNXEZy

NTH :: Here’s how your provident fund may earn higher interest rate this fiscal

Interest rates of provident fund might increase to 8.95% from 8.75% earlier
DNA WEB TEAM | Fri, 22 Jan 2016-09:47am , Mumbai , dna web desk

NTH

The interest rates of provident fund might increase to 8.95% from 8.75% earlier. The Employees Provident Fund Organisation’s (EPFO) finance panel has recommended the increase in interest rates on statutory savings of over 5 crore subscribers to 8.95% in the current fiscal, according to a leading news agency.

The central board of trustees have endorsed the proposal and is yet to get the finance ministry nod. If the proposal is approved then it will be the highest return since 2011 when the interest rates were 9.5% and the highest ever real interest rate, said the report.

The 8.95% interest rate will translate into returns of nearly 12% for the highest slab as withdrawals and interest earnings do not attract tax at the time of withdrawal.

The government and the Reserve Bank of India (RBI) are looking at reducing deposit rates in order for banks to cut lending rates and push investment. The move to increase the interest rates on EPF deposits may result in a diversion of bank discounts or other small saving schemes.

The finance ministry is expected to lower the interest rates on many small savings schemes by up to 50 basis points.

The EPFO’s, which is a basic investment for many employees, increase in interest rates might face some resistance from the finance ministry. However, it might go through as the middle class depends on it for savings.

Source: http://goo.gl/IIbZf7

ATM :: How to know if you need help with your debt

By Rishi Mehra | 20 Jan, 2016, 10.17AM IST | Economic Times

ATM

It is common to have debt in some form or the other and it is not bad to have them. However, there may come a time when runaway debt may cause problems and you may need professional help. A look at some scenarios that can indicate you need help to tackle your debt.

Caught in minimum payments – This is especially true for credit cards. When your credit card is generated there are two payment terms in that statement. One would be total amount due, while the other is the minimum amount, which is about 1 % of the principal amount outstanding. Minimum amount, being a small percentage of the total amount due, largely consists of interest and fees. This would mean if a person pays only the minimum amount outstanding on the card every month, it would take him decades to pay the entire amount. If you find yourself caught in the trap of minimum payments, it may be time to get professional help to get out of the situation.

Over reliance on credit cards – Being caught in the minimum payment trap may not be the only indicator that your finances may be off track. When debt increases, servicing it may lead to over reliance on your credit card. Having to use the credit card for daily expenses may be proof that your finances are not in shape. However, paying by credit card because you chose to and not because you have cash crunch is okay. Similarly, if you are making payments by credit cards to earn points, rewards or cash back, it makes perfect sense. However, when you start feeling your cash drying up and having to resort to credit cards to fund your monthly need, it may be time to talk to a financial advisor to get your finances in order.

Getting a loan to tackle debt – Unless it’s a credit card debt, or the new loan has substantially lower interest rates, taking a loan to settle another loan defeats the purpose. This can be very counterproductive, especially in cases when you increase the tenure of the loan to ensure you pay lower EMIs. The very idea of taking a loan should be to reduce your debt at the earliest and most frugal manner. By increasing the tenure you may be making things easier for yourself, but the interest outgo will be much higher. You also run the risk of being under debt for a longer time. If you have any debt, your first priority should be to pay them off at the earliest. If you find yourself in a situation where you think you may need a loan to settle another loan, it is best you consult an expert first to get an opinion.

Little or no savings – When your entire income goes on servicing your debt and catering to your daily expenses, it may be time to get help. When you start your career you may not be able to save immediately, but as you progress in life, you should start having some form of saving. What products appeal and suit you can differ, but it is imperative to save money, especially for periods after retirement. However, if your savings are negligible or you have no products that help you save money, you may be in a tricky situation. Get help on what products will be ideal for you and start saving diligently. Failure to do so may be painful when you grow old or during an emergency.

Difficulty in drawing or sticking to a budget – To build some sort of order and responsibility between what you earn, what you spend and what you need to set aside to cater to your debt, it is important to draw up a monthly budget. This helps you come to grips with the regular expenses every month and the special ones that may creep in. This also helps you realize when you are overspending and the need to put money aside as savings. When you have difficulty in drawing a monthly budget or sticking to it despite having one, you may need to get help to figure out ways to correct your situation.

Consistently overshoot payment deadlines – This may be an early and a potentially important indicator to know if you are having problem with your finances. If you miss payment deadlines on your bills because you do not have the requisite money and have to wait for your next payday, things may be tight for you. Servicing your existing debt may be taking its toll and you should get help to see what can be done to address your financial situation.

(The author is co-founder of deal4loans.com)

Source : http://goo.gl/vehEzi

ATM :: Three Crucial Tips to Manage Your Financial Goals

Harshala Chandorkar | Updated On: May 25, 2015 10:32 (IST) | NDTV Profit

ATM

Easy and hassle free availability of finance in the form of loans and credit cards is perhaps the biggest advantage that today’s generation has. This easy access to finance has made the potential of realising dreams a certainty, be it a dream to pursue higher education or to buy a dream home. But this opportunity must be used with utmost restraint and caution.

Take for instance the situation of Shreya, a 27-year old financially independent woman who works in an MNC. Like any other twenty first century youngster, she has her own share of aspirations and wanted to gift herself a swanky new car for her upcoming 28th birthday. However, when Shreya applied to a bank for an auto loan for fulfilling this aspiration, it was rejected. The reason for rejection was Shreya’s low CIBIL TransUnion Score due to a delinquent CIBIL Report. What Shreya did not consider was her past behaviour on the loans and credit cards she had taken. Shreya was already servicing bills on four credit cards and EMIs on consumer durable loan which she had taken to buy the latest phone. She had been missing payments on 2 of her credit cards for over 6 months and had also defaulted on her monthly instalments on the consumer durable loan on three instances. This reckless credit behaviour had impacted her CIBIL TransUnion Score and thereby hampered her dream of driving her own car on her birthday.

Shreya’s predicament is shared by a lot of youngsters today. Taking any kind of loan is a serious financial commitment and needs some amount of discipline. And although today banks may seem eager to lend, there are certain important things you need to consider to avoid any surprises and disappointments while applying for a loan which ultimately hamper your financial goals.

Here are a few tips for ensuring you have access to finance for fulfilling your future aspirations:

1. Maintain a healthy CIBIL TransUnion Score:
Your CIBIL TransUnion Score is one the most crucial parameters for being “finance ready”. Banks and credit institutions check your CIBIL Report and CIBIL TransUnion Score along with your income for deciding on your loan or credit card application. Therefore you must ensure that you maintain a healthy credit history and thereby a good CIBIL TransUnion Score.

What hampers your CIBIL Report and CIBIL TransUnion Score is missing an EMI or credit card bill payments and delay in payments. For building and maintaining a good CIBIL TransUnion Score you must maintain a healthy credit history through:

  • Keeping a track of all your loan EMIs and credit card expenditures and planning finances in advance each month for servicing the loan/s and paying credit card bills
  • Ensuring you make payments of your credit card bills and loan EMIs by or before the due date month -on-month.
  • Reviewing your credit report regularly to keep a tab on your credit history and CIBIL TransUnion Score.

2. Chalk an aspirational roadmap
While servicing your loans and managing household expenses and other financial commitments, one tends to forget planning for future aspirations. Chalking out a roadmap of future aspirations and the cost estimate required for fulfilling each of these aspirations is the first step towards attaining them. Once you have chalked out this roadmap you need to carefully plan your expenses and loan payments and ensure that you save money for aspirational milestones according to the roadmap. Consistently saving money in growth plans, fixed deposits and other safe saving instruments will ensure you will have capital required to attain your aspirational milestone at the desired stage in life.

3. Save for the rainy day
While diligently saving for your future aspirations, do not forget to keep aside funds for contingencies. Life is full of uncertainties and unfortunate situations or unforeseen financial losses like illnesses, natural calamities or job losses can catch you off-guard and hamper fulfilment of your aspirations. Therefore it is critical to ensure you save some money or buy insurance coverage for facing such situations confidently.

Wise planning and financial discipline will help you achieve your financial aspirations and goals with ease.

(Harshala Chandorkar is Senior Vice President-Consumer Services and Communications at CIBIL)

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

Source: http://goo.gl/wURCgn

ATM :: How does a falling rupee affect you?

Priya Nair | May 18, 2015 Last Updated at 00:10 IST | Business Standard
Be prepared to pay more if travelling abroad or if your child is studying there. Other impacts can be varied

ATM

Your family and you are flying to the US next week on holiday. Flight tickets and hotel bookings were done in advance. So, why should the rupee depreciation bother you? It should because all other expenses, such as sightseeing, local transfers and food will increase as a result of the fall in the rupee.

Similarly, if your child is studying in a foreign university, don’t be surprised if tuition fees increase substantially over last year.

There are also some advantages of a falling rupee. Those working abroad will gain, as the same amount they remit will translate into more rupees.

“It looks like the rupee will be in the 64-65 range (to the dollar). As the rupee tends to be overvalued and exports are not growing much, the Reserve Bank might be willing to let the rupee depreciate,” says Madan Sabnavis, chief economist, CARE Ratings.

The immediate impact will be on foreign travel and students studying abroad. The indirect impact will be on other expenses, too, as oil prices will go up and this could push up prices of other commodities. However, this time, as the price of crude oil in the international market is low, there might not be much of an impact on domestic oil prices, says Sabnavis.

Below is a look at some ways a weaker rupee will impact your life and what you can do about it.

Foreign travel
Europe tours are popular with Indians in the summer months of April to June. Most people book in October for departures starting in April. Those who have booked and paid earlier, including the forex component, will not feel much of an impact. However, travellers who don’t pay the forex component in advance might feel the pinch. Usually, travellers pay the deposit and for flight tickets in rupees, in advance. The forex component, which covers accommodation, meals, sight-seeing and excursions, can be paid later. “For trips in April, packages are booked as early as October. We pushed many of our customers to pay in advance. Those who did not pay then might feel the pinch now,” says Daniel D’Souza, head of sales, Tour Operating, Kuoni India.

One way to avoid last-minute heartburn is to pay for your entire package in advance and not only the rupee component. If booking last-minute, choosing a short-haul holiday to a destination closer to home rather than a long-haul holiday is also a way to save some costs.

Tips to save

  • Reduce the number of days from 10 to, say, eight
  • Reduce the number of excursions
  • Switching to a lower category hotel or staying in a bed and breakfast or home stay
  • Cut on shopping rather than sight-seeing, since it is the experience that matters
  • Opting for public transport such as trains, subway or buses, rather than renting a car
  • While sightseeing, choose days when tourists are allowed to go for free or given discounts. Most monuments abroad have such days
  • While shopping, buying from flea markets can work out cheaper than from stores
  • Take a decent amount of cash with you, as you might not get good rates while travelling
  • Pre-paid travel cards that allow you to load multiple currencies are a good option. In these cards, the value of the rupee is of the date the money is loaded to the card

Foreign education
Students studying abroad also suffer when the rupee falls. The US, Britain, Canada, Singapore and Australia are popular countries for Indian students. The university will not offer any leeway in tuition fees. Students will have to pay the entire amount. In most cases, you will have to pay before a term starts.

Given the high tuition fees in foreign universities and the cost of living, most students take some loan and pay for the rest by scholarships or taking a part-time job. “When the rupee falls, it becomes difficult for the entire family, not only the student. And, not many individuals know how to hedge themselves against currency fluctuations by using derivative products. What you can do is try and pay the entire fee upfront when the exchange rate is low. Most universities give a discount of one or two per cent if you do so,” says Naveen Chopra, of The Chopras, a foreign educational consultancy.

Neeraj Saxena, chief executive, Avanse, a non-banking financial company that gives education loans, says there is an option to enhance the loan amount during the course. “We don’t usually disburse the full loan amount at one go. We do as per the semester. So, if the fees increase in the third semester, we can increase the loan amount,” he advises.

Saxena suggest students going abroad should look for scholarships or part-time jobs like teaching assistantships. “We find of the Rs 30-35 lakh required for a foreign university course, students often are able to earn Rs 8-10 lakh through part-time jobs, which pay by the hour,” he says.

Tips to save:

  • Using discount coupons given by universities and accepted at all major stores
  • Using cards like the ISIC (a specialised card for students) for travelling, eating out, even shopping at some departmental stores
  • Going for free concerts, to movie halls which offer student discounts
  • Going to budget pubs, during happy hours, for leisure
  • Use special cards that offer discounts to students for eating out and shopping

Medical costs
The rupee’s weakness will push up medical costs, too. About 30-40 per cent of a hospital’s cost is on account of medical equipment and of these, 80 per cent is imported, says Vivek Desai, managing director, HOSMAC, a health care management consultancy. “Many common procedures in cardiology and cancer care use imported equipment. Even orthopaedic implants and consumables used in laboratories are imported. Any increase in their costs will be passed on to patients and there is nothing the latter can do about it. That is why medical insurance is a must. That, too, comes with a ceiling,” he says.

Other costs like air-conditioning and flooring in hospitals, also imported, will also see an increase and hospitals are likely to pass these on to patients by way of higher charges.

Patients going abroad for treatment will also see an increase in cost due to the rupee’s fall.

Tips to save:

  • Health insurance is one way you can deal with rising medical costs. Buy one early in life
  • Even if covered under your employer’s group medical insurance, take a separate family floater
  • Buy a top-up medical insurance to increase your sum assured without too much increase in premium

A weak rupee will benefit
Remittances
Non-resident Indians (NRIs) sending money home will benefit from the rupee’s weakness, as they will get more returns for what they send. Typically, NRIs with higher disposable incomes send more money to India when the rupee falls, says Sudesh Giriyan, chief operating officer, Xpress Money. “We will see an increase in remittances when the rupee crosses 64 to a dollar. In the case of cash remittances, we don’t see much increase because these are smaller ticket-size. But in direct remittances, which are bigger ticket-size, currency value has a bigger impact,”

Many NRIs also take loans from banks abroad, since the interest rates are lower, and remit money to India in order to invest, he adds.

There is usually an increase of seven to 10 per cent in remittances on account of rupee weakness, says K A Babu, head-retail and NRI banking, Federal Bank. Remittances from the Gulf countries tend to increase in such times than those from elsewhere.

With regard to investments, those from the lower income group prefer bank fixed deposits – NRE rupee deposits or FCNR deposits which are in foreign currency. The NRE deposits offer the same rates as domestic FDs and can be liquidated easily. The FCNR deposits will provide protection from exchange rate volatility, though the rates are lower.

“Ideally, investors should have a mix of both kinds of deposits. That way, they can earn high interest rates and also get a hedge from currency fluctuation,” Babu says.

For NRIs in the high income segment, banks and wealth management firms offer portfolio management services, through which they can invest in stocks, PMS schemes, mutual funds, fixed income products, real estate, etc. The preference is usually for land or residential property. Some NRIs might also look to expand their business in India and buy commercial property.

International funds
International equity funds that invest abroad will benefit from the fall in the rupee. Investors of such funds would have seen their portfolios rise in the past few months. According to data from Value Research, over the past three-month period, returns from international funds have been the highest at 6.19 per cent, while equity multi-cap funds have seen their returns fall 3.19 per cent.

But these gains are marginal and should not be the only reason for investing in international equity funds. For instance, over a one-year period, multi-cap funds have given returns of 34.84 per cent, while in the case of international funds, it is 7.78 per cent.

The US market is currently doing well and will definitely give better returns in the near term, as it will not be as volatile as the Indian equity market. But over a longer term, that is a five-year period, Indian equities will definitely give better returns. So, one can look at international funds provided they have sufficient exposure to Indian equities, say experts.

Anand Radhakrishnan, chief investment officer at Franklin Equity, Franklin Templeton Investments – India, also says investors should not look to time the markets, but invest on a regular basis and in a systematic manner. “Typically, the exposure would depend on the individual’s risk profile and investment objective, but as a thumb rule, one should have at least 20 per cent of their investment portfolio allocated to international assets. Equity investments warrant a longer investment horizon and we recommend investors come in with a three-to-five year horizon or more,” he says.

Source : http://goo.gl/SUyRgr