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  • MF News Will NRIs move their PPF money to mutual funds?

    Will NRIs move their PPF money to mutual funds?

    Now, NRIs will just earn post office savings rate of around 4%.on their PPF account.
    Padmaja Choudhury Nov 4, 2017

     

    Recently, the government has issued a notification in which it has clarified that NRIs will just earn post office savings rate i.e. currently around 4% on their PPF and NSC investments.

    Only Indian residents can invest in PPF. However, so far, once a person became an NRI after opening a PPF account, he continued to get benefits like individual investors on his PPF account. The government has clarified that such account holders will no longer get PPF returns and has instructed banks to close their accounts.

    We spoke to a few financial advisors to understand if this move will bring inflows to the mutual funds. Let us see what they have to say.

    Gajendra Kothari of Etica Wealth Management believes that the move will attract inflows from NRIs in mutual funds and fixed deposits. “We may see at least 20% of PPF money moving into bank FDs and debt funds. Since debt funds provide better risk adjusted returns and tax benefits than bank FDs, a major portion of this money will come to mutual funds,” says Kothari.

    Seconding Gajendra, Vishal Dhawan of Plan Ahead says, “NRIs may prefer debt funds such as FMPs and capital protection plans over bank FDs for better returns and structure,” says Vishal.      

    Vishal further says that the investment choice of the NRIs will largely depend on their local tax rules. “US-based NRI may prefer FDs to avoid double taxation whereas middle east NRIs will be better off investing in debt funds as there is no capital gain tax in the middle east region,” says Vishal. 

    A Cafemutual book titled ‘Smart ideas & advice to help IFAs grow business’ advises advisors to conduct seminars, attend events abroad and build social media presence to reach out to NRIs.  

     

     

     

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    1 Comment
    shri nath sahai · 6 years ago `
    INDIAN ECONOMY CONSUMPTION DRIVEN, FOLLOWED BY GST,DEMONETISATION,ADHAR LINKING,TRANSPARENCY IN MUTUAL FUND, WILL ECOURAGE PEOPLE TO INVEST MORE IN FINANCIAL ASSET MOST PREFFERED WILL BE MUTUAL FUND, BECAUSE OF TAXATION ADVANTAGE.HAPPY INVESTING.
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