Fixed Deposits can be highly beneficial for non-resident Indians. Here are several reasons why FDs are considered a good investment option for NRIs:

Highly secure

FDs are the safest investment option. These schemes are backed by banks. For NRIs, this ensures the safety of their capital while earning interest rates, with minimal risk. NRIs can safely invest in FDs from abroad based on their preference.

Higher returns

FDs generally offer higher interest rates than keeping the money in Savings Account. It makes them an attractive option for NRIs who want a stable income. Indian banks often offer preferential FD interest rates for NRIs.

Flexible tenure

NRIs can choose the tenure based on their financial goals, ranging from a few months to several years. NRIs can open a short-term or long-term FD. There are no restrictions on choosing the preferred tenure. They ensure that they receive the funds at the right time.

Easy to manage

NRIs can manage their FDs from anywhere in the world using the bank’s online platforms, making it easy to monitor, renew, or modify FDs without visiting India. NRIs can also appoint nominees for their FDs, which ensures that their funds are transferred seamlessly in case of an unfortunate event.

Build wealth

FDs are a safe way to preserve wealth over time, especially for NRIs whose immediate plans may not be to return to India but still wish to maintain a connection with the country through their savings.

Ideal for conservative investors

NRIs who prefer low-risk investments can benefit from FDs as they offer a predictable and stable return. It is suitable for conservative NRI investors seeking to avoid market fluctuations and have a predictable return strategy.

Simple vs. compound interest

NRIs can opt for either simple or compound interest on their FDs. This flexibility allows them to choose the method that best suits their financial goals. For those who wish to use their FD interest as an additional source of regular income, banks offer options like quarterly or monthly interest payouts. FDs can become a reliable source of passive income.

Tax benefits

NRIs can avail the benefits of three Tax-Saving FDs in India. NRIs can open an NRE, FCNR, or NRO FD based on preference. The interest earned on NRE and FCNR FDs is exempt from income tax. On the other hand, the interest earned on NRO FDs is subject to tax in India. However, NRIs can claim tax relief under the Double Taxation Avoidance Agreement if their country of residence has a tax treaty with India.

Conclusion

FDs are a highly beneficial option for NRIs, offering a blend of safety, tax benefits, higher returns, and easy management. Whether you are seeking tax-free returns, protection from currency fluctuations, or just a secure way to grow your savings, FDs can be an ideal investment choice. FDs are the most popular investment method for NRIs.

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