My 27-year-old daughter is an NRI and wants to invest in mutual funds for a time horizon of seven years with the aim to get higher returns. Please advise suitable funds and the formalities for them to invest in mutual funds.
- Anil Sukumaran
Given the time horizon, she can invest in aggressive hybrid funds. In terms of the formalities for NRI, one is that you can invest only through an NRE or NRO account because fund companies do not accept investments made in foreign currency. To be able to invest, she would need to complete some on-boarding and KYC formalities. She will need to furnish documents like her PAN card, passport, an address proof for her foreign address and so on.
Also if she is a US or a Canadian citizen, then she will have to comply with some additional requirements under the FATCA rules and would need to submit some additional forms. In fact, because of these additional compliance requirements, some fund houses do not accept investments from US or Canadian citizens.
Also bear in mind that for NRI investors, there are TDS laws which are applicable to capital gains. So while the overall applicability of capital gains for an NRI is the same as an Indian resident, but in the case of NRI, the fund house is liable to deduct from the capital gains going to them at the time of redemption.