A thought for NRIs – Where can they invest?

The NRIs, more often than not, have a problem. This problem does figure in conversations between any two NRIs on most occasions. This is a problem which does not appear to have a clear-cut answer. This is a problem which makes resident Indians turn green with envy! This is perhaps a problem of plenty and the problem is “which is the best asset class for investment in Indian Rupees”.

Before trying to attempt an answer, we need to remember that NRIs get some sort of special treatment on their Indian Income from Indian Income Tax regulations. For example, interest income from repatriable NRE Fixed Deposits with banks in India are totally exempted from income tax.

Four of the popular asset classes amongst NRIs are Stocks, Gold, Bank Deposits and Real Estate. While real estate as an asset class has many advantages such as scope for appreciation and income from rent and leasing, I am not very enthusiastic about real estate as an asset class for investment (for self-occupation, it is a must!). My reservations on real estate investments are mainly on the following aspects :

  • Real Estate investments involve very large initial outflow of funds and many a times one has to avail credit facilities for purchasing real-estate.
  • The income stream from real-estate i.e., rent is often very less when compared to the capital outlay,
  • While one can be happy about appreciation, the illiquidity in the market and legal and other hassles such as black money transactions makes it quite challenging to divest real-estate assets.

Therefore, my analysis is confined to remaining three popular asset classes i.e., Stocks, Gold and NRE Fixed Deposits. The analysis is based on income accrued on Rs 100 invested in each of these asset classes on a specified day and for a specified period. This income is pre-tax income.

Let us first have a look at what one was able to  earn on Rs 100 invested on 1st January 2013 and continued to be invested till 30th June 2013 (i.e., for a period of 6 months)


Similarly let us have a look at what one was able to  earn on Rs 100 invested on various dates spanning up to 3 years and continued to be invested till 30th June 2013 :

 Now let us have a look at the return on investment over different periods, as mentioned above:


 What is this analysis telling us?

  1. Investment in gold over last six months period has been a disaster. Investors have earned a negative annualized yield of 42.12% over the last 6 months. Over the last three years, investors have earned annualized yield of 8.44%
  2. Stocks have been pretty inconsistent with returns. Over the periods annualized, returns have ranged from (-) 2.16% to 13.91%. Over a longer period of 3 years, stocks gave an annualized yield of only 3.02%
  3. NRE Fixed Deposits have performed really good. The yield has been very steady and conforming to the theory of time value of money – normal yields. Higher the term, the yields have been higher in respect of NRE Fixed Deposits. Besides, interest on NRE Fixed Deposits are tax free!

Hope that the above inputs will help my NRI friends in deciding their asset class for investment. However remember not put all your eggs in one basket!

Family Values

Family Values is a phrase which we come across pretty often. This is such a phrase about which most of us feel that we have a good idea of its meaning but not really sure as to what it really means (and perhaps a bit confused as to what precisely these values are!) This looks crazy but is very much a reality. It is also true that this phrase may mean different things to different people. My idea of family values may not be the same as what you understand by family values. But it is highly possible that there will be some common elements in what I understand as family values and what you mean by family values!

Why family values are important? In my view, having strong and well defined family values lays the foundation for a strong, and well knit family.  Strong and consistent family values are important in building trust and confidence in each family member. Family values caters  to one of the most important emotional needs i.e., need to belong. When practiced, this sense of belonging provides a caring place to fall back when life doesn’t go according to plan.

Before we go further in this discussion of family values, it is important to understand what we mean by ‘family’. In earlier times, it was very easy to define ‘family’ as a group of people who lived under one roof! Now joint families are an endangered species. Even nuclear families no longer live under a single roof! A Family can therefore be said to be a group of people who are mostly first degree relatives and share a bonding. Well I hope this definition is sufficiently wide and vague and can suit wide variety of people.

With this introduction, it is now time to share with you my idea of family values. In my view, family values are a set of virtues which are commonly known as values, morals and ethics. Incidentally, values, morals and ethics are inextricably tied together. Values are guiding principles which are regarded as desirable. Morals are the intrinsic beliefs developed from value systems telling us how we ‘should’ behave in any given situation. It is all about doing the right thing even when no one is watching! Ethics, on the other hand, are how actually we behave in the face of difficult situations that test our moral fiber.

There are many highly desirable virtues which can find place in the set of virtues which constitutes one’s family values. I am listing below seven essential components of family values:

1. Fostering a sense of belonging

It is important that each member of the family feel that they are loved, that they belong and that they matter. While creating a strong family unit is great, each person should be allowed the space and freedom to explore the activities they think they may enjoy. People are more courageous and more willing to take chances if they know they have a safe place to come back to when things don’t quite go as per plan. Coming together for special occasions (such as weddings, ceremonies after death etc.), coming together on holidays and just spending time together as a family is what helps build that sense of belonging.

2. Honesty

This is the foundation of any lasting relationships (i.e., such as mother-daughter, husband-wife, sister-brother etc.).  Without honesty, a deeper connection will not form and certainly won’t last. Encourage honesty by practicing understanding and particularly remember to respect when someone tells you of their wrong doings. They are telling you because they feel that you are worthy of such a confession. If you get angry when someone tells what has happened, he will tend to hide the things from you next time – simply to avoid the disrespect.

3. Responsibility.

We’d all like to be considered responsible people. Some of us are and some of us are decidedly less so. Responsibility is something that we learn. As a child you may have been shown how to put your toys away after playing, how to tidy your room etc. This sense of responsibility extends well into adulthood. An adult who has an intrinsic sense of responsibility doesn’t require a lot of prodding to show up to work on time, return phone calls or meet deadlines. Setting out individual responsibilities for family members works to instill this quality in everyone.

4. Flexibility

I’m all for order, schedules and structure in my family to help maintain some level of sanity. But too much structure and the unwillingness to give a little can result in a lot of unhappiness and resentment. The more flexibility you have in decision making, the happier your family will be for it. Imagine one member of the family always thinking they are right and enforcing their way of doing things. This certainly wouldn’t lead to much happiness within the family unit.

5. Communication.

Communication is as much an art as it is a science. Failure to communicate leads to unhappiness and misunderstandings. Small issues grow into larger ones and when they eventually boil to the surface, it’s unlikely they will be resolved calmly. Communication is  lot more than simply speaking your mind. In addition to spoken words, communication also extends to tone, volume, expression, eye contact, body language and effective listening.

6. Respect.

This is a bit more difficult to define. In a family, respecting each other is to take feelings, thoughts, needs, and preferences in to account when making decisions. It also means acknowledging and valuing everyone’s thoughts, feelings and contributions to the family as a whole. Respect is indeed earned and there is a very fine line between it and fear. The only way to earn and keep someone’s respect is to first show them respect yourself. Respect as an important family value will extend out of the home and into school, work or other social settings.

7. Traditions. 

I think traditions makes a family unique! Traditions draw people together and create a sense of belonging for everyone. Traditions don’t need to be expensive, elaborate or a lot of work. It can be something as simple as a Saturday morning chatting (even over internet, if family is scattered) or an annual get-together. If you don’t currently have traditions in your family, create them! This might be the reason for some families to start a tradition of meeting for a day or two at a specified place at least once a year.

Remember, these are the family values which I think are important. In addition to these, for a meaningful life and also for a successful one, a person needs to have values, which I call as personal or individual virtues. Important personal virtues are integrity, commitment, compassion, modesty and courage.

Let me conclude this not so interesting (in fact a pretty boring!) write-up with a quote, source of which is unknown:  “A Meaningful Life is not being rich, being popular, being highly educated or being perfect. It is about being real, being humble, being strong and being able to share ourselves and touch the lives of others. It is only then that we could have a full, happy and contented life”

(Note: I acknowledge having obtained some inputs for this write-up from the published blogs / articles sourced from internet)