Four common financial planning questions Indian expats ask
Written by Carl Turner on November 01, 2016.
Asia’s expat profile is changing according to an article published in The Wall Street Times last year. While there are still plenty of Western expats on short-term, multinational contracts, there are increasing numbers of expats moving within Asia – particularly Chinese and Indians. Indian expats moving within the continent often have similar questions and concerns – I will address four of the main ones below.
What is the best way to send money home to my family in India?
It is very common for my Indian clients to send regular payments to family members back in India and they want to know the most cost-effective way to do this. Some Asian countries such as China have strict laws on how much money can be sent out of the country and this can complicate the issue, however this can easily be solved by using an offshore bank account. This is a perfectly legal tool enabling you to easily send money around the world securely. With the possibility of holding accounts in more than one currency, you can also protect against currency inflation.
How can my investments match interest rates in India?
Currently FD interest rates in India are between 7 and 8%, which sounds great compared to the far lower rates savers are facing in both Europe and the US. However this is counterbalanced by a high inflation rate (forecast at 5.4% for October 2016) which erodes much of the interest earnings bringing the real term gain down to under 3%, even lower if inflation rises. That is why investing offshore may be a better option, even if rates don’t seem as good on paper.
##What is the best way to save for my child’s university education?##
Expat Indians, like any other expats, often want the best education they can afford for their children and the ability to choose from the finest universities in the world. While that is usually well worth the sacrifice, it doesn’t come cheap. Forward planning is key to spreading the cost of your child’s education over a number of years and benefitting from compound interest. A professional financial planner can help you find the most tax efficient way of saving for your child’s tertiary education, often via professionally managed global funds.
With India’s economy booming, why invest elsewhere?
President Modi promised 'achhe din' (good times) for all and seems to be delivering on his economic reforms with India’s GDP expected to outpace even China’s in the next few decades. Investing in India may be a good idea, but investing solely in India is not. As a developing country, India is prone to volatility and to avoid overexposure to risk a balanced portfolio is a must. That means diversified investments across not only different asset classes but in different economic sectors, geographical areas and world currencies.
In today’s global economy wherever you choose to live you have a wide range of international investments to choose from. With the right advice you can take advantage of this to secure your family’s financial future and put in place a watertight financial plan with investments that work for you. Feel free to contact me for a no-obligation chat about investing as an Indian expat in Asia – I will be happy to answer all your questions.