Ideal Investment Options for Indian Expats in UAE: Fixed Deposits & Bonds

Indian expatriates in the UAE are always in the hunt for the financial schemes that will help them grow their savings exponentially in a short period of time. Amongst the Indian expatriates, the most popular option is to send a part of their earnings back to their homes. These repatriated funds are not only used for daily expenses but are also placed in several investment plans that are available in India.

Some spend these funds to buy a new house while others consider investing in bonds or mutual funds. Bonds and USD/INR fixed deposits in India also commonly called Foreign Currency non-repatriable (FCNR), turn out to be the most demanding of all. With a decreasing slide of INR against USD, more NRIs are looking forward to sending their earnings to their country. Many Indians residing in UAE are considering taking a personal loan in the UAE for paying their debts in India. This is mainly due to the fact that the rate of interest on personal loans in UAE is lesser than the interest that is paid off on loans in India particularly mortgages. With the reducing value of INR in the global market, it is very beneficial for the NRI’s in the gulf to get involved in currency exchange. 

Fixed Deposits and Bonds: Explained

Fixed deposit plans, particularly in USD, are quite popular among people looking for plans with low risk. These plans provide an approximate annual return of 3.5%, which considerably higher when compared to any standard savings bank account. Business owners, traders and those who have a surplus cash flow usually tend to park their surplus cash in such investments. NRE accounts in India are not subjected to taxation and therefore NRI’s don’t have to pay taxes for the overall interest and the principal amount deposited in the FD. Indian ex-pats need to open NRE or Nonresident external account in order to invest in fixed deposits.

Bonds are popular because they offer high rates of returns when compared to conventional savings bank accounts which usually offer quite a low-interest rate. Bonds are generally issued by corporations and governments to raise money. So basically, when you buy a bond you are providing the issuer a sort of loan where you are the lender. After a certain period of time, the initial value of the bond is paid back and the lender receives an interest that is usually pre-determined. Although bonds are an excellent option to consider while investing your earnings it is also important to be aware of the risks that are associated with it. With bonds, one should always do proper research and emphasize on choosing the right bond. 

Banks and financial institutions in India are governed and controlled by the government. Moreover, Indian banks are insured internally so investing your money in FD’s is a good option. PSU bonds that are sold privately are considered less risky whereas other private type bonds have a variety of risks associated with it that depends upon the credit Score of the issuing company. 

To Sum it up

It’s always better to invest your earnings in multiple directions and not keeping it intact in one place. For expatriates living in the UAE, there are several options to invest their money that will provide good returns in the future. Before investing your valuable earnings it’s always good to research and ensure that the plans that you are looking forward to investing in fulfill your needs and are low on risk. Risk mitigation should also be a crucial factor while investing your money for returns.