Benefits of owning a recurring deposit from an early age

Recurring Deposit, in present days, is one of the most preferred investment schemes available in India. Investors looking for a more promising investment scheme with good returns choose recurring deposit because it is a very convenient financial product. Before discussing the benefits of owning a recurring deposit from an early age, it is necessary to get a hold upon what recurring deposit actually means.

A Recurring Deposit or RD as it is generally referred to is a unique term deposit offered by banks. It is an investment scheme which allows customers with the ability to make regular deposits and earn decent returns on investments. This basically consisting of regular deposits and an interest component, this investment scheme provides flexibility and ease of use to individuals. The account holders can choose to invest a particular amount each month, ensuring that they have sufficient income for an emergency and ultimately facilitates earning decent interest on the amount. Given the fact that fixed deposits are rigid making it unideal for short-term investments, a recurring deposit is an ideal investment or savings option.

Most of the banks in India offer a recurring deposit account, with the term typically ranging between 6 months and 10 years and provide the investors with an opportunity to choose a term as per their needs. Competition among different banks to attract new customers has ensured that interest rates are competitive, and thus helps an investor earn a good amount on maturity of the account. Once determined, the interest rate does not alter during the given tenure, with the Reserve Bank of India ensuring that strict guidelines are followed. On maturity, the individual will be paid a huge amount which includes the regular, periodic investments and the interest earned on them.

The benefits of owning a recurring deposit from an early age are as follows:-

• Useful for Planning Short Term Goals- Investing in a recurring deposit is completely free of any risks and guarantees good returns in comparison to mutual funds and stocks. Because of this nature of this termed deposit, investors contemplating on short-term goals in a time span of 1 to 3 years choose to involve in a recurring deposit. It helps to handle situations where huge expenses are involved.

• Recurring Deposit Interest Rates- Recurring Deposit interest rates depend on the tenure and deposit amount. Interest rates for RD vary from 7.25% to 9% depending on the bank and the plan chosen by the customer.

Hence opening a recurring deposit account at an early age provides more returns due to the longer tenure of investment. The high and guaranteed returns attract more customers nowadays to open such accounts. In addition to this, facilities of online recurring deposit schemes have made things much easier.

Factors to keep in mind before making an NRI investment.

Just because one is an NRI or a Non-Resident Indian, it does not mean that they cannot invest in Indian stocks. One can invest under the Portfolio Investment Scheme or PIS, by opening and NRE or NRO account in any of the RBI authorised Indian Banks.

But before making an NRI investment there are few factors that you should keep in mind. They are-

• First and foremost concern while making an NRI investment is to know if India is actually a good option to invest in or not. Compared to nations like Brazil, China and Russia, India was underdeveloped and its economic condition was not that great, but over the years there has been a steady rise in the economy which has made the country a suitable investment destination.

• Secondly, as an NRI you should look into the different options of investment. You may either invest in Direct Equity or Mutual Funds or Real Estate.
o Direct equity or Direct Investment means that one can directly buy shares in a company or invest in shares through a broker or sub broker.
o Indirect investment or Mutual Funds means that one can buy mutual fund.
o Real estate investment trusts or REITs are also considered as indirect investment. It is one of the most popular form of investment for NRIs.

• Thirdly, another important factor to be considered before making an NRI investment is tax.
Tax is usually made on Dividends and on Capital Gains on Mutual Funds.
o Dividend refers to the distribution of the profit earned by a company to their shareholders.
o There are two types of Capital Gains- Long term and Short Term:
When an NRI investment is made in Mutual Funds and an asset is kept or held by the investor for a year or more than it is a Long Term Capital Gain. If it is sold within a year itself, it is a considered a Short Term Capital Gain and the tax on it is 15%. Long Term Capital Assets are exempted from tax.

• Fourthly, an NRI should also consider the type of bank accounts available. You can either consider a NRE account or NRO account based on your preferences. These preferences takes into consideration  three main factors:
o The currency one wishes to deposit- In case of the NRO account, foreign funds cannot be transferred, unlike in the case of an NRE account.
o Fund Repatriation is another factor that determines the type of account that one should opt for. In case of an NRE account, principal as well interest can be freely repatriable, while in the case of an NRO account, the interest is taxed in India @30%.
o Another factor to keep in mind is the Funds that one wishes to invest in a bank are acquired from Indian sources and if they can be repatriated from the country or not.

Keeping mind these points will help an NRI make a wise and profitable investment.

What are the different NRI services in India that can benefit you?

NRI or Non Resident Indian, refers to those Indian citizens who have migrated abroad and are working there or are living there or those who are of Indian Origin but were born outside and have a different citizenship. In simple words it refers to all those Indian citizens or Indians who do not reside within the country.

But NRI’s are eligible to avail several banking services in India. Some of these services provided by banks are available on their respective websites for individuals to browse through. There are many different NRI services in India:

• One of the major benefits provided by banks is that they have numerous branches and ATMs all over the world and also maintain a global corresponding network.
• The banks also make provision of different types of accounts that an NRI can open. They are savings accounts, current accounts, accounts for NRIs, Offshore accounts and deposits as well as over draft against deposits. The individual may also select from a variety of options such as NRE or NRO or FCNR(B) or RFC accounts, keeping in mind the type of account (savings or fixed or both) they wish to have and the term of investment of their choice.
• Banks also provide premium banking services such as Classic banking, Preferred Banking and Imperia Banking to their NRI clients.
• NRIs can also apply for Home Loans and Loan against Securities through Indian banks.
• Besides enjoying the service of loans they can also look forward to investing in various form of Fixed Deposits, Mutual Funds, Equities and Derivatives, Private Banking, Life Insurance, Research Reports of Investments or Portfolio Investment Schemes.
• Banks also provide Life Insurance services for NRIs.
• NRIs can make payments via Billpay, Direct pay and Instapay Netsafe. They can also make Online Donations as well as make the most of online banking and banking through the use of phone apps.
• NRIs are also able to send money to India from any part of the world that they are residing or working in.
• Another major benefit is that different types of customer services are provided to NRIs. They can either dial toll free numbers to enquire about their queries. They can also find an Overseas P.O. Box or access points or file a complaint form or write queries on bank websites or also refer to bank service channel options in case of any questions.

All the services that are provided also include tax free interest income in India along with some other benefits as well. Thus NRIs can make the most of these services which make banking easier and faster.

How to send money to India: What are the options you can consider?

There was a time when people would post money to each other within the country. Now times have changed. People not only travel outside their village and towns to different cities but also cross borders and fly to distant countries. Those who work abroad should not worry about how to send money to India from across the seas, across the borders.

One can easily choose to transfer money via online or offline methods, and rest assured that the money will be received by their family living in India-

When considering how to send money to India some online options are:

• E-transfer– This form of disbursement is extremely convenient. In case of E-transfer money is directly sent and received from one bank account to another.
• Power transfers- It is a web-based wire transfer of money. It gets rid of all the errors that is associated with the normal wire transfer.
• Online foreign exchange service- This allows an individual to be able to remit money in different currencies.
• Paypal- Is a more recent transfer option that has come up. Paypal is another great and viable option which is extremely user friendly. Through Paypal, an individual can transfer money easily and quickly via his mobile.

Online wire options are better if an individual is in a hurry to remit money. One can also opt for National Electronic Funds Transfer (NEFT) system or EFT system and money can be received in India by a week. Although it takes more time, it comes at a lower cost.

When considering how to send money to India some offline options are:

• Cheques- Through this method of transfer, an individual will have to first order a foreign currency draft via which funds can be transferred to India.
• Bank drafts- Using this option is also very pragmatic as remote employees who work from India, can quickly cash the cheques.
• Hubstaff- It is another service that allows payment to outsourced employees in India.
• Wire transfer- This form of transfer is the oldest traditional method of money transfer, where one has to go to the bank or an agency in order to send money.
• Money orders- When it comes to transferring a small amount of money, a money order is the most feasible choice. Moreover money orders are less expensive compared to bank drafts.

While money transfer to India was difficult in the olden day, today it is as easy as making and online purchase. A number of different reliable and fast transfer modes have been developed for the convenience of Indians living over-seas.

How to track Forex exchange rate?

Foreign exchange rate is also known as Forex exchange rate. When the currency exchange rate is floating in nature, in that case it may be pegged with another currency, usually to the U.S dollar or to the currency of gold. The exchange rate is usually determined by the relative demand and supply of money in between two countries.

The exchange rate of a country generally signifies how economically well it is doing. The richer the country the higher is its exchange rate. This is primarily why more developed countries like America, Australia and Britain have a higher exchange rate as compared to developing countries like Africa or India.

It is important to be able to track the changing exchange rates with time and remain up to date with the prevalent Global exchange rates.

But how can one keep a track of the different forex exchange rates?

• One could do so by downloading the Global Exchange rate apps from the App Store or the Play Store or Google Play, where live exchange rates can be received along with the provision of an all-in-one currency converter. These apps also help to transfer money as well as track all transfers on the go.

• There are also service finance apps such as Yahoo! finance and free stock charts.com that offer notification of live market rates of currency pairs. One can just download such an app for more information on Forex exchange rate. These apps are extremely helpful to those who want to keep themselves updated about the global exchange rates.

• News channels as well as new apps also provides a lot of information regarding the world of Business and Finance. Daily discussions on the changing exchange rate in the Global market are held by news channels, offering a market analysis of every country’s economic status.

• There are plenty of websites on the net and one could surf these sites and web pages to get information on different exchange rates all over the world.

• While surfing the net, there are several web pages that provide information on Currency Tools, Foreign Exchange Charges Calculator or Forex Exchange Rate Convertors and Currency Converters and Calculators. These tools help to calculate and convert currency as per the exchange rate of the country one is visiting.

Staying up-to-date with the forex exchange rate helps people to trade at a more profitable rate.
Knowledge about the forex exchange rate is not just helpful for those involved in trade, business and finance but also those who wish to travel and see the world.

Do you know the features of the NRE accounts that you can use to your advantage?

NRE stands for non-resident external account. This account is a savings or a current account used by Indians who are staying abroad, allowing an efficient conversion as well as transfer of Indian and foreign currency, both in and out of India.

NRI’s may transfer money to their family living in India, through their NRE account. The income that is generated in the country as rent, dividend or pension is also deposited in their NRE account for later use.

Some of the features of the NRE account which you can use to your advantage are given below:

• The most attractive feature of the NRE account is the fact that it is free from wealth tax.
• Not only is the tax exempted but one can also earn interest.
• The minimum balance that has to be maintained in the account is comparatively low as low that is 10,000 rupees only.
• When it comes to NRE accounts, the account holder can nominate an Indian resident to be responsible for the savings in the account in case of death of the account holder.
• One can conveniently access money using an ATM cum debit card, anytime and anywhere. There are numerous ATM branches throughout the country.
• Simple and easy money transfers can be made at a very low cost both online as well as offline. The exchange rates generally vary and one can compare and select what suits them the best. Many banks also provide a very simple and safe process of money transfer from abroad to India.
• Banks also provide the facility and the option of auto renewal of deposits.
• A person can also open a joint account with another NRI.
• NRI accounts also allow easy transfer of funds from out of India into the coutnry.
• Another advantage of having an NRI account is that it comes with a variety of added benefits which caters to an individual’s needs in India as well as in foreign lands.
• If an individual earns rent or revenue etc. from Immovable property abroad, that amount can be deposited into the RFC account once the individual returns to India.
• The banks also offer several other facilities like International Credit/Debit cards, On-line / Internet banking etc. making the process of depositing and withdrawing money less tedious for customers.

All the above mention features are extremely pragmatic and beneficial for the bank customer and also the depositor's near and dear ones residing in India. Therefore, it is practical and wise to opt for an NRE account for safe and easy money transfers and deposits.

Why the NRI account is a must for those settled abroad?

Those Indians who reside outside India, or those who are of Indian origin but are not residing in India, are referred to as NRIs or Non-Resident Indians. Although they live abroad, it is a must for them to have an NRI account. They can open an account under any RBI authorized financial institution or bank which provides a number of services and benefits.

Some of the reasons why Non-Indian residents should have an NRI account have been listed below:

• One of the most important reasons why an NRI must have an NRI account is that it is ILLEGAL to have a residents saving account when someone becomes an NRI. It is against the law according to FEMA regulation. Thus, the person must find a new account to invest his funds in. This is why an NRI account plays a valuable role.
• Besides the viability of the account, an NRI has to manage money- the transfer of money, its conversion, its repatriation etc. All of this can be handled and managed by an NRI account.
• There are basically two types of NRI accounts:
1. NRE account- This is a non-resident external account, where the NRI can save all his earnings in foreign currency.  It gets automatically converted into INR, when deposited in the account.
2. NRO account- This is a non-residence account, in which both Indian as well as foreign currency can be deposited.
• Another interesting fact is that the NRO account is tax free. But the NRE is liable to tax payment of GOI @ 30%.
• One major positive feature of having an NRO account is that it is fully repatriable, while an NRE account can be repatriated up to 1 million.
• With the advancement in technology, those working overseas need not worry about sending money to their loved ones back in India. They can do so on the go, online, through their cells from anywhere and at any time.
• The family members back at home can withdraw this money sent to them easily.
• Not only can an NRI save and deposit money into their NRI account, but even friends or family can deposit money into that account which can be transferred by the NRI whilst staying in a different part of the world without the hassle of paying extra fees or providing legal documents.

All these above mentioned points provide enough reason for an NRI to open an NRI account. It will definitely make their and their family’s life much easier and simpler. The account helps maintain and support long distance relationships and bonds.