I am 57 years old. I have investments in ICICI prudential balanced advantage funds, Kotak balanced advantage funds, KOtak flexicap, PGIM India Flexicap, Bandhan ELSS Equity funds and ICICI Pru Nifty50 Index fund. I received EPF money of around 45lakhs. Can you suggest where should I invest this money as an NRI ?

Ans: Depends on multiple things, your risk profile, time horizon, time to retirement, goal etc. there is not enough data for me to help but I can surely say, you mutual funds. Add to your existing mutual fund investments. Use the same schemes you have invested in & dont add more schemes. Split the investment into 4 parts & deploy over the next 6 months on every fall you have.

Ans: Given your age and current investment ratio, as an NRI, consider diversifying the EPF money to align with your risk profile and retirement needs.

Equity Allocation: You already have a significant equity exposure; however, evaluate if you want to maintain or adjust this based on your risk tolerance and time horizon.
Debt Allocation: With a 60:40 equity to debt ratio, you might consider increasing the debt component for stability and income generation, especially as you approach retirement.
Tax Efficiency: As an NRI, prioritize tax-efficient investments to maximize post-tax returns.
Professional Advice: Consult a financial advisor to create a customized investment strategy tailored to your NRI status and retirement goals.

Ans: You have done a wonderful job accumulating Rs. 8 crores across FDs, mutual funds, shares, and properties. At age 55, it is essential to start focusing on stability, income generation, and wealth preservation. You are entering a critical financial stage where your money must start working for you.

Let us now assess the best investment options for an NRI like you.

Your Current Life Stage: Transitioning to Retirement

At 55, you are possibly in your peak income years or already planning for retirement. Your priority now should be:

– Creating regular income
– Minimising tax outflow
– Keeping inflation under control
– Avoiding capital erosion
– Providing for family and health needs

This life stage needs a customised investment mix that works under a 360-degree framework.

Step 1: Classify Your Financial Goals

Start by separating your financial goals:

– Monthly income needs (post-retirement lifestyle)
– Emergency medical fund (Rs. 15–20 lakhs at minimum)
– Support for spouse or dependent family
– Legacy and estate planning
– Optional: travel or hobbies-based fund

Each goal should have its own investment strategy and risk level.

Step 2: Create a Three-Bucket Investment Strategy

You need to break your portfolio into three parts:

# Short-Term Bucket (0–3 years)
– Keep 1 to 2 years of income needs here.
– Include liquid funds, ultra-short duration debt mutual funds, or bank FDs.
– Do not keep more than 25% of your corpus here.
– Return is not the focus here. Capital safety and liquidity is.

# Medium-Term Bucket (3–7 years)
– Include aggressive hybrid funds and balanced advantage funds.
– Choose regular plans through a Mutual Fund Distributor who is a Certified Financial Planner.
– These funds provide decent growth and some downside protection.
– Rebalance this bucket every 12–18 months.

# Long-Term Bucket (More than 7 years)
– Include diversified equity mutual funds and international exposure through regulated MF houses.
– Choose actively managed funds, not index funds.
– This segment will beat inflation and build wealth.
– Keep 40–50% of your total corpus here, depending on risk comfort.

Step 3: Avoid Index Funds – Here’s Why

You may hear that index funds are low-cost. But cost is not the only thing that matters.

– Index funds have no active human decision-making.
– They follow the market blindly – both up and down.
– In falling markets, index funds cannot protect your capital.
– Actively managed funds adjust to market cycles better.
– Good fund managers know when to reduce equity and when to switch to debt.

So, prefer actively managed funds under the guidance of a Certified Financial Planner.

Step 4: Never Choose Direct Mutual Funds – Here’s Why

Many NRIs feel direct plans have lower cost. But this lower cost comes with hidden problems.

– You don’t get personalised service in direct funds.
– You won’t have anyone to help you with fund rebalancing.
– Tax-efficient withdrawal becomes complex if unmanaged.
– Switching between funds can lead to wrong choices.

Investing through a CFP-certified Mutual Fund Distributor ensures:

– Correct asset allocation
– Timely rebalancing
– Goal mapping and monitoring
– Tax planning
– Behavioural guidance during market volatility

Regular plans, although slightly higher in cost, give you expert handholding and avoid costly mistakes.

Step 5: Ideal Mutual Fund Allocation Strategy

For an NRI like you, mutual funds offer flexibility, diversification, and tax benefits.

Consider a mix of the following categories:

– Flexi cap funds for long-term growth
– Large and mid-cap funds for stability and return
– Aggressive hybrid funds for medium-term needs
– Dynamic asset allocation funds for rebalancing ease
– International funds for USD-based diversification (select AMCs allow NRI investment)

Invest using the Systematic Withdrawal Plan (SWP) once you start needing regular income.

– This gives monthly cash flow
– You only pay capital gains tax on the withdrawn amount
– Equity SWP is tax-efficient in the long term

Step 6: Optimise Your FD Exposure

Many NRIs prefer FDs because they feel safe. But these have major downsides:

– Interest is taxable
– Low returns post inflation
– Premature withdrawal reduces interest
– No equity-linked growth potential

Keep only 10–15% of your corpus in FDs. Only for:

– Emergency fund
– Known expense in 1–2 years
– Safety corpus for elderly spouse

Look at debt mutual funds or low-duration hybrid funds as an alternative.

Step 7: Review Your Insurance Exposure

If you hold traditional insurance policies like:

– LIC endowment plans
– ULIPs
– Investment-cum-insurance schemes

Then these may be underperforming. Please check IRR on them. If below 6–7%, surrendering them may be the better choice.

Reinvest the surrender value into mutual funds as per goal needs. Term insurance is enough for life cover.

Step 8: Taxation Awareness for NRIs

Tax planning is very important. NRIs need to keep this in mind:

– LTCG on equity mutual funds above Rs. 1.25 lakh is taxed at 12.5%
– STCG on equity mutual funds is taxed at 20%
– Debt mutual funds are taxed as per your slab
– NRE FDs are tax-free but repatriation rules apply
– Be aware of Double Tax Avoidance Agreement (DTAA) rules of your resident country

Work with a tax consultant in India and abroad to ensure clean filing.

Step 9: Estate Planning for NRIs

Being an NRI, you must create a Will in India and your country of residence. Key steps:

– Prepare a clear nomination and Will for your Indian assets
– Appoint a Power of Attorney if needed
– Keep your financial records and MF folios up to date
– Use joint holding in MF investments wherever possible
– Avoid complexity in legal documentation

A CFP can help align your estate wishes with financial instruments.

Step 10: Avoid Real Estate for Future Investments

You already own property. No need to increase exposure here.

– Real estate is illiquid
– Rental income is low post-tax
– Capital gains may not beat inflation
– Regulatory and legal issues exist
– Difficult to manage property from abroad

Instead, channel new investments into flexible instruments like mutual funds or sovereign bonds.

Step 11: Use of SWP Instead of Annuity

You may think of annuity plans for monthly income. But they have major drawbacks:

– Irreversible
– Poor returns
– Capital is locked
– Taxed fully as income

Use mutual funds with SWP option for monthly income. It is:

– Flexible
– Tax-efficient
– Capital remains with you
– You can change withdrawal amount anytime

Step 12: Investment Platform for NRIs

Choose SEBI-registered mutual fund platforms that support NRI KYC and documentation. Ensure:

– Your bank is NRE/NRO compliant
– Your demat (if needed) is NRI-type
– FATCA declaration is submitted
– Avoid platforms that do not provide human support

Do not invest through relatives or proxy accounts. It can lead to compliance issues later.

Step 13: Review Your Portfolio Twice a Year

As an NRI, it’s easy to lose track of Indian investments. Create a review system.

– Use a single dashboard to track MFs, FDs, shares
– Hire a CFP to review asset allocation
– Rebalance every 6–12 months
– Exit poor-performing schemes early
– Align portfolio with risk and goals regularly

Stay informed but avoid reacting emotionally to market ups and downs.

Step 14: Don't Ignore Currency Risks

As an NRI, your retirement may be abroad or in India. Currency fluctuation matters.

– If planning to return to India, Indian assets are good enough
– If staying abroad, include international mutual funds in USD
– Avoid too much repatriation unless needed
– Keep one leg in both currencies through dual strategy

This protects you from rupee depreciation or sudden currency volatility.

Finally

At 55, your portfolio must move from “growing” to “guarding and generating”. You already have built the foundation. Now you need a structured, expert-driven plan.

Keep your investments simple, diversified, and regularly monitored.

Avoid high-cost, inflexible products. Stay away from real estate and annuity locks.

Choose professionally managed mutual funds over index funds and direct investing. Let an experienced Certified Financial Planner guide your journey.

You deserve both peace of mind and wealth growth.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment