Dear mam, I am 39. In the past few months I have been under financial stress.

My salary was reduced by 25% since April 2020 and wife’s salary dropped to 20% of my salary.

My EMIs are 70% of total income. I took moratorium. But, now moratorium ended and I am not able to manage the finances

Also, I am not able to find a new job. Without any help, everyone is facing a financial crisis.

I am not able to cope up . What should I do?

Ans: I appreciate your detailed overview of your financial situation and your proactive approach to investing. Let's address each of your queries systematically to ensure we cover all aspects comprehensively.

1. Taxation on Shares and Mutual Funds: As an NRI, capital gains tax rules apply to your investments in shares and mutual funds in India. For equity investments held for over one year, long-term capital gains (LTCG) are taxed at 10% without indexation. For mutual funds, equity-oriented funds are treated similarly. However, if you become a resident Indian again, you'll be taxed as per the applicable resident Indian tax laws. Increasing your SIPs by 5-10% annually is a prudent strategy, especially considering your long-term investment horizon and the power of compounding. Regarding international funds, they can provide diversification benefits, especially during periods of rupee depreciation, but ensure you understand the associated risks before investing.

2. Investment in Fixed Deposits and Government Bonds: As an NRI, you are eligible to invest in fixed deposits and government bonds in India. Interest earned on fixed deposits is taxable in India, subject to applicable tax laws. Government bonds also carry tax implications, but specific rules depend on the type of bond and your residential status. Given your current location in Saudi Arabia, consider exploring NRI-specific investment options like NRE or NRO fixed deposits, which offer tax benefits and repatriation flexibility.


3. Investment Strategy: Diversification is key to a well-rounded investment portfolio. Equity investments offer long-term growth potential, while debt instruments like PPF provide stability and tax benefits. Considering your risk appetite and investment goals, continue your SIPs in equity mutual funds, but ensure you have an adequate emergency fund in place. Explore options like international funds for global exposure and consider increasing exposure to debt instruments for capital preservation.

4. Investment Considerations for NRIs: As an NRI, it's essential to stay informed about regulatory changes and tax implications related to your investments in India. Additionally, consider factors like currency risk, repatriation restrictions, and geopolitical developments when making investment decisions. Regularly review your portfolio and consult with a financial advisor to optimize your investment strategy based on changing market dynamics.


5. Early Retirement Planning: Achieving early retirement requires careful financial planning and disciplined saving and investing. Start by setting clear retirement goals, estimating your future expenses, and determining the required corpus. Maximize contributions to tax-efficient retirement accounts like EPF, PPF, and NPS. Consider allocating a portion of your portfolio to growth-oriented assets like equity mutual funds to generate inflation-beating returns over the long term. Regularly reassess your retirement plan and adjust your investment strategy as needed to stay on track towards your retirement goals.

By following a systematic approach to investing, staying informed about regulatory changes, and regularly reviewing your financial plan, you can work towards achieving financial stability and early retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in