SIP Investment Plans in India for NRI

Best SIP Investment in India for NRI in 2024

Choosing the best SIP investment in India for an NRI in 2024 depends on several factors, including your risk appetite, investment goals, and time horizon. However, following are some of the best SIPs in India available for an NRI: 

1. Insurance Companies

   Fund Name	Returns
   	3 Years	5 Years	10 Years
   Top 200 Fund TATA AIA	28.32%	24.81%	20.25%
   Virtue II PNB METLIFE	23.25%	19.25%	17.26%
   Pure Equity BIRLA SUN LIFE	20.23%	15.93%	16.8%
   Growth Opportunities Plus Fund BHARTI AXA	19.08%	16.31%	16.73%
   Growth Fund LIC	10.74%	-	16.17%
   Pure Stock Fund BAJAJ ALLIANZ	17.73%	14.52%	16.16%
   Blue Chip Fund HDFC STANDARD	14.99%	13.28%	14.12%
   Growth Super Fund MAX LIFE	15.25%	13.34%	13.31%
   Multi Cap Growth Fund ICICI PRUDENTIAL	16.69%	11.58%	13.13%
   Equity Fund SBI	14.78%	12.92%	12.97%

   *Updated as on January 2024

2. Mutual Funds

   Fund Name	3 Year Returns	5 Year Returns	10 Year Returns
   Large Cap Fund NIPPON INDIA	24.99%	15.06%	16.79%
   Bluechip Fund SBI	17.71%	14.27%	15.41%
   Large Cap Fund EDELWEISS	16.83%	14.35%	14.28%
   Frontline Equity Fund ADITYA BIRLA SUN LIFE	17.52%	13.21%	14.34%
   Bluechip Fund ICICI PRUDENTIAL	20.34%	14.76%	14.88%
   Large Cap Fund MIRAE ASSET	14.85%	12.99%	16.34%
   Bluechip Equity Fund CANARA ROBECO	15.01%	15.14%	14.38%
   Bluechip Growth KOTAK	16.41%	14.67%	14.49%
   Large Cap Fund BARODA BNP PARIBAS	15.89%	15.08%	14.61%

Updated as on January 2024

What is a SIP in India?

A SIP is also known as a Systematic Investment Plan in India. It is a method of investing in the best investment options like Unit Linked Insurance Plans (ULIPs) and mutual funds. SIPs in India allow you to contribute a fixed amount at regular intervals, say monthly, quarterly, or half-yearly. 

These plans offer a disciplined approach to investing, allowing NRIs (Non-Resident Indians) to systematically grow their wealth over time by leveraging the power of compounding. 

SIPs provide flexibility and convenience, making it an accessible investment option for NRIs looking to participate in India's financial markets.

Key Features of SIP Investments in India for NRI

The key features of an investment in a Systematic Investment Plan (SIP) in India are listed in the table below:

#You can discover the potential of your SIP investments in ULIP plans and mutual fund schemes by utilizing either a ULIP calculator or Mutual Fund calculator.

Working of a Systematic Investment Plan in India for NRI

The NRI in Singapore can follow the steps mentioned below to start investing in SIPs in India:

Step 1: Selecting a Mutual Fund

• Research and choose a ULIP fund or mutual fund scheme that aligns with your financial goals and risk tolerance.

• Opt for funds managed by reputable fund houses with a good track record.

Step 2: NRI Eligibility

• Confirm your eligibility as an NRI to invest in Indian ULIP plans and mutual funds.

• NRIs in Singapore can typically invest in SIPs as per regulations set by the Reserve Bank of India (RBI).

Step 3: KYC Compliance

• Complete the Know Your Customer (KYC) process by submitting the necessary documents.

• This step is crucial for regulatory compliance and can often be done online.

Step 4: Opening an NRI Account

• Open a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account to facilitate SIP transactions.

• Link this account with your mutual fund or ULIP investment plans for seamless transactions.

Step 5: Funding Your SIP

• Transfer funds from your NRE/NRO account to your ULIP or mutual fund investment account.

• You can set up an auto-debit facility for a hassle-free monthly investment.

Step 6: Choosing SIP Amount and Frequency

• Decide the monthly investment amount based on your financial capacity and goals.

• Choose the frequency of investment (monthly, quarterly) according to your preference.

Step 7: Monitoring and Review

• Keep track of your SIP investments through regular statements provided by the insurance company or the mutual fund house.

• Periodically review your portfolio and adjust your SIP amount if needed.

Step 8: Redemption and Returns

• Understand the redemption process and how returns are credited to your NRE/NRO account.

• Stay informed about tax implications and DTAA agreements on capital gains for NRIs.

Types of SIP Investment in India for NRI

The table below lists the significant types of Systematic Investment Plans in India based on the mode of investment in the SIP plan:

Principles of a Systematic Investment Plan in India

A SIP investment plan follows the principle of rupee-cost averaging and the power of compounding. Let us understand them in detail from below:

1. Rupee- Cost Averaging:

   • In an SIP investment plan, rupee-cost averaging is a strategy applied to mutual funds and ULIP plan funds.

   • It involves purchasing more units of your chosen fund portfolio when prices are low and fewer units when prices are high.

   • This approach helps to even out the overall cost of your investment over time.

   To illustrate this principle, let's explore it through an example using an SIP Rupee-Cost Averaging Calculator:

   SIP Months	Invested Amount (in Rs.)	Price Per Unit (in Rs.)	No. of Units Bought
   10th January 2023	Rs. 10000	32	312.50
   10th April 2023	Rs. 10000	36	277.77
   10th July 2023	Rs. 10000	30	333.33
   10th October 2023	Rs. 10000	28	357.14
   Total	Rs. 40000	31.23 (Average Cost)	1280.74

   If You Invest in a Lump Sum	If You Invest in SIP
   You invest the entire Rs. 40000 on 10th April in Lump Sum: Total No. of Units Bought = 1111.11	As seen in the above illustration, if you invest Rs. 10000 per quarter: Total No. of Units Bought = 1280.74

   Please note: The aforementioned table and values are only provided for illustration purposes and should not be correlated with the performance of any SIP mutual fund scheme.

2. Power of Compounding

   • In an SIP plan, your money doesn't just grow on the amount you put in initially. It also earns interest on the interest it accumulates.

   • The returns your investment generates get reinvested, creating a cycle of growth that leads to additional returns over time.

   • The compounding effect in an SIP investment plan works best when you stay invested for a longer period.

   Illustration of the Power of Compounding

   If you invest in an SIP investment plan with the following details:

   • Monthly Investment = Rs. 10,000 per month

   • The SIP plan offers a rate of return = 12% p.a.

   • Interest compounding period = Annually

   Your SIP investment plan will grow as follows:

   After 5 years:

   • Total investment = Rs. 6 lakhs

   • Value of investment = Rs. 8.5 lakhs

   After 10 years:

   • Total investment = Rs. 12 lakhs

   • Value of investment = Rs. 23.5 lakhs

   After 15 years:

   • Total investment = Rs. 18 lakhs

   • Value of investment = Rs. 50.1 lakhs

   After 20 years:

   • Total investment = Rs. 24 lakhs

   • Value of investment = Rs. 96.8 lakhs

Documents Required for NRI for SIP Investment in India

The following table shows the documents required to start investing in an SIP plan in India for NRI:

• Passport

• PAN Card

• Singapore Address Proof

• India Address Proof (if applicable)

• NRE/NRO Bank Account Details

• Photograph (Recent)

Estimating Returns with SIP Calculator

An SIP calculator is like a helpful assistant that gives you an idea of how your money can grow in a mutual fund or ULIP plan. It considers a few key things:

• Investment Amount: How much money you plan to put in regularly.

• Period of Investment: The duration for which you plan to keep investing.

• Expected Rate of Return: The percentage of profit you hope to make.

• Frequency of Investment: How often you contribute money (monthly, quarterly, etc.).

After you provide these details, the SIP calculator does the math and shows you:

• Total Amount Invested: The sum of all the money you've put in.

• Returns Earned: The profits your investment has made.

• Final Value of the Investment: How much your investment is worth now.

How to Choose the Best SIP Investment in India?

The NRI investor should consider the following aspects before investing in a Systematic Investment Plan (SIP) in India:

1. Research Fund Categories:

   • Start by understanding your financial goals and risk tolerance.

   • Explore mutual fund categories like equity, debt, or hybrid based on your objectives.

2. Fund Performance:

   • Evaluate the historical performance of funds.

   • Look for consistent returns and a fund manager's track record.

3. Expense Ratio:

   • Pay attention to the expense ratio, as lower fees can significantly impact your overall returns.

4. Fund House Reputation:

   • Opt for well-established fund houses with a credible reputation.

   • Check their financial stability and customer service reviews.

5. Risk Factors:

   • Assess the risk associated with the fund.

   • Diversify your investments to mitigate risks.

NRI-specific Considerations:

1. Regulatory Compliance:

   • Ensure that the chosen fund complies with regulations for NRIs.

   • Check for the Foreign Account Tax Compliance Act (FATCA) and the Prevention of Money Laundering (PMLA) norms.

2. NRE or NRO Account:

   • Open a Non-Residential External (NRE) or Non-Residential Ordinary (NRO) account in India for seamless fund transactions.

3. Tax Implications:

   • Understand the tax implications both in India and Singapore.

   • Consider consulting a tax advisor to optimize tax efficiency.

4. Repatriation Rules:

   • Familiarize yourself with repatriation rules to transfer funds back to Singapore without complications.