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Mutual Funds for NRIs in UAE

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The UAE has become one of the largest economies in the world as well as in the gulf area. The per capita income of residents of people living in the UAE is increasing. The UAE provides a plethora of investment options not only for residents of the UAE but also for NRIs (Non-Resident of India).

Mutual fund for NRI investment is a great instrument to build your wealth in the long term in the UAE. If you are new to the financial market or do not have much time to research securities and track them, then investing in mutual funds is a preferable option. In other words, it reduces the burden of selecting stocks and analysing their financials. In this article, we are going to learn about mutual funds for NRIs in the UAE. 

What are Mutual Funds?

Mutual funds allocate their money to different assets such as stocks, bonds, cash and ETFs. Hence, you get the benefits of diversification. Diversification reduces the risk and gives you stable returns over time. Mutual funds are managed by fund managers who have expertise in the financial markets. They take care of your funds by tracking and balancing the funds according to the market situation. However, you should be aware that the stock market is risky and it does not assure you provide guaranteed returns. 

You can invest in mutual funds for NRI in UAE through a stock broker or an online advisory website or an offline platform. Investing in a mutual fund is cost-effective as you can invest a pocket-friendly amount every month through SIP. There are varieties of mutual fund schemes available that is suitable for different investor type. Mutual fund investments are done for the long term to reap maximum benefit. 

Benefits of Mutual Funds for NRI

NRIs residing in the UAE can invest in mutual funds and participate in the equity market. They can invest not only in mutual funds but also in other assets such as stocks. Nowadays, many countries allow investing in global stocks hassle-free. 

Diversification: Investors get to invest in different sector stocks and a large number of stocks by investing in a single mutual fund. Hence, your investment portfolio is diversified and the exposure to risk gets reduced. 

Less Risky: Mutual funds’ investments are less risky as their portfolio is diversified. Diversification safeguards your investment from market fluctuations or sector risk. 

Less Investment Amount: Mutual funds investment can be done with a less amount. If you have a considerable amount of money, then you can invest a lump sum amount whereas you can opt for sip investment if you want to invest little money every month. 

Investors don't have to be experts in investment: The best part of investing in mutual funds is that you don't need expert knowledge of the stock market. Even if you have basic knowledge of the stock market and how mutual funds for NRI work, then you can invest in mutual funds. 

How to Invest in Mutual Funds?

Understand Your Financial Objective:

Figure out the purpose of your investment before investing in any mutual fund or financial instruments. You can invest in buying a house, children's education or abroad study. The goals differ from person to person. Make sure that returns from the mutual fund should be able to fulfil your investment purpose. 

Analyse Risk Associated with the Fund:

Analyse the risk associated with the mutual fund scheme. Make sure that you choose the mutual fund for NRI scheme based on your risk appetite. 

Decide Timeline of Your Investment:

Analyse how much time you are willing to invest to achieve your financial objective. You can use a mutual fund for NRI calculator to find the estimated returns and the required years to fulfil your goals. If you are planning to invest to fulfil a long-term goal such as a child's higher education or creating a retirement corpus, then you should invest for the long term. 

How can NRIs Invest in Mutual Funds in UAE?

NRIs living in the UAE can invest in any mutual fund scheme as per their requirements. However, UAE-based NRIs should be aware of the rules and regulations they need to follow while investing in mutual funds.

  • To invest in mutual funds for NRI has to open either an NRE Account or an NRO account. NRE account is a Non-Resident External account. It can be a current account or a savings account. Also, this account can be fixed or a recurring deposit. However, you will be required to deposit foreign currency in the NRE account. Also, there is no maximum limit on the transaction. 
  • NRO account is also known as a Non-Resident Ordinary account. The account can be in the form of a current or savings account. The account holder has the option to hold jointly with another NRI in the account. 
  • After opening the account, you will have to complete the KYC process. 
  • Complete the KYC process by submitting the required details such as overseas address proof, a recent photocopy, Indian resident address proof and a photocopy of passport. 
  • Once the KYC process is completed, in-person verification or IPV is conducted. 

To conclude, investing your money in a mutual fund is a great way to start your investment journey and achieve your financial goals. However, you need to keep in mind that you must have done adequate research about the mutual fund scheme you are opting for. Research their past performance, expense ratio and experience of the fund managers. Also, you need to make sure that the mutual fund investment should align with your financial goals, risk appetite and time horizon of your investment. 

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