NRI asking for advise

Dear Srikanth,

We(me and my wife) are frequent visitors of your blog and find it an interesting read.

We need your advice and improvement suggestions for our investment strategy.

We, currently, live abroad and intend to live abroad for next 2 to 3 years. I am 30 years old and my wife is 29 years old. We both are working and planning for kids in near future. So, we may end up with a single salary, if required, on a temporary basis.


Our current investments are as follows :

1) Residential plot in India. (We do not have a residential house in India. We plan to construct in another 2 to 3 years)
2) Investments in direct equities (Not organised and hit by the current trend)

3) Some NSC, PPF and ULIP investments
4) Gold

To sum it up, we have not invested in a very organised way given that we are novice investors and lack knowledge. Currently, we are doing extensive research to put us back on track. Also, we would like to make use of the current market situation for good returns in a period of 2-3 years (mid-term for house, second property etc) and longer term investment for retirement, child etc.


Also, we have a loan of around Rs 10 lakhs at 6%. We can easily settle
it with the current liquid cash we have. However, given the low
interest rate of the loan we are unable to decide if it would be a good idea to settle the loan or make investments in India continuing with the EMIs.

Going forward, we could invest around Rs 1 lakh per month. We have shortlisted some of the investment avenues (please find attached file). Other than the SIPs(mid and long term) and FMPs, we would like to invest the balance amount in FDs or Gold. Your inputs would be highly appreciated and helpful.


Also, could you give us more insight of FMPs with current market scenario. We are apprehensive after the liquidity crunch and negative speculations from experts in various forums.

Best Wishes and Regards,

Name withheld on request....




SRIKANTH SHANKAR MATRUBAI advised .............

Dear S,
Thank you for your kind words.
Age is on your side, even then it is always a good idea to have a goal and plan your savings and investments accordingly. Thankfully, you have realised your lack of organised investments and looking for advise, which is a sure sign of mature heads working.

a). Residential Plot : You should consider constructing a house on the plot straightaway and give for rent till you actually decide on settling here. As and when your wife stops working (albeit temporarily), this rental income could supplement (at least partially) the salary she would have been earning.
b). Investment in Direct Equities : Not recommended. Unless you are buying for long long term and able to actively monitor your investments, you are better off investing through the Mutual Fund route for exposure to direce equities.
c). Sure go for NSC, PPF, ULIPs, but ensure they make just a token presence to your portfolio.
d). Gold. Gold is Gold. Invest. Preferably through ETFs as they are not only cost effective but also tax efficient. Make sure they do not make more than 10% of your overall portfolio.

Do continue your loan. At 6%, you are better off continuing and investing the liquid cash in other assets to earn more. I do hope your interest is a fixed one and not a floating one.

I went through your shortlisted Funds.

1. DWS Investment Opportunity Fund - Invest.
Has a good track record and is expected to be an outperformer.

2. DSPML Top 100 Equity Fund - Invest.
This too have very very good track record and has been very consistent in its performance. Expect it to be an outperformer.

3. ICICI Pru Infrastructure fund - Avoid.
This fund has had a great track record. But do avoid investing in Theme/Sector Fund. Going forward, I do not expect Infrastructure to outperform the Broader Markets. You are better off investing in some other Diversified Equity Funds.
You can consider
Birla sunlife Equity Fund
Fidelity Equity Fund
Reliance Growth Fund

4. Sundaram Select Focus Fund - Invest.
This fund is a "Must Have" in everyone's portfolio.


I also appreciate your pegging of growth expectation at 15% average. It is a definetly achievable target.

However, I am surprised at your Expected Growth of 15% to 20% in Debt and Gilt funds. Yes, surely, with the declining interest rates, these funds are expected to give returns in excess of 12% going forward. But, I do not expect them to maintain the same rate of returns for more than 2 years, maximum. You may scale down your expectation to a more realistic 10%.
Although I personally feel that the liquidity crunch will not affect the FMPs very much, and I also I do not approve the negative speculations from experts(?), I would rather have you invest in Long Term Income funds and also Arbitrage Funds (UTI Spread Fund) which do give returns in the range of 8-10%.

Best of luck,
Srikanth Shankar Matrubai