NRI (UK) mutual fund investment advice

[yodlee99]

When ever you have some lumpsum amount in hand, you can follow this regimen.
Transferring from debt fund into a equity fund of the same mutual fund house (AMC) is NOT considered as selling the unit. Thats why the concept of STP came about. However, some debt funds have Exit load (For eg., HDFC Hi interest short term plan fund charges ~ 0.1% if u sell or do STP within 30 days).

There is no Exit Load if you STP from Reliance Short Term Fund to say, Reliance Regular Savings equity fund from 2nd day onwards.

Invest in DSPBR Savings Manager Fund(Aggressive)& STP to DSPBR EQUITY Fund.

Invest in HDFC High Interest Fund Short term plan & STP to HDFC Top 200 or Prudence Fund.

Invest the rest in IDFC MMF - TP - Plan A & STP to IDFC Premier EQUITY Fund.

Hope this is clear. Good luck !

 

[BUZZ]

Since this is NRI related Post . I would like to know if lets say person has opened an online account (resident) with fund house when he was in India and later he went overseas and became NRI.

Should that person continue to have resident a/c and keep investing or should change it into NRI?

If he is continue with resident a/c what is the consequences he will face in future?

Please suggest.

Thanks with regards
Buzz

 

[yodlee99]

According to FEMA and RBI rules, you have to intimate the bank when u have a change of status of residency (from resident to NRI or viceversa). I have not heard of any consequences, but that does not mean you can take it lightly.
1) From what ever I personally know, I think there should not be any issue with mutual funds. You have to open a NRE account with repatriable facility and get your mutual funds moved.
2) However, depending on your country, you may or maynot get permission to open a demat & online trading account. You will have issues with transferring stocks & ETFs.
There are a few round about ways for taking care of your stocks & ETFs like a) having a account with broker or b) opening a specialized bank account called PMS (portfolio management services) or c) Gift these to a resident like your parents or siblings and manage it online easily, but their income taxes might see a jump when u sell your holdings !

Check with the customer service of your bank's NRI cell. Share what ever you learn with forum members. Thanks!

 

[hihowruin]

When ever you have some lumpsum amount in hand, you can follow this regimen.
Transferring from debt fund into a equity fund of the same mutual fund house (AMC) is NOT considered as selling the unit. Thats why the concept of STP came about. However, some debt funds have Exit load (For eg., HDFC Hi interest short term plan fund charges ~ 0.1% if u sell or do STP within 30 days).

There is no Exit Load if you STP from Reliance Short Term Fund to say, Reliance Regular Savings equity fund from 2nd day onwards.

Invest in DSPBR Savings Manager Fund(Aggressive)& STP to DSPBR EQUITY Fund.

Invest in HDFC High Interest Fund Short term plan & STP to HDFC Top 200 or Prudence Fund.

Invest the rest in IDFC MMF - TP - Plan A & STP to IDFC Premier EQUITY Fund.

Hope this is clear. Good luck !

Excellent information.... this is what I was looking for, but untill your reply I didn't get this information.

I think STP will make more sense for me... with high variability and too often the variability......

Birla Suna Life has this iSIP thing, which looks pretty interesting.... I haven't found any criticisms so far on the internet... do you know any?

 

[BUZZ]

According to FEMA and RBI rules, you have to intimate the bank when u have a change of status of residency (from resident to NRI or viceversa). I have not heard of any consequences, but that does not mean you can take it lightly.
1) From what ever I personally know, I think there should not be any issue with mutual funds. You have to open a NRE account with repatriable facility and get your mutual funds moved.
2) However, depending on your country, you may or maynot get permission to open a demat & online trading account. You will have issues with transferring stocks & ETFs.
There are a few round about ways for taking care of your stocks & ETFs like a) having a account with broker or b) opening a specialized bank account called PMS (portfolio management services) or c) Gift these to a resident like your parents or siblings and manage it online easily, but their income taxes might see a jump when u sell your holdings !

Check with the customer service of your bank's NRI cell. Share what ever you learn with forum members. Thanks!

If there is no consequences then why NRIs take pain to convert into NRI a/c of their residency online a/cs which cost huge for selling or buying anything in market.

Is there any straight guidelines from RBI or FEMA (don't know what is this) in this concern?

Is there any Tax dept interference if NRIs income is less then the tax slab given?

If its above the tax slap then if NRIs still files tax as a resident. In that case what will happen?

How Tax dept will find out?

 

[yodlee99]

It is definitely illegal to become a NRI but still maintain a resident account. If you google about FEMA (Foreign exchange maintenance act), you can read more about it in rbi.org.in. FEMA came into existence mainly to prevent bad money (read as terror/underworld/drug) in the system.
SEBI has added new rule that all NRIs need to submit KYC (know your client) form as well, irrespective of the investment amount.
Read guys... www.valueresearchonline.com and www.moneycontrol.com

 

[hihowruin]

It is definitely illegal to become a NRI but still maintain a resident account. If you google about FEMA (Foreign exchange maintenance act), you can read more about it in rbi.org.in. FEMA came into existence mainly to prevent bad money (read as terror/underworld/drug) in the system.
SEBI has added new rule that all NRIs need to submit KYC (know your client) form as well, irrespective of the investment amount.
Read guys... www.valueresearchonline.com and www.moneycontrol.com

Yes, Buzz... Yodlee is correct. Just wanted add few points which I thought might be relevant for others...

1. The other day when I called up www.cvlindia.com, I was told that KYC will be made mandatory for any investment amount (right not KYC is needed only when the income is more than Rs 50,000.) very soon.

2. KYC application will also carry a cost very soon too. Which means to get KYC acknowledgement there will be cost, but right now it is free. So everyone get KYC now before they start charging.

3. I was told by a broker in India once that the assets might get frozen or added tax/charges might be imposed if an NRI doesn't declare NRI status. Also Buzz, you dont wanna look like funding some dodgy activities in India.... or else Big B wont hesitate to bother you

Correct me if I am wrong......

 

[yodlee99]

If there is no consequences then why NRIs take pain to convert into NRI a/c of their residency online a/cs which cost huge for selling or buying anything in market.

Do you know the difference in cost for purchasing mutual funds as a NRI ?

 

[BUZZ]

I am not NRI but curious and to know as many people gone out of India to earn money and they come back. it is always good to gather knowledge and share.

I have seen many of my friends. They have been to overseas for many years and some are still there and some return back to India for good.


Most of people come back to India after spending many years outside so don't really bother to convert bank a/c as well as mutual funds into NRI account. And still i did not see any impact on them so far.

In my knowledge I have not seen anyone facing such problem.

I think they are correct too because if they earn from their money in India more than the tax slap they will file the tax. otherwise why to bother to do changes.

I have never seen such cases in other counties to do so.

There is nothing that it is a black money. It comes through proper channel. So there is no scope of any terrorist activities. After all NRI always pay tax to that country where he lives. its his hard money that he sends back to India.

India should proud of it instead of chasing him/her.


We Indian can only think about terrorists. We have to grow up little more than that.


About KYC: There is no need if you are investing below 50K at one time. Such a stupid I ahve not seen who just dump few lacs to one mutual fund in one time. That can be done by Institutionals not for NRI or Resident.

If NRI/resident wants to purchase more than 50 , He can easily park his money in installs. why bother about parking 50 and above in one time?

What charge did your broker mis-guided about KYC ? I don't think any reason to charge for KYC. It's just a document to declare. That's all.

Don't forget Brokers have to make money from individual always. That is included in their job.

 

[yodlee99]

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