Pune

Due to its low-risk factor and potential for high returns in future, real estate has been the safest investment option for NRIs.

Q. What should I keep in mind while planning to invest in real estate?

A: Real estate is been conventionally considered to be a product; whereas it's an Industry in itself, with a platter of products like plotting schemes, farmhouse, industrial plotting, warehouses, residential, commercial, retirement living among others. Hence one should take a decision keeping in mind the purpose, the budget and the time period for which the investment is being made. If the individual is looking solely at investment, it should be done in the developing and emerging areas. As and when the area is developed one should exit. In real estate, entry and exit timing is the most important factor for best ROI (Return on Investment).

Q. Which is the best investment option for 3 to 5 year period?

A: 3-5 years is a short period for any kind of investment; so you can look at semi-liquid instruments to invest in. If you are looking at higher returns, you have to look at a minimum time period of 6 to 8 years.

Q. For an NRI/NRG, which are the low-risk and higher-return investment options in India?

A: Predominantly, there are only three instruments for investment (1) Gold/Silver (2) Equity (3) Real Estate. The most suitable low-risk, high-return option for the NRI/NRGs is real estate.

Q. How much sum assured/cover should I take in a term plan?

A: Sum assured should be equal to 20 times of the lifestyle expense of the family member's dependent on the primary earning person in the family. It means the sum assured is equal to your annual expenditure to maintain the same lifestyle / prevalent interest rate per annum. And you have to review every five years, as the lifestyle expenses as well as interest rate, both change every five years.

Q. Which is a better investment option: term insurance or money back plan?

A: Both the instruments have a different purpose. Insurance is done basically to maintain the same lifestyle of the dependent family members after the death of the main earning member. So, the main purpose of life insurance should be risk cover and not RoI. You may find better options than money back plan if return is a concern.