How To Manage Investments Across India And Overseas

Wealth is rarely built in one place. A career that starts in India often enables the accumulation of mutual funds, fixed deposits and perhaps property in the subcontinent. A move abroad adds a workplace pension, employer share plans and local bank accounts. Another move adds another layer of assets.

Each financial planning decision was usually sensible at the time it was made. The result, however, is often a portfolio that has been assembled by circumstance rather than by design.

Many non-resident Indians (NRIs) look at their wealth country by country rather than as a complete picture. They know how their Indian investments are doing and they know the value of their company shares, but they have rarely taken a holistic view of everything side by side.

When putting in place a cross-border investment management strategy, before any decision is made about what to keep, sell or change, it helps to have a clear record of what you own. For each holding, that means noting:

• what it is
• where it is held and in which currency
• whose name it is in
• what it is for

When we take on a new client here at Hoxton Wealth, a detailed fact find is always the starting point. As well as taking an inventory of assets, your dedicated adviser will take a deep dive into your financial goals and what you want your wealth to do for you and your family: fund retirement, pay for children’s education or something else entirely. 

This may sound basic, but it is often the step that reveals the most. Duplicated exposure, forgotten accounts and cash sitting idle in one currency tend to become obvious only once everything is written down in one place.

A common assumption among people who have built wealth abroad is that their Indian investments need to be moved or restructured. Often, this is not necessary. Many Indian families instil a savings habit from a very young age, and it is not unusual for clients to have substantial savings in India that are performing well. Where that is the case, there is little reason to dismantle them. The more useful exercise is to look at how the Indian and international holdings are growing together and how well diversified the overall portfolio is.

Hoxton Wealth does not manage Indian assets directly. However, a good plan will still take them fully into account, because they affect how much risk sits elsewhere, which currencies you are exposed to and what the international part of the portfolio needs to do.

Diversification is usually discussed in terms of spreading money across different types of investment and different sectors. For people with ties to more than one country, geography and currency matter just as much.

Keeping a percentage of your wealth outside India, in pounds or US dollars for example, can help diversify the portfolio and reduce reliance on a single currency, especially one that can be volatile. The right proportion will vary from person to person, but the principle is straightforward: if all of your wealth is in one currency, your future spending power depends entirely on how that currency performs.

This becomes particularly relevant when future costs are likely to arise in a different currency. University fees overseas, a home in another country or a retirement spent outside India are all examples where holding some wealth in the currency you will eventually spend can reduce the risk of exchange rate movements eroding its value.

Many internationally mobile professionals with ties to India work for large multinational companies and receive part of their pay in company shares. Over time, these holdings can grow to represent a large share of their total wealth.

When those shares have performed well, it can be tempting to hold on to them. But a concentrated position carries a particular risk: your salary, your bonus and a large part of your investments all depend on the fortunes of the same business. If the company has a difficult period, all of these can be affected at once.

It can make sense to realise some of the gain and begin diversifying, so that the growth achieved so far is protected rather than left exposed to a single company. Any sale needs careful planning, as the tax consequences will depend on where you are resident and where the shares are held.

There is also an estate planning dimension to holding shares in overseas companies, particularly US companies, which is covered in more detail in our companion article on retiring with assets in India and overseas.

An investment strategy that is working well for a friend or colleague will not necessarily work well for you. It’s important to find solutions tailored to your unique situation taking into account personal factors, including: 

• where you want to retire
• the currency you want your money in
• the jurisdictions in which your assets are held
• the tax rules that apply to you now and in future

 Two people with similar portfolios can need quite different arrangements if their plans for the future are different. Only once these questions have been answered does it make sense to decide which structure fits.

In addition, your strategy will almost certainly need to evolve over time to accommodate life changes. An investment strategy that suited you when you first moved abroad may no longer fit. Priorities change as children grow up, careers progress and retirement approaches.

Good investment management is not a set and forget transaction. It involves reviewing the whole picture regularly and checking that the portfolio is still aligned with where you are now and where you want to be. 

That’s why our wealth planners seek to nurture long-term relationships built on trust and an in-depth understanding of clients’ needs to provide bespoke investment management advice at every life stage.

Having investments in India and overseas is not a problem in itself. The challenge is making sure they are working towards the same goals rather than pulling in different directions. Knowing what you hold, understanding your currency and concentration risk and reviewing your strategy as your circumstances change are the foundations of a coherent plan.

Our team includes specialists with expertise on the issues pertinent to non-resident Indians, like Senior Wealth Planner, Aarti Sagar.

If you would like to review how your investments in India and overseas fit together, get in touch.