A US-based Non-Resident Indian (NRI), who moved back to Mumbai in 2024 after spending 28 years in New York, has gone viral on Reddit after sharing the investment portfolio they wish they had built before returning to India.
In a discussion on Reddit, a user pointed out that much of the investment guidance available for NRIs fails to address a crucial point: US citizens and green card holders are still subject to taxation by the Internal Revenue Service (IRS) on their global income, even after they have relocated to India. However, HT.com cannot independently verify the authenticity of Redditor’s claim.
To simplify planning, the Redditor suggested dividing investments into three buckets: money meant to be spent in India, long-term US-dollar wealth that doesn’t need to be converted into rupees, and a transition cash reserve for the first two to three years after relocation.
Investments worth keeping
Among India-based investments, the user recommended NRE fixed deposits for short-term rupee needs despite US taxation on the interest, and direct Indian equities through NRE-PIS or NRO non-PIS accounts instead of Indian mutual funds.
According to the post, Indian mutual funds trigger the US Passive Foreign Investment Company (PFIC) rules, which can lead to significantly higher taxes and complex reporting.
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The Redditor then talked about NPS Tier I for its low expense ratio and tax benefits for those with Indian taxable income, while recommending FCNR(B) deposits before returning to India to reduce foreign exchange risk.
On the US side, the Redditor advised against closing 401(k) and traditional IRA retirement accounts, saying they can continue to offer tax advantages after returning to India if the required filings are completed. The post further recommended retaining US-domiciled ETFs such as SPY, VTI, VOO and QQQ, along with brokerage accounts at firms like Schwab and Fidelity.
Investments to avoid
The Redditor strongly cautioned against investing in Indian mutual funds because of PFIC taxation. The post suggested avoiding Unit Linked Insurance Plans (ULIPs) marketed to returning NRIs, claiming high charges and unfavorable US tax treatment reduce their appeal.
High-yield NRI bonds issued by lesser-known companies made the avoid list, with the user warning that attractive interest rates often come with elevated default risk.
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The Redditor concluded by saying that if starting over, they would first maximize US retirement contributions, keep US brokerage accounts active, open an FCNR(B) deposit before moving, use NRE fixed deposits for short-term needs, and invest in direct Indian equities instead of mutual funds.
The post resonated with many users, who praised its detailed breakdown and requested similar investment guides for NRIs returning from countries including Australia, the UK and European nations. Others sought clarification on topics such as Roth IRA taxation and the treatment of future 401(k) withdrawals under US and Indian tax rules.
