The rate of interest on a fixed deposit in India is more than that in US. For NRIs living in US and other countries they can invest in FDs in India and get a higher rate of interest instead of investing in US. The money transferred to India can be transferred back to US if its done through NRE account. You can check more details with the bank in which you have the NRI accounts.
Here is a sheet that gives a calculation of the difference in the returns and how much additional gain could be generated by investing in a FD as compare to a CD in US.
Download the sheet and change the upper portion of the sheet with the amount in $s that you want to invest and the rate of Interest in India and US. This sheet can also be used for all the other countries and currencies you just need to change the upper part of the sheet with conversion rates and rate of interest.
CD vs FD xls
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Nice Sheet. I was always wondering about it and I am glad that others have researched about it. They say US equities have return of 8% over long term but it has considerable amount of risk associated with it while FDs in India are virtually risk free and 8.5% return guaranteed. I am not sure how much money is insured if something happens to the bank.
ReplyDeleteMaybe we should consider inflation adjustment as well here given that Indian inflation is 8% odd and US is 2%. Thoughts?
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