Picture two NRIs with identical Indian portfolios of Rs 50 lakh each. One puts it all into an NRE fixed deposit and watches it grow at a steady, predictable rate, fully repatriable and tax-free in India. The other puts it all into equity mutual funds, chasing higher long-term returns but riding out every market correction along the way. Neither approach, on its own, is really doing the whole job.

NRE fixed deposits offer something equity can’t: capital certainty, full repatriability of both principal and interest, and interest that is exempt from Indian income tax for as long as the depositor holds NRI status. That makes them a natural home for money that has a purpose within the next few years, or for the part of a portfolio that simply needs to not lose value.

Equity mutual funds do the opposite job well. Over long holding periods, Indian equities have historically outpaced fixed-income returns by a meaningful margin, and mutual funds give NRIs a regulated, professionally managed way to participate in that growth without picking individual stocks. The trade-off is volatility that FDs simply don’t have, and gains are subject to capital gains tax depending on the holding period and fund category.

Blending the two isn’t a compromise so much as a division of labour. The FD portion anchors the portfolio and covers near-term needs or risk-averse capital, while the equity portion is left alone to compound over years, ideally through market cycles rather than around them. The right split between the two depends entirely on the individual’s time horizon, repatriation needs, and appetite for seeing account values move.

Ashutosh Financial Services frequently helps NRIs think through this balance rather than defaulting to whichever option feels more familiar. Ashutosh Financial Services’ ongoing investor awareness programmes cover exactly this kind of asset allocation thinking for the NRI community.