Like many Indians in the UAE, Mohamed Ashraf is looking forward to the day he retires to his native home in India.
Coming from Kochi in Kerala, he misses the lush greenery and the meandering backwaters found there.
“I love Dubai but I still find that my home country haunts me,” says Mr Ashraf, 55, the founder and managing director of Autograde Industries, which specialises in vehicle safety products. He has been based in Dubai for the past six years because of the business opportunities on offer in the emirate.
“In a maximum two or three years I should be retiring,” he says, adding that he has been saving for his future throughout his 35-year working life.
“I’m happy with what I have,” says Mr Ashraf.
In total, he has invested Dh10 million for his retirement – buying properties in India and Dubai and putting money into stocks, insurance schemes and mutual funds in India.
“Ask most Indians in the Gulf region, they will always say that after retirement they will go back to India, the reason being you cannot have permanent residence here,” says Y Sudhir Kumar Shetty, the chief operating officer, global operations, at UAE Exchange. “Most of them have savings and investments back in their home country. I know people who have invested into property, mutual funds and equities, and have got very good returns.”
This will please the Indian prime minister Narendra Modi, who this week urged non-resident Indians around the world to invest back home.
Ravi Krishnamurthy, the executive director of marketing at SBI Life Insurance, says there is a growing need for Indians in the Gulf to build a nest egg for retirement as high inflation levels in India over the past couple of years have sent the cost of living in the country soaring.
“The value of maintaining a retirement corpus can never be overstated,” Mr Krishnamurthy says. “NRIs in the UAE are strongly emotionally connected to their homeland. Due to this natural sentiment, there has been a definite uptick in demand of pension products from the NRI population.”
To maintain the lifestyles they enjoy in the UAE, he advises Indian expats to start building their retirement wealth early on.
“An individual can either make a lump-sum investment or make regular investments over a period of time in various annuity plans,” he adds.
And with a stable government in place focused on boosting India’s economy and widespread expectations of improved economic growth over the coming years, Mr Krishnamurthy adds that now is a good time to invest in the country.
But is a simple pension plan the best option?
“Look at plain vanilla products [including mutual funds] as long as you’re going to be disciplined,” says Gaurav Mashruwala, a financial planner based in Mumbai. “Whether it’s a pension plan or a plain mutual fund, at the end of the day the mutual fund is a product which is going to put money into the same stock market as a pension fund would do, or the same security or the same bond market as a pension.”
Mr Mashruwala says NRIs should also consider asset classes which have the potential to beat inflation, such as equities and gold, as pension plans can be limiting.
“There can be little flexibility to move money out of them once you are locked in,” he says, “which one might want to do if they are not performing, for example, or one finds a better investment option.”
However, there are benefits to having a pension plan – it keeps savers disciplined and there can be tax benefits, says Mr Mashruwala, who adds that Indian expats should set aside the “maximum possible”.
“Just earmark those funds, so mentally you say that they are for your retirement and the moment you do that you will not then use that money to go and buy a lavish car for yourself,” he says.
Rashi Datt, 48, the co-founder of the Yoga Ashram Studio in Dubai, has instilled that discipline into her life.
She sets aside at least 10 per cent of her income every month in savings and has invested in property and fixed deposits in India. With fixed deposits offering returns of about 10 per cent, these are an attractive option for many Indians looking for risk-free returns she says.
“All NRIs should look at keeping regular savings and making fixed deposits to have a comfortable life after you retire,” says Ms Datt.
“People should always think about their future and that of their children’s and plan accordingly.”
Ms Datt grew up in Shimla, a hill station in the north of India, and has been a Dubai resident for the past 24 years.
Like Mr Ashraf, she is keen to spend her golden years in India, although she says that she would find it hard to retire completely and hopes to work as long as she can.
“I always had a special place in my heart for Bangalore and would probably like to move there and settle down some day,” adds Ms Datt.
While returning to the country of their birth is a sensible retirement option for UAE-based NRIs, only holding investments in their home nation is not, says Mr Mashruwala.
“Emotionally they want to bring money into India and they should. But I also advise them that while India is their comfort zone, ensure that you are investing across the globe as well because then there is some kind of diversification happening,” he says.
Property investment is another popular option for NRIs with many buying homes in India, either as an investment or in some cases they have the intention of actually living in them.
“Thirty per cent of our sales are towards NRIs and most of them are from the UAE,” says Manju Yagnik, the vice chairperson of Nahar Group, a property developer based in Mumbai. “The motives behind purchases are multiple and include retirement plans.”
As well as planning for their futures, NRIs must also plan for their death, adds Mr Mashruwala.
“Ensure that a will is in place so that in case of any kind of eventuality it’s easy to pass on to the next generation,” he says, adding those with created wealth in the UAE should pay off any liabilities and streamlining assets in the run up to retiring.
For some though, retirement is a difficult word to swallow.
Entrepreneur Mr Ashraf is already considering ideas for starting a business in India when he returns.
“As I am a born businessman, I would like to retire and die as a businessman,” he adds.
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