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Who Should Go For Robo Advisors in India?

There is a certain mathematical equation that offers ‘customised’ investment advice on the basis of what your risk profile is along with other useful factors

Political Climate Accused Of Encouraging The Promotion Of Black Money. Pixabay
  • Robo advisors make it easy to invest in the market
  • However, they are not suitable for everyone
  • Here, find out if you should really consult a robo advisor or not

Robo Advisors in India make it easy to invest in the market. However, are they meant for everyone? Will robo advisors able to guide the client in the right direction as per the prevailing market conditions? Can they replace financial advisors? To find the answers, let’s first understand what robo advisory is.

What is Robo Advisory?

A robo-advisor is an algorithm based financial services which are offered online with little or no human involvement. These algorithms collect useful information from investors like age, financial goals, etc.; and impart investment-based advice. There is a certain mathematical equation that offers ‘customised’ investment advice on the basis of what your risk profile is along with other useful factors.

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Robo advisors can make it easy for you to invest in markets. Pixabay.

Who Should Take Advice FromRobo Advisors In India?

Usually, it is said that robo advisory is low-cost and therefore, it is well-suited to investors with low asset size. On the other hand, financial advisors believe that those investors who have a thorough understanding of the market along with the investment risks should avail services of robo advisors in India.

It means do-it-yourself investors who have ample time to review their financial portfolios are apt for robo advisory. Such investors are usually aware of the risks which may arise,and they have a better idea of where they should invest money to accomplish their financial goals.

Is Any Drawback Attached to Robo Advisory?

Thoughrobo advisors make it easy to invest in the market; they might not give you complete advice. In a booming market, a risk-averse investor might be interested in investing in equities. On the other hand, the same investor might not be able to bear losses when the market falls. As a result, a robo advisor might not be able to know that whether the investor is keen to take risks as the stock markets are doing well or does he able to bear losses when the market crashes.

Anti black money day, Demontisation
Robo advisors can have their own cons. Pixabay

An investor might miss human touch, which is needed to understand the entire purpose and for which a person is investing. At times, a person might not be comfortable in investing in equities. During this time, some hand-holding is required to help the person understand that why he should invest in the market. Similarly, motivation is needed to encourage the investor to stay invested.

However, what happens in a robo advisory is that a person needs to enter basic details like goals, income, expenses, etc. Once the information is submitted, a robo advisor will show some numbers which tells a person how much he/she is required to save every month/ year to achieve goals.

Also Read: G20 finance ministers affirms steps to keep economic recovery sturdy

Here the numbers given by robo advisor might tell the investor how much he needs to save but these big numbers might not be enough to encourage them to start investing.

Financial planning is a complex process which not only involves investing but other aspects as well, like estate planning, insurance, tax, etc. Though a robo advisor may get you started; it may not cover other aspects of financial planning.

Now, Can Robo Advisors Replace Financial Planners?

Whether you are a newbie or an experienced investor, you may require help at certain points of your time. Moreover, it has been seen that most of the people start investing with zeal but fail to keep up the pace with time. Here, a financial planner can help you. A financial planner can devise a financial chart for you and also motivate you to start investing (and continue investing) to achieve your goals.

However, a financial planner can help you only if he does his job honestly and stays away from pushing one product over another for his personal interest.

Time and Money
Financial planning is important to avoid any losses. Pixabay

Wrapping Up

If you think you have enough knowledge and time to follow the market, go with robo advisors in India. They can be a good option if you use it correctly.

Most importantly, whether you are using robo advisor or financial advisor, invest only after understanding the market and product carefully.

Next Story

Best Tax Saving Options for NRIs in A.Y. 2018-19

As an NRI, you are qualified for tax exemptions on specific investments in India

  • NRIs are supposed to pay taxes to India as well
  • There are tips for this tax saving
  • NRIs can use many methods to save taxes

Non- Resident Indians (NRIs) are supposed to pay taxes on income earned in India during a particular financial year. So, any income that has been either accrued or received in India shall form part of the taxable income of NRI. If you have recently moved abroad, you may be worried about ensuring your tax compliance in India for the assessment year 2018-19. Moreover, you need to do tax saving in India with twofold goals- decrease tax liability and increase return on investments. While tax saving is essential, you should strive to invest prudently to reap the maximum benefit of the savings.

These simple tips will help NRIs in tax saving.

If you are an NRI and searching for investment options with tax saving benefits, you should realise that there are various options for the same. Take a look at these tax saving options for NRIs in A.Y. 2018-19:

Bank Deposits

For money to be parked for short-term or long-term investments, NRI can have any one of three following types of banks accounts:

  1. Non-Resident External Rupee Account (NRE): In this type of account, your funds in foreign currency are converted into Indian rupees and the rate prevailing at the time of conversion is applicable. The benefit here is-Interest earned on NRE account is exempt from tax for an individual who qualifies as a ‘person resident outside India’ under the exchange control law.
  2. Non-Resident Ordinary Rupee Account (NRO): Interest earned on NRO account (savings or fixed) is fully taxable. A deduction up to Rs 10,000 may be claimed for interest earned on savings account while filing the tax return.
  3. Foreign Currency Non-Resident Bank Deposit (FCNR): It is a term deposit or fixed deposit account, where NRIs can deposit their money in foreign currency. The deposits canbe made for a minimum maturity period of one year and maximum maturity period of 5 years. The interest earned under this account is tax-free, whereas the principal amount is taxed under wealth tax.

    Opening bank deposits can help save taxes.

Other popular means of claiming a deduction from gross total income is via Section 80C.

Deductions Under Section 80C

Term Insurance

NRIs can invest in term insurance, a type of life cover, which provides financial coverage to the insured. If the insured expires during the tenure of the policy, then death benefit is payable to the nominee. A deduction of Rs 1.5 lakh is allowed for the premium paid towards term insurance plans as per Section 80C. This deduction can be claimed where the plan has been purchased in the NRI’s name or the name of his/her spouse. Moreover, purchasing online insurance plans like term plans has turned out to be simple, hence you can easily go for these online insurance plans and avail tax benefits on the premium payable.

Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans offer duals benefits of life insurance and investment. Some part of the premium is utilised as insurance coverage to the policyholder, while the remaining amount is invested in various debt and equity schemes. As with all life insurance plans, the amount invested in a ULIP is available for tax deductions for NRIs.

Subject to certain conditions, the premium paid for ULIPs is allowed as a deduction under Section 80C of the Income Tax Act. ULIP premium can be deducted from your taxable income up to Rs 1.5 lakh, which is currently the permissible limit.

Loan to Buy a Home

Buying a house property is beneficial for you (NRI) as the interest income and principal income will allow for a tax rebate. The total deduction for interest payment on home advances is Rs 1.5 lakh, whereas the principal amount repayment on home loan already qualifies for a tax rebate of Rs 1 lakh.

Equity Linked Mutual Fund schemes (ELSS)

Loaning a house can help save taxes for NRIs. Pixabay

For NRIs, ELSS also offers similar benefits under Section 80C of the Income Tax Act. ELSS are equity-linked mutual fund schemes investing in a diversified portfolio of Indian stocks. ELSS schemes can be purchased online, yet remember, there is an element of risk in ELSS as money is put into equity markets. Be that as it may, they are tax efficient instruments for NRIs.

National Pension Scheme (NPS)

You can subscribe to NPS if you have retained your Indian citizenship and planned to retire in India. You can contribute to NPS from NRE and NRO accounts. However, the pension needs to be received in India only and cannot be repatriated. Your investment up to 1.5 lakh can be used to avail tax deductions.

NPS comes under EET tax structure (Exempt-Exempt-Tax) and is a cost-effective, government-backed retirement savings plan. All the contributions and accrued capital gains are exempt from tax; however, withdrawal is subject to tax.

Also Read: Rich NRI Keralites Seek State-of-the-Art Old Age Homes to Ensure Stress-Free Life for their Aged Parents

Other Allowable Deductions:

Health Insurance- Deduction under Section 80D

NRIs can take health insurance from Indian companies for themselves or their family members and claim a deduction for the premium paid under Section 80D. Additionally, health plans like cancer insurance plans serve as monthly income plan with different payout options made available upon diagnosis of the disease. The availability monthly income plan feature offers a comprehensive financial coverage for the life assured as well as his family.

The deduction for health insurance is up to Rs25,000 for insurance of self. You can claim a deduction for insurance of parents up to Rs30,000 if their parents are a senior citizen (above 60 years) and Rs25,000 if the parents are below 60 years.

Education Loan- Deduction under Section 80E

Like resident Indians, NRIs can also take educational loans and claim tax deductions on the interest paid under section 80E. This loan might be either taken for higher education for self, spouse or children.

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Saving money by saving taxes now becomes easy for NRIS with these tips. Pixabay.

Besides, there is no limit on the amount which can be claimed as a deduction, and deduction is offered for a maximum of eight years or till the interest is paid, whichever is earlier.Additionally, no deduction is allowed on the principal repayment of the loan.


As an NRI, you are qualified for tax exemptions on specific investments in India. Before investing, you should make an informed choice by understanding tax laws in India, in addition to the nation of your residence. Moreover, you must select tax saving instruments which would enable repatriation of income at maturity. Your investment decisions should consider your life objectives and also repatriation restrictions on investments in India.