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"We found a lot of other Indian expats in the same situation as us - wanting to invest in India for financial and emotional reasons, but unable to do so easily or consistently. We wished a simple product existed to solve for this online. We couldn’t find one, so we built it."

Simple products do exist which provide exposure to passive indexes for India equities in USD. Any NRI in US can invest in these ETFs at reasonable cost (about 0.64%-0.85% Expense Ratio):

1) iShares MSCI India index ETF - $INDA (USD) : https://www.ishares.com/us/products/239659/ishares-msci-indi...

2) Wisdomtree India Earnings ETF - $EPI (USD) : https://www.wisdomtree.com/investments/etfs/equity/epi

1. Their tracking error (because of frequent currency transactions + cash requirements) cumulates to a large underperformance vs investing directly. In the last 5 years, there's a cumulative return of 14% for INDY vs 69% for NIFTY. Even accounting for currency depreciation and remittance charges, the $ adjusted return for NIFTY is at least 2x.

Even active funds like WAINX, EPGIX havent beaten investing directly over the long run. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.

This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.

2. Depth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.

Since the target is Indian expats, that probably doesn't matter much, but be aware the name INRI has strong religious connotations in the West [1].

[1] https://en.wikipedia.org/wiki/Jesus,_King_of_the_Jews#INRI

First thought that entered my head as well.

And it really is "the West" (not just US), since the original phrase is Latin.

Hahaha! That would have never occurred to me (or at least not immediately) - NRI

It does in India too. With Easter around the corner, I thought of Inri Appam [1][2].

[1] https://en.wikipedia.org/wiki/Inri_appam [2] https://www.youtube.com/results?search_query=inri+appam+east...

Interesting, thanks!

Also, it's funny (and probably not accidental) that it's also called Pesaha, which is basically the name for the Hebrew/Jewish celebration from which Christian Easter is derived.

This connotation is present in India too. For example, the local church here has it as well [1].

I'm a Hindu, so my mind definitely did not go there.

[1]: https://www.google.com/maps/@12.8738405,74.8453608,3a,75y,90...

Thanks for the amazing response and great questions so far! Just to add - if you are in Bay Area, we are doing an event to clarify all these and similar doubts here - https://lu.ma/inri

Keep posting your questions and we're happy to answer! Do try out the platform if you're interested.

Less than 4 hours to go for the event. See you all Bay Area folks at Hacker Dojo today! We and some Indian snacks will be waiting :')

Do you help US-based investors with PFIC taxation (see Steps 4 and 5 here)? (https://www.taxesforexpats.com/guides/passive-foreign-invest...).

This is a huge pain point for US persons investing in foreign mutual funds. This made me liquidate all my ETFs/mutual funds in India and move the money to individual stocks or property.

If you can make it easy for NRIs to invest in a basket of individual stocks, a NRI-friendly smallcase (https://www.smallcase.com/) if you will, that would be amazing.

Yes, we know about PFIC taxation and help investors with Mark-to-Market Accounting. Further, Inri provides tax support as part of the product offering, thereby abstracting the pain of tax reporting.

That's great! You should add that to your FAQs (spell it out specifically).

How do you factor the US taxation at marginal rate (instead of the more favorable long term capital gain tax rate) factor into your ROI comparison between investing directly in India vs an US-based India fund (which enjoys all the tax benefits)?

Arent ETFs tracking Indices a better option rather than Index Funds itself because of the PFIC rules?

exactly, my cpa cited PFIC reporting rules as doubling the cost of my file

A few comments and advice on investing in India.

The target audience for this would know this, but it's useful to be reminded. INR (Indian Rupee) depreciates on average about 4% each year against USD (US Dollar). When you look at the gains from investments in India in USD terms, it would be lower due to the continuously weakening currency. As an emerging market and one with a still-developing stock market, the returns could be comparatively a lot higher along with volatility.

People in India who "invest" ("gamble" may be a better term) in the stock market are used to larger double digit returns and chase "multi baggers" (check some financial publications in India and you'll find many headlines about multi baggers). This makes the same bunch beat a retreat at the first sign of a downturn.

Tax laws in India are getting more complex and onerous (because the government believes everyone to be a tax evader unless proven otherwise), and it seems like the government wants to slow down the outflow of money from the country while getting a larger slice in advance. Though the government wants to attract non-resident Indians to invest (they've historically sent a lot of money into the country), it's also reluctant to provide an attractive taxation and tax compliance experience. If you choose to invest through this or any other platform, keep an eye on the changing tax laws so that you can exit before things suddenly become painful with very little notice. As an example, though the union budget with tax changes was presented in the beginning of February in the parliament, the government made a slew of changes that impact whole classes of mutual funds just a few days ago with no discussion in parliament and passed all of those (because the ruling party has a majority).

A few comments on this

1. Yes it's true that INR has depreciated vs $. But all of that depreciation has been coming in the zero interest regime we have been in the last decade. If you see the previous decade, INR was flat vs $ and NIFTY also grew more than S&P500. Point here is to say that there are financial cycles and the next cycle is likely going to be different (because of higher interest rates at least in the medium term) than the last one. Additionally, higher interest rates also makes US equities less attractive than what they were in the last decade, and India is likely to be among the fastest growing economies in the next decade so a good bet for diversification for 5-10% of your wealth.

2. Can you elaborate on tax laws becoming more onerous for NRIs? The Feb law change doesnt affect NRIs remitting money outside, so dont think is relevant in this case.

> INR was flat vs $ and NIFTY also grew more than S&P500

> India is likely to be among the fastest growing economies in the next decade so a good bet for diversification for 5-10% of your wealth.

I'm going to ask this in the most laymen way possible...how is it possible that a country that is growing faster than the US depreciates the money value relative to the US by so much? I genuinely believe India has stronger growth, but those two facts don't seem to match up. One would think that a stronger economy would imply more investment, and thus push the price up on the currency. ELI5.

Cause India imports much more than it exports. And the majority of global trade happens in USD which effects demand for USD.

I have direct experience with this as an NRI. Indian govt charges outbound INR to USD conversion at 5% for amounts above 10k USD [1]. So apart from the rupee depreciation you’d have to account for that if you ever need your money out.

I see the value of your platform and in the past I’ve invested a lot of USD in india and gotten great returns. But when I needed my money out for grad school, I had to pay these outrageous fees. Even the amount exchanged for tuition is taxed at 0.5%, all other transfers at 5%.

My net return on mutual funds investments were not so great on a dollar by dollar terms.

It’s not just me, many (younger) NRIs would prefer to invest in US index funds or if they’re feeling risky invest in vanguard emerging market funds.

Edit: added reference

[1] https://taxguru.in/service-tax/tax-implications-forex-transa...

> Indian govt charges outbound INR to USD conversion at 5%.

I'm sorry, what?

Yes, above 10k USD. So if you need access to your investments above 10k USD you’d have to pay 5% on the extra amount. I was shocked when I found out that my forex transfer for buying a car in Canada was cancelled and I had refill an A2 form with the taxed amount added and sign and scan it. It’s a hellish experience if you’re used to the US banking system.

https://taxguru.in/service-tax/tax-implications-forex-transa...

1. You should not be subjected to TCS if you are not an Indian resident. Perhaps you did not convert your bank account to NRE?

2. You can file tax return and get a refund if your tax liability is nil or lower than tax collected at the end of the financial year.

This still doesn't make this situation better but it is not a charge, just an advance tax automatically deducted which needs to be adjusted or claimed back.

Agreed with this comment, the 5% is applicable for Indian residents, not NRIs. If the tax status and bank account was not updated to NRI, this would have been incurred.

LRS and the associated TCS is not applicable to NRIs. I have no idea what you're on about.

I see, my status changed from US tax resident to student in Canada so the taxes now apply. I stand corrected.

Still I feel it’s unfair in a globalized economy considering it’s reducing liquidity, as in you have to be a tax resident of some other country to avoid this steep tax. For example if you decide to take a year long sabbatical or retire in, say Portugal, you’d have to pay the tax every time you withdraw money for rent and groceries.

> I see, my status changed from US tax resident to student in Canada so the taxes now apply.

If you stay in Canada for more than 183 days in a year, you are deemed a resident of Canada. I don't understand why the tax applies.

> Still I feel it’s unfair in a globalized economy considering it’s reducing liquidity, as in you have to be a tax resident of some other country to avoid this steep tax.

It's not an additional tax. It simply changes when the tax is collected.

> For example if you decide to take a year long sabbatical or retire in, say Portugal, you’d have to pay the tax every time you withdraw money for rent and groceries. . The tax only applies if you have an Indian income of more than 15 lakh rupees and you are not a tax resident elsewhere. If you retire in Portugal, this does not apply to you.

Interesting. I'll check with our CA then. I've paid a significant amount of these 5% taxes over the past 2 years to ebixcash. They outright reject transfers beyond 700k INR otherwise.

It's probably because EbixCash isn't set up to handle remmitances by non-residents. Using a bank where you have an NRO account should allow you to remit upto 1 million USD.

Tangentially related to your first point is the phenomenon / heuristic of : https://en.m.wikipedia.org/wiki/Interest_rate_parity

To add, insider trading and financial misreporting is rampant in Indian stocks. Just look at the recent Hindernberg report on Adani as a starting point. The shocking aspect is that this is accepted as the norm.

US stock markets and regulations are not without fault but they are leagues better than stocks in countries like India and China.

Oh and to add on to another excellent point you brought up - Indian regulations are unstable and change on a whim. India’s government recently proposed subjecting long term debt holdings to tax, a move that is widely criticized.

The same Hindernberg, that is banned from doing reports in the US? this seems more like a case of the pot calling the kettle ...

Lol Hindenburg dropped a report on Jack Dorsey's Block, which is a US company just a week ago.

When was Hindenburg "banned" from doing reports in the US? And which agency in the US "blocks" companies from reporting fraud?

Bhai mere. stop following whatsapp propaganda. Hindernberg or no one else is banned from doing any reports in the USA.

Found the BJP IT cell target audience.

1. INR Depreciation: A seasoned investor (assuming US investor) must cover this risk by shorting his INR position. This way, he only collects the alpha of the Indian stock market while remaining neutral to the fluctuations of the INR.

2. Indian Taxation: This has been the trend in almost every country. The taxes do not matter if the yield is still higher than your Western yield. It'll pay for itself.

3. Money Outflow: In my humble opinion, this is the real concern. You can pay high taxes, and still come out ahead. But if you can't get your money out, that's a real problem. And companies will leave because of that. I think the uncertainty of one's money is what's preventing a foreign investment boom in India.

Agreed with points on tax and repatriation, that is a core part of the service. On the depreciation, most of the depreciation has happened in the zero interest rate environment, which is unlikely to hold true in the medium term. But yes, agreed with the solve there of hedging the currency risk independently, cost of hedging has to be baked in though.

If you are interested in the product, do check out the website / fill the form and we will reach out

Wouldn’t the depreciation be higher in a higher (US) interest environment? The gap between US interest rates and Indian interest rates is what determines depreciation and the RBI (effectively, the Indian Govt as the RBI has no real independence) has not been as aggressive in increasing rates. So, I see faster INR depreciation for the near future.

This is awesome - exactly the thing I was looking for! Apologies if I missed it but what are the fees for using this service?

We charge a flat 1% advisory fees for all capital invested through us, we have an early bird offer running that waives this off for the first year.

Why so much? It's a large fee.

That's too expensive. I'd prefer a monthly/yearly fee.

Hmm, we have tiers that reduce the % once your AUM grows. How much monthly fee would you pay btw?

Would rather invest in US Indices for nominal fees that are less than .1%. 1% is a very high fee that reduces the hassle of opening a Zerodha NRO account. 1% is 4 times the fee of Wealthfront, the company you are trying to replicate.

This is also a more efficient way of investing, which leads to higher returns because of low tracking errors. The fee more than covers for itself with the return delta you get here, refer the comment on investing in India ETF vs investing here.

1% is what wealth management groups charge. If you're going to charge that much you should change your marketing

https://www.google.com/search?q=india+etf

https://etfdb.com/etfs/country/india/

Now granted, as far as I know, no major brokerage supports dollar cost averaging into an ETF (needs to be a mutual fund that trades once at close so you never get to benefit from any intraday volatility)

which "moves the goalpost to" https://www.google.com/search?q=india+mutual+fund

in fidelity, i can set up automatic investing / dollar cost averaging (wealthfront's entire business model, right?) into any mutual fund they allow access to. curious the advantages from your product over this.

The major difference here is that you invest directly through your NRE/NRO bank account in India. This makes your investing more efficient, because you dont face the tracking errors and frequent currency transaction costs that funds abroad face. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.

This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.

2. Breadth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.

3. We are starting with mutual funds but plan to offer all asset classes for investments including real estates.

Also, DCA is just one part of Wealthfront, there are other advantages also, but that's a separate point.

> He couldn't go ahead with the process because bank account opening was a challenge

For NRI's who do go to India, just go to any big bank like ICICI, HDFC etc. They will give you special treatment simply because of you are an NRI. Once your bank account is setup, open a Zerodha NRO account by submitting the docs to their local office. It can be done in two weeks if you have all your docs.

But yes it is a bit of a hassle especially if you want to go the NRE account route, so if this company can take away all those hassles then its a great option.

That's true, but going to India is not frequent for a lot of NRIs/OCIs. Also, NRO account essentially means you are putting restrictions on repatriation of that money. For people who want to repatriate back, NRE is much better and those processes are very painful for demat accounts.

Curious: Why focus on wealthfront for expats? Why not simply a wealthfront for India?

I lived in India until 2014—all the SIPs were shitty and ran old school software and UI. Maybe things have changed now, but 98% of India does not do any active investments other than Fixed and savings deposits.

We think the market for Indian residents is fairly saturated, lot of upgrades in the last 5 years and already some products which do this. But NRIs/OCIs are still underserved

There's been a lot of improvements since then. Checkout apps like ET Money, Groww, Zerodha Coin. It's really easy to start SIP in India and the tech is good and modern.

I currently have some money in an Indian mutual fund through my Schwab brokerage, WAINX. What's the difference between Inri, and just investing in an Indian mutual fund? Schwab shows 4 different India-focused equity funds from Eaton Vance, ALPS/Kotak, Matthews, and Wasatch.

If you are based in the US and directly invest in mutual funds in India, keep in mind the US taxes it in extremely unfavorable terms via PFIC[0]. I browsed through their website and it appears their tax guidance is only for Indian taxation, which is fair but something to keep in mind. If you have to deal with US taxes, I would highly avoid holding mutual funds abroad, and just buy US-based India-focused funds.

[0] https://creativeplanning.com/international/insights/american...

The major difference here is that you invest directly through your NRE/NRO bank account in India.

1. WAINX is an actively managed fund, if you are just looking for tracking the Indian index (NIFTY), there's INDY here. Their tracking error (because of frequent currency transactions + cash requirements) cumulates to a large underperformance vs investing directly. In the last 5 years, there's a cumulative return of 14% for INDY vs 69% for NIFTY. Even accounting for currency depreciation and remittance charges, the $ adjusted return for NIFTY is at least 2x.

Even active funds like WAINX, EPGIX havent beaten investing directly over the long run. You can compare these with NIFTY growth % - USD/INR growth % - two-way currency transaction charges to confirm.

This is a fair option for anyone who cant access the Indian markets directly, but for Indians with PAN card, the efficiency of investing directly is much higher.

2. Depth of funds is still not as good as in the Indian market. India has 8000+ mutual funds listed, with specific allocations available to mid cap, small cap, thematic (tech vs pharma vs consumer vs infra), equity-debt hybrid etc.

3. We are starting with mutual funds but plan to offer all asset classes for investments including real estates.

Let me know if any of this is not clear

I’m curious to see if NRIs just invest some fun money of their portfolio to Indian funds or do you really put a significant part of your portfolio invested in India, in other words if you have 70% stock allocation portfolio and may be 90% of it is VOO. Would you trust this platform to invest a significant part of your net worth over Vanguard.

Fun money the way in describing is an extremely small part of your portfolio which you don’t mind doing away with should it tank.

Question: how do the rules introduced(https://sbnri.com/blog/nri-income-tax/union-budget-2023-for-...) in the Union Budget 2023 for taxing outward remittances (i.e. on moving money from India to US) affect you?

The outward remittance rules are a part of LRS (Liberalised Remittance Scheme) and applicable only for payments from Indian residents outside. Since repatriation in our case will be by NRIs themselves, through their NRE accounts, this doesn't affect us.

The Liberalised Remittance Scheme is applicable to Indian residents and not Indian expats whereas Inri is an investment product for Indian expats remitting to India from a foreign country. https://m.rbi.org.in/scripts/FAQView.aspx?Id=115

> Indian expats remitting to India

But eventually I have to remit back my profit? I will be affected right?

No, since you are an expat, this rule doesn't apply to you while remitting back your profits. Your capital will go back to your NRE account once you exit your investments, (assuming that's where you invested it from) and then you can remit it back from there to your resident bank account using any remittance product

If the money goes back to my NRE account, then I (as a PAN card holder) can myself have an NRE account, tied to a brokerage firm like Zerodha and I can trade and manage my money there myself much more efficiently and at negligible cost?

What is the value proposition you are offering by charging 1% management fee?

Firstly, opening account with Zerodha requires physical paperwork.

"Non-Resident Indian (NRI) Zerodha accounts can only be opened offline, unlike regular accounts." https://support.zerodha.com/category/account-opening/nri-acc...

Secondly, we are not just a way to invest faster but also offer continuous rebalancing services, and are an end to end platform for NRIs along with taxation and repatriation support.

Awesome guys! I know Hemant personally. Great fruition. Looking forward to testing it out

Tangential question: are you both co-founders, not in the same city/ time-zone? If that's the case, how has your experience been collaborating remotely?

But US Canada customers are not entertained by most mutual funds right?

It says PAN card is needed. What about aadhar?

Is this guaranteed by FINRA/SIPC?

PAN card is mandatory. Aadhaar is optional.

These funds are invested in India directly, thus not guaranteed by FINRA/SIPC.

I think they just made Aadhaar card mandatory. You have to link it to Pan Card within a set deadline or the Pan card becomes invalid.

No idea if NRI's also have to do it.

https://www.ndtv.com/india-news/date-for-linking-pan-and-aad...

It is not mandatory for NRIs, only indian residents. Refer below:

Aadhaar-PAN linkage requirement does not apply to any individual who is:

Residing in the States of Assam, Jammu and Kashmir, and Meghalaya; a non-resident as per the Income-tax Act, 1961; of the age of eighty years or more at any time during the previous year; or not a citizen of India.

https://www.incometax.gov.in/iec/foportal/help/e-filing-link...

So money/equity/stocks are not guaranteed by anyone?

Watch out. You might get weird "looks" from Christians among your audience: Search keyword: "Iesus Nazarenus Rex Iudaeorum".

(I don't think it's offensive or anything that level)

I'm Christian and that's the first thing I noticed about the Url. "Go INRI? Cool" was my reaction.

What are the inflation adjusted returns for investments in the indian market? What are the tax implications?

Indian indices have given 14-17% CAGR in the last 5 years. Inflation is around 6-7% (hard to cross verify since there's also a lag here).

On tax, India and US (along with 80+ other countries) have a Double Tax Avoidance Agreement, so you dont get taxed twice. Local rules vary in terms of tax declarations though. E.g. In US, IRS mandates all foreign income to be declared. So you file capital gains taxes in India (online) and declare those in US while filing taxes here. We help with all the reporting here.

More details in the article here - https://www.goinri.com/blog/tax-implications-for-nris

Inflation adjusted NIFTY for 31. March 2023: https://www.tradingview.com/chart/NIFTY/p30N39p6-NIFTY-Infla...

Looking at last 5 years is not correct (responding to sibling comment for this para). It is very short term and does not cover the time periods when India does not grow. Back of the envelope calculation shows a 10 X growth over past 20 years which averages to about 12% returns. Give back 5% in rupee depreciation and we are talking about 7% in USD terms.

But it comes at additional cost. Accounting costs. You need to file taxes in India and you need to claim its credit in US. Extra paperwork both sides. Foreign tax credit is not 100%, it is close enough, but you lose small change claiming it back. Then there is lag in selling something and being able to use that money in USD. You need to fill forms, get CA certificates and work with banks to get money back, takes time and takes money to get that done. Maybe the incidental costs are 0.1%, maybe they are 1% if you start counting the time you spend.

Also we can not compare returns directly against Indian equities. I will need to look it up but I believe some stocks are locked to the maximum for foreigners (maybe at 50%) so you can not buy any more unless a foreigner sells ... although the number of such stocks may be limited, if you can not buy and sell like an Indian, your returns can not be comparable. They may incidentally come out better, or they may incidentally come out worse.

In my personal experience working with 3 advisors (all companies managing thousands of crores = close to a billion dollars //* should cross check *// of total client funds), my returns never matched their benchmarks, and there was always some explanation, but never a match to their company wide returns for all clients.

Over the last 20 years, NIFTY has had a CAGR of 15%. Currency depreciation was 3% every year. So a net gain of 12%. Compared to this, S&P500 CAGR was 7%.

We are not talking about stock picking here, since that is anyway individual investor dependent. Plus not all stocks have a foreign counterpart. So funds end up becoming a better diversified alternative.

We make the accounting experience simple and online as well but I'd definitely want to know more about your experience, if you are open to chat, feel free to fill the form on the website and we'll reach out

I understand people not of indian origin can't invest or buy real estate in india?

Congrats! Very happy to see an ex-BCGer launch an amazing product. Will try it out.

Go Green ;) Thanks, let us know if you have any feedback!

Would it make sense to offer this to a wider audience? Why limit it to just Indian expats?

I think you need a special bank account that is only available to Indians living outside and it's a nightmare to keep it active/open.

It would, unfortunately, the bank account creation requires PAN card (Indian financial identity document) which you cant get if you dont have any ties to India.

Ah! Ok, that's too bad then... Much good luck with the project then, I hope you will succeed with this, I think a mechanism like this one is sorely needed.

But US Canada investors are not entertained by Indian mutual fund houses right?

Yes, not every fund house serves US / Canada residents and there are nuances in terms of which funds allow digital onboarding. But even after accounting for those rules, there are enough good performing funds available, which we have curated for the offering

So like Vested?

No, it's the reverse of Vested.

Vested is for Indian residents to invest in US, we are for global NRIs to invest in Indian financial instruments.

What about expats without pan card?

You can apply for a PAN card if you are an OCI holder. Refer to form 49AA here - https://www.protean-tinpan.com/services/pan/pan-index.html This can be done online, attestation will be required though of a copy of your tax identification document (SSN card for US)

You should maybe just create your own wiki for all this stuff. It's nontrivial to search it ourselves

Yes, on point, we plan to post all of it on our blog (https://www.goinri.com/blog)

Best of luck, hope you succeed!

Good idea.

Thanks, if you're interested, do sign up and upload your docs to get started

why not just use an ETF

Launch HN: Inri (YC W23) – Wealthfront for Investing in India