5 Questions NRIs Should Ask Before Allocating to USD

First-time NRI investors ask "should I invest in USD?" Experienced ones ask something sharper: "how much, through what, and what breaks if I'm wrong?"

At Belong, we work with NRIs who've already been investing for years. They don't need convincing about USD.

They need a framework. These are the five questions they ask before committing capital.

1. "What Percentage of My Portfolio Actually Needs to Be in USD?"

This is the question that separates strategy from impulse. The answer isn't a fixed number. It depends entirely on where your future obligations sit.

An NRI planning to stay in the UAE long-term needs 60-70% in USD or AED-linked assets. Someone returning to India within 3-5 years needs the opposite: 60-70% in INR, with a smaller USD buffer.

The rupee has depreciated roughly 4.5% annually against the dollar over 34 years (Source: Kotak MF/Bloomberg, Dec 2025). That's the structural headwind. But your spending currency matters more than any macro trend.

Here's the allocation framework we use at Belong:

Read our detailed asset allocation guide for NRIs and compare it against your current portfolio split. If you're heavily tilted one way, that's your action item.

👉 Tip: Map every major financial goal (retirement, children's education, property, parents' care) to a country. That country determines the currency. No guesswork needed.

2. "GIFT City FD, FCNR, or Both? What's the Actual Trade-Off?"

Experienced NRIs don't ask "what's the best product." They ask "what am I giving up with each option?" Here's the honest comparison.

GIFT City USD FDs offer higher rates (4-6%), flexible tenures starting from 7 days, and tax-free interest in India (Source: IFSCA). The trade-off: no DICGC deposit insurance.

FCNR deposits offer DICGC coverage up to ₹5 lakh (roughly USD 5,600) per depositor per bank (Source: DICGC). The trade-off: lower rates, minimum 1-year tenure, and premature withdrawal before 1 year forfeits all interest.

Here's the nuance most articles miss. DICGC covers ₹5 lakh. If you're deploying USD 50,000, that insurance protects barely 11%. At that scale, the bank's balance sheet is your real safety net, and it's the same bank in both cases.

What seasoned NRIs actually do: FCNR for amounts within the insurance ceiling. GIFT City for everything above. No dogma. Just math. Read our balanced assessment of GIFT City trade-offs.

3. "What's My Real After-Tax, After-Depreciation Return?"

This is the question that exposes hollow advice. Most NRI content quotes headline rates. Experienced investors run a three-layer filter: nominal return, minus tax, minus currency depreciation.

Take an NRE FD at 7.25%. Tax-free in India, so after-tax return stays 7.25%. But the rupee fell 4.8% against the dollar in 2025 (Source: UBS via ANI, Feb 2026). Real dollar return: roughly 2.5%.

A GIFT City USD FD at 5% has no currency risk. Real dollar return: 5%. No adjustment needed.

For UAE NRIs, zero personal income tax means the GIFT City return is genuinely 5% net. UK NRIs must report GIFT City income at their UK marginal rate since April 2025. US NRIs report it on their 1040.

The takeaway: Calculate returns in the currency you spend, after all taxes in both countries. Use the India-UAE DTAA and our guide on avoiding double taxation to confirm your position.

👉 Tip: A 5% USD return with zero tax and zero currency risk beats a 7% INR return eroded by 4-5% depreciation. Run every investment through this three-layer filter before committing.

4. "What Happens to My USD Allocation When I Move Countries?"

This question reveals the experienced investor. Beginners think about today's returns. Veterans plan for the next passport stamp.

The good news: GIFT City products don't need restructuring when you relocate. Your FD stays. Your mutual fund NAV doesn't reset. What changes is your tax reporting obligation in your new country of residence.

UAE → India: Your GIFT City investments continue. During RNOR (2-3 years after returning), foreign-sourced income stays tax-free. Structure FD maturities within this window.

UAE → UK: GIFT City income becomes reportable on your UK Self Assessment. India-UK DTAA provides relief, but you must claim it.

UAE → US: GIFT City FDs remain straightforward. But mutual funds may trigger PFIC classification. If a US move is possible, stick to FDs.

The principle: Favour products with simple tax treatment. GIFT City FDs are "interest income" everywhere. Mutual funds and AIFs can trigger complex classification depending on destination.

5. "Am I Building a USD Position or Just Parking Cash?"

This is the question that separates wealth builders from savers. Parking cash means a lump sum in a 1-year FD. Building a position means systematic allocation across products and tenures.

What a built USD position looks like:

A base layer of GIFT City FDs at staggered maturities (1-year, 3-year, 5-year) to capture rates while maintaining liquidity. A growth layer of GIFT City mutual funds for India equity exposure in USD. An emergency layer of 3-6 months' expenses in a short-tenure FD or UAE bank account.

The Fed has been easing rates since late 2025 (Source: SBI Funds Management via ANI, Jan 2026). Locking longer tenures now captures today's rates before they decline. Track movements on the GIFT Nifty tracker.

👉 Tip: Treat your USD allocation like an SIP. Add to it monthly or quarterly. Don't wait for the "perfect" exchange rate. The rupee's long-term direction makes timing less important than consistency. Read about common NRI investment mistakes that stem from this exact hesitation.

Your Next Step

These five questions are the framework thousands of NRIs in our WhatsApp community use before every USD allocation. The conversations are specific, practical and free of sales pitches.

When you're ready, the Belong app puts the tools in your hands. Compare FD rates. Explore mutual funds and AIFs. Track the GIFT Nifty. Ask the right questions first. The right allocation follows.

Disclaimer: For informational purposes only. Not financial, tax or legal advice. Consult qualified advisors before investing. Rates and regulations subject to change. Data from published sources as of early 2026.