5 Silent Risks NRIs Ignore While Planning Long-Term Wealth

A Dubai-based software engineer reached out to us last year with a frustrating problem. 

He had done everything right for 15 years: invested in Indian mutual funds, bought property in Bangalore, maintained NRE and NRO accounts, and even started SIPs for his children's education. 

His portfolio showed impressive returns in rupee terms.

Then he tried to calculate his actual wealth in dollars.

The number shocked him. After accounting for rupee depreciation from ₹45 to ₹85 per dollar over his investment horizon, his "12% annual returns" had become barely 4% in USD terms. 

Fifteen years of disciplined investing, and his real wealth growth was less than a UAE savings account would have delivered.

This is the pattern we see repeatedly at Belong. Smart, successful NRIs making solid investment decisions, yet missing the silent risks that quietly erode their wealth over decades. 

These aren't the obvious dangers like market crashes or fraud. These are the slow, invisible forces that compound against you while you're focused elsewhere.

Our WhatsApp community discusses these risks daily. Thousands of NRIs share similar stories and help each other avoid these traps. 

This article unpacks the five silent risks we see most often and what you can do about each one.

Why "Silent" Risks Are More Dangerous Than Obvious Ones

Market volatility gets headlines. Scams make news. Tax raids create panic.

But the risks that truly damage NRI wealth don't announce themselves. They work slowly, over 10, 20, or 30 years. By the time you notice, the damage is done.

Consider this: an NRI purchased a flat in Pune in 2010 for ₹45 lakh, spending an additional ₹5 lakh on interiors, for a total outlay of ₹45 lakh. 

At the time, the exchange rate stood at ₹45 to a US dollar, amounting to approximately $100,000. By 2024, the flat's value increased to ₹1 crore. Impressive, right?

After accounting for taxes and currency exchange, the USD gain was only $2,941, equating to a mere 3% total return over 14 years, according to analysis shared by veteran banker Sai on LinkedIn. 

That's less than 0.2% annualized.

The property more than doubled in rupee value. But the investor's actual wealth, measured in the currency he earns and spends, barely moved.

This is what silent risks do. They create an illusion of progress while quietly taking away your gains.

Risk 1: Currency Depreciation Eating Your Returns

This is the biggest wealth destroyer for NRIs, and the most ignored.

You earn in AED, USD, or GBP. You invest in INR. When you eventually need that money, whether for retirement, children's education abroad, or returning to your country of residence, you convert back.

That conversion step changes everything.

The Math Nobody Shows You

The rupee has depreciated roughly 3-4% annually against the dollar over the past decade. In 2025, the rupee had depreciated more than 6% against the US dollar, according to ICICI Direct research. 

It fell from approximately ₹85 at the beginning of 2025 to breach ₹90 by December.

Here's what that means for your investments:

A PMS portfolio growing 12% annually in INR delivers barely 7-8% in USD terms after currency adjustment. 

Over a 10-year horizon, a slow, steady rupee depreciation of 3-4% annually can wipe away nearly one-third of your returns.

What Most Blogs Miss

Currency risk isn't just about depreciation rates. It's about timing mismatch.

You're investing now, in strong foreign currency, converting to weaker rupees. You'll need the money later, when the rupee will likely be even weaker. 

Both the entry and exit work against you.

An NRI based in Dubai invested ₹1 crore in Indian equities in 2013. Over the next decade, the portfolio delivered a healthy 12% annualized return in INR terms. 

But in the same period, the rupee depreciated from ₹55 to ₹83 per USD. When the investor converted gains back to dollars, the final CAGR was barely 2-3%.

How to Protect Yourself

Option 1: Currency-hedged instruments

GIFT City investments offer USD-denominated products within India's regulatory framework. You get Indian regulatory protection without currency risk. Compare options using our GIFT City mutual funds explorer.

Option 2: Match investment currency to spending currency

If you'll retire in India and spend in rupees, currency risk matters less. If you'll stay abroad or fund education overseas, you need USD exposure.

Option 3: Diversify geographically

Don't put all your wealth in India. Maintain investments in your country of residence as well.

👉 Tip: Use our NRI FD rates comparison tool to compare traditional NRE FDs with GIFT City USD FDs. The difference in effective returns after currency adjustment often surprises people.

Risk 2: Estate Planning Gaps That Cost Families Years and Lakhs

Every year, NRIs lose crores in inheritance, unable to claim their parents' assets in India due to complex succession laws. The moment they try, they hit a legal wall: the demand for a "succession certificate."

This process often takes 6 to 24 months, sometimes longer. It costs ₹10-20 lakh, including 3% court fees on estate value in Delhi. 

It requires apostilled foreign documents, multiple affidavits, and powers of attorney.

The Problem Nobody Talks About

According to investment sources, approximately 85% of NRIs don't have proper estate planning. They assume nomination equals ownership. It doesn't.

Many NRIs assume that nominees automatically become owners. This is legally incorrect under Indian law. 

Nomination only designates who receives assets as a trustee. The actual distribution follows succession laws based on your religion, not your nomination.

What Happens Without a Will

Without a will, your assets distribute according to intestate succession laws based on your religion:

Hindus, Sikhs, Jains, Buddhists: Hindu Succession Act, 1956 applies. Class I heirs (spouse, children, mother) share equally.

Muslims: Sharia law applies. Fixed shares for specific relatives. You can only will away up to one-third of your estate to non-heirs.

Christians and Parsis: Indian Succession Act governs.

For NRI families, intestate succession frequently results in complications including unauthorized occupation by distant relatives, prolonged inheritance delays, extended legal disputes, and considerable emotional stress for family members.

Real Cases We've Seen

An NRI based in the US owned a prime property in Punjab. After his sudden death, his brother forged a will and took possession. 

His children, living abroad, had to fight a 7-year legal battle to reclaim their rightful inheritance. A registered will would have prevented this.

Another common scenario: Mother adds elder son as joint owner thinking "he'll take care of siblings." 

Elder son sells property, keeps proceeds, siblings get nothing. Mother's will becomes useless because property already transferred.

What to Do Now

Create separate wills for each country. A single global will might appear convenient, but separate wills for India and your country of residence often work more effectively. 

This ensures assets are distributed according to each country's laws and prevents conflicts between legal systems.

Register your Indian will. Registration costs ₹2,000-5,000 and makes wills harder to challenge.

Align nominations with your will. Ensure bank accounts, demat accounts, insurance policies, and property registrations all have updated nominees that match your will.

Set up Power of Attorney. Authorize a representative in India to handle formalities if needed.

👉 Tip: Review and update your will every 3-5 years or after major life changes like marriage, divorce, or childbirth. Estate planning isn't a one-time task.

Risk 3: Tax Rule Changes You Don't Track

Indian tax laws for NRIs change almost every budget cycle. What was optimal three years ago may now be inefficient or non-compliant.

Most NRIs set up their investment structure once and forget it. Meanwhile, the rules shift beneath them.

Recent Changes That Caught NRIs Off Guard

Capital gains tax revision (2024):

Short-term equity gains increased from 15% to 20%. Long-term equity gains above ₹1.25 lakh are now taxed at 12.5%, up from 10% above ₹1 lakh. 

Debt fund gains are now taxed at slab rates regardless of holding period, eliminating the indexation benefit that made them attractive.

Residential status rule changes:

The Income Tax Bill 2025, effective from April 1, 2026, introduces significant changes to tax residency rules. 

From April 2026, NRIs with ₹15 lakh or more Indian income will be treated as RNOR if they spend 120 days or more in India, replacing the earlier 60-day threshold.

A significant amendment targets individuals residing in tax-free jurisdictions like the UAE: Indian citizens earning ₹15 lakh or more from Indian sources but not paying taxes abroad will be treated as full tax residents of India. 

This rule applies even if they spend zero days in India during the year, according to India Briefing.

The "Deemed Residency" Trap

This is the rule that will catch UAE-based NRIs by surprise.

If you're earning significant rental income, dividends, or capital gains from India exceeding ₹15 lakh, and you're not paying tax in the UAE (which has no income tax), you may be deemed a full resident of India for tax purposes.

This means your global income becomes taxable in India. Every dollar you earn anywhere in the world must be reported.

What Changes You Should Track

👉 Tip: Set a calendar reminder each February when the Union Budget is announced. Spend 30 minutes reading how changes affect NRIs. The Belong blog covers budget implications specifically for NRIs.

Risk 4: Inflation Mismatch Between Countries

This risk is subtle but powerful.

You invest in India expecting certain returns. You plan your retirement assuming those returns will cover your expenses. 

But the inflation rates in India and your country of residence can be dramatically different.

The Two Inflation Problem

Let's say you're building a retirement corpus in India while living in the UAE. You assume 6-7% inflation when planning.

But India's inflation averages 5-7% annually. UAE inflation is typically 2-3%. If you retire in the UAE, your Indian returns need to beat UAE inflation, not Indian inflation. That's actually easier.

However, if you return to India, your foreign-currency savings face Indian inflation, which erodes purchasing power faster than you expected.

The mismatch works both ways:

Scenario 1: NRI staying abroad

Your India investments growing at 10% in INR, minus 4% currency depreciation, gives you 6% in USD. With UAE inflation at 2-3%, real returns are 3-4%. Reasonable.

Scenario 2: NRI returning to India

Your UAE savings earning 4% in USD, converted to INR with 4% currency gain, gives you 8% in INR. With Indian inflation at 6-7%, real returns are 1-2%. Barely breaking even.

What Most NRIs Get Wrong

They calculate returns in one currency and expenses in another without adjusting for inflation differentials.

A common mistake: assuming ₹5 crore is enough for retirement in India because "it's a lot of money." But with 6% inflation, ₹5 crore today has the purchasing power of ₹2.5 crore in 12 years.

Compare that to UAE dirhams: with 2% inflation, AED 1 million today still has the purchasing power of AED 780,000 in 12 years.

How to Plan for Inflation Mismatch

Be clear about where you'll spend. Your investment allocation should reflect where expenses will occur.

Use real returns, not nominal returns. Always subtract the relevant inflation rate from your expected returns.

Maintain currency balance. If unsure where you'll retire, keep investments in both currencies.

👉 Tip: Our retirement planning guides include inflation-adjusted calculators. Don't plan in nominal terms when you're 20 years from retirement.

Risk 5: Compliance Drift Over Time

You set up your accounts correctly when you first became an NRI. KYC was done. NRE and NRO accounts were opened. Demat account was converted.

Then years passed. Life got busy. Small violations accumulated.

This is compliance drift, and it creates time bombs in your financial structure.

Common Compliance Gaps We See

Using resident accounts after becoming NRI

Many NRIs continue with their resident accounts as before, which violates RBI guidelines. 

Once someone attains NRI status, they cannot operate a resident account to conduct transactions in India. Non-compliance may carry heavy financial penalties under FEMA.

Outdated KYC

Banks and mutual fund houses require periodic KYC updates. If your address, passport number, or visa status has changed and you haven't updated, your accounts can be frozen.

Wrong account for wrong purpose

Routing Indian salary through NRE account (should go to NRO). Using NRO funds for investments that should come from NRE. These mismatches create audit trails that trigger questions.

Missed FATCA/CRS reporting

If you're US-based, FATCA requires reporting foreign accounts. India has similar reporting agreements with other countries under CRS. Missing these filings creates cross-border complications.

PPF continuation beyond maturity

NRIs can continue with their PPF account opened in India, but it cannot be extended beyond the 15-year maturity period. Many NRIs don't realize this and face complications later.

The Penalty Problem

FEMA violations can attract penalties up to three times the amount involved in the contravention. For large balances, this can mean lakhs or even crores.

More commonly, violations result in:

Account freezes that take months to resolve. Difficulty repatriating funds when you actually need them. Higher TDS rates when banks classify you incorrectly. Complications during property sales or inheritance.

How Compliance Drift Happens

Year 1: Everything set up correctly.

Year 3: Passport renewed, forgot to update banks.

Year 5: Changed jobs, salary now going to old account.

Year 7: Started receiving rental income, using NRE instead of NRO.

Year 10: Major transaction, bank asks for documents you don't have.

The longer you wait, the harder untangling becomes.

Building a Compliance Review System

Annual checklist:

Verify bank accounts match your current status. Check all KYC is updated across institutions. Confirm TDS rates being applied are correct. 

Review FEMA compliance for all transactions. Check that nominees are updated and match your will.

Every 2-3 years:

Full audit of account structures. Review whether accounts still serve their original purpose. Check for any new compliance requirements. Consider consolidating scattered accounts.

👉 Tip: Use our compliance compass tool to check if you're following all necessary rules across banking, investments, and taxation.

The Compounding Problem: How Silent Risks Multiply

Here's what makes silent risks particularly dangerous: they compound.

Currency depreciation reduces your returns. Lower returns mean less corpus for retirement. Smaller corpus means more pressure to take risks. 

Higher risks mean more volatility. Volatility triggers emotional decisions. Emotional decisions lock in losses.

Meanwhile, missing estate planning means disputes when you die. Disputes mean legal fees. Legal fees eat into inheritance. 

Reduced inheritance affects the next generation's starting point.

Tax rule changes you didn't track mean surprise liabilities. Surprise liabilities force asset sales at wrong times. 

Wrong-time sales mean realized losses. Losses mean starting over.

These aren't independent risks. They feed each other.

What a Comprehensive Risk Review Looks Like

At Belong, we've helped thousands of NRIs structure their India investments. Here's the framework we use:

Currency Exposure Assessment

What percentage of your investments are in INR?

What currency will you spend in retirement?

Do you have any USD-denominated instruments like GIFT City FDs or GIFT City mutual funds?

What's your breakeven depreciation rate?

Estate Structure Review

Do you have a registered will for Indian assets?

Are nominations aligned with the will?

Is Power of Attorney in place?

When was the last review?

Tax Compliance Check

What's your residential status under current rules?

Are you aware of the 2026 changes?

Are DTAA benefits being claimed properly?

Is TDS being deducted at correct rates?

Inflation Planning

Where will major expenses occur?

Are returns calculated in real terms?

Is the corpus sufficient for target country's inflation?

Compliance Audit

Are all accounts properly categorized?

Is KYC current everywhere?

Any FEMA violations to correct?

Are PPF/other restricted products handled correctly?

Building Long-Term Wealth the Right Way

Silent risks don't mean you shouldn't invest in India. India's growth story remains compelling. The economy continues to expand. Corporate earnings are rising. The middle class is growing.

The key is investing with awareness.

Accept that currency is a real cost. Don't pretend rupee depreciation won't affect you. Build it into your return expectations. Explore currency-protected options.

Treat estate planning as urgent, not optional. A registered will takes a few hours to create. Intestate succession can consume years of your family's life. The math is obvious.

Stay updated on tax changes. You don't need to become a tax expert. But 30 minutes after each budget to understand NRI implications is worth it. The old vs new tax regime comparison affects most NRIs.

Match investments to your actual future. Don't invest based on where you are now. Invest based on where you'll be spending. If uncertain, diversify.

Build compliance into your routine. Annual review takes an hour. Fixing compliance failures can take months.

Take Action Today

Silent risks are called silent because they don't demand immediate attention. That's exactly why they're dangerous.

The NRI who contacted us about his dollar-adjusted returns? He's now restructuring his portfolio with currency protection, has created a registered will, and reviews his compliance annually. 

He wishes he'd started 10 years earlier.

You don't need to restructure everything today. But you do need to start:

This week: Calculate your actual returns in your earning currency. Use our NRI FD comparison tool to see how your current investments stack up against currency-protected alternatives.

This month: Check if you have a registered will for Indian assets. If not, start the process.

This quarter: Review your residential status and understand how 2026 changes affect you.

Many NRIs in our WhatsApp community share experiences with exactly these challenges. Join the conversation, learn from others who've navigated these risks, and get your questions answered by the community.

Download the Belong app to access our comparison tools, track your investments, and stay updated on changes that affect NRI investors.

Silent risks only stay dangerous when they remain invisible. Now that you see them, you can address them.

Disclaimer: This article is for educational purposes only and does not constitute financial, tax, or legal advice. Tax laws and regulations change frequently. Consult qualified professionals for advice specific to your situation.