Why Copying Other NRIs' Investments Is Dangerous

Rahul and Deepak share a desk at the same tech company in Dubai.

Same salary. Same age.

Same conversation every lunch break: "What are you investing in?"

Last year, Rahul told Deepak he'd started a SIP in three mutual funds through his NRE account. The returns were solid. Tax-free interest on his NRE FD. Life was good.

Deepak did exactly what most NRIs do. He copied Rahul's portfolio, fund for fund.

Six months later, Deepak's investments were frozen.

The problem? Deepak holds a US green card. Two of the three funds Rahul picked don't accept US-based NRIs. The AMCs flagged Deepak's account during a FATCA compliance review and suspended his folios.

His NRE FD interest, which is tax-free in India for Rahul, triggered a PFIC reporting nightmare with the IRS.

And the one fund that did accept US NRIs had a 30% TDS deduction that Rahul never experienced because UAE has no income tax complications.

Same funds. Same amounts. Completely different outcomes.

This isn't a rare edge case. We see versions of this story every week in our Belong community. NRIs copying each other's portfolios without realizing that the same investment can be legal for one person and a compliance violation for another.

The same return can be tax-free for one NRI and heavily taxed for another. The same timeline can be perfect for someone staying abroad and disastrous for someone planning to move back to India.

This article breaks down exactly why copying another NRI's investments is one of the most common and costly financial mistakes, and what to do instead.

The WhatsApp Group Problem

Let's name the real source of this behavior. It's not copy trading platforms or robo-advisors. For NRIs, investment copying happens over WhatsApp.

Someone in the group shares a screenshot of their mutual fund returns. Another person asks "which fund?"

A third person shares a YouTube link about a "best NRI investment." Within days, five people in the group have started the same SIP without checking if it actually fits their situation.

We've seen this pattern across thousands of conversations in our WhatsApp community. The intent is good. NRIs trust other NRIs more than they trust banks or financial influencers.

When someone who earns a similar salary, lives in a similar city, and shares a similar background says "this worked for me," it feels safer than doing independent research.

But "worked for me" hides an enormous amount of context. It hides their tax residency.

Their risk tolerance. Their timeline. Their other investments. Their family obligations. Their return-to-India plan. Their residential status under Indian tax law.

Strip away that context, and you're not copying a strategy. You're copying a single data point without the equation that produced it.

👉 Tip: When someone shares an investment recommendation in a group, ask three questions before acting: "What country are you tax-resident in?" "When do you plan to use this money?" "What's the rest of your portfolio look like?" If those answers differ from yours, the recommendation probably doesn't apply to you.

Your Tax Residency Changes Everything

This is the single biggest reason copying fails.

Two NRIs sitting in the same Dubai office can have completely different tax obligations based on their nationality, visa status, and where else they have financial ties.

A UAE-based NRI with no other tax residency is in perhaps the simplest situation globally. The UAE has no personal income tax. India taxes NRIs only on India-sourced income.

NRE account interest is tax-free under Section 10(4)(ii) of the Income Tax Act (Source: Income Tax Act). Capital gains from mutual funds face TDS in India, but with the India-UAE DTAA, double taxation is avoidable.

Now consider a US green card holder sitting next to that same UAE NRI. The US taxes its residents on worldwide income, regardless of where they live. Every Indian mutual fund is classified as a PFIC (Passive Foreign Investment Company) under US tax law.

PFICs face punitive taxation. Annual reporting is complex. Some tax advisors call Indian mutual funds "the single worst investment a US-connected NRI can make" from a compliance standpoint.

A UK-based NRI faces yet another reality. UK capital gains tax applies to worldwide gains above the annual allowance.

Indian mutual fund gains are reportable. The India-UK DTAA provides relief, but claiming it requires Form 10F and a Tax Residency Certificate.

Here's what this means in practice:

Sources: Income Tax Act Sections 10(4)(ii), 10(4D), 112A; US IRC Sections 1291-1298; UK TCGA 1992

When Rahul (UAE NRI) tells Deepak (US green card holder) that his mutual fund returns are "tax-free," he's not lying.

He's just describing his own situation. Deepak's situation is fundamentally different, and copying Rahul's portfolio creates a tax problem that could cost thousands of dollars annually in compliance and penalties.

Read our guide on NRI tax exemptions and deductions to understand what applies to your specific situation.

The Fund Restriction Trap

Beyond taxes, some investments are literally unavailable to certain NRIs.

Under SEBI regulations, individual AMCs (Asset Management Companies) decide whether to accept investments from NRIs in specific countries.

Most large Indian AMCs accept investments from NRIs in the UAE, UK, Singapore, and most GCC countries. But NRIs in the US and Canada face severe restrictions.

Only about 10-15 AMCs accept US/Canada NRIs. These include Aditya Birla Sun Life, SBI Mutual Fund, UTI, ICICI Prudential, Nippon India, PPFAS, Tata, and Sundaram among others.

The rest either block investments entirely or require additional FATCA compliance documentation that makes the process cumbersome.

What happens when a UAE NRI recommends a DSP or HDFC fund to a US-based NRI friend?

The friend tries to invest, gets rejected during KYC, and either gives up on Indian mutual funds entirely or worse, tries to invest through a workaround that violates compliance rules.

Even within the same country, restrictions apply based on account type. Investments routed through an NRE account are fully repatriable.

Investments through an NRO account have a $1 million per year repatriation cap under RBI guidelines. If you copy someone's investment but use a different account type, your money may be trapped when you need it most.

👉 Tip: Before acting on any fund recommendation, check two things on the AMC's website: (1) Does the fund accept NRIs from your country of residence? (2) Which account type (NRE/NRO) does the AMC require? If either doesn't match, the recommendation doesn't work for you regardless of how good the returns look.

Different Goals, Different Portfolios

Two NRIs can earn the same salary in Dubai and still need completely different investment strategies. Here's why.

NRI A plans to retire in India in 10 years.

They need to build a rupee-denominated corpus. Their priority is long-term growth in Indian equity, with a gradual shift toward stable income as retirement approaches.

They should be building SIPs in equity mutual funds today and planning to convert their NRE account to a resident account when they return.

NRI B plans to stay in the UAE permanently.

They need to keep most savings in USD or AED. Their India investments are supplementary, not primary.

They should focus on GIFT City USD FDs for currency-protected returns and perhaps a small equity allocation for diversification.

If NRI A copies NRI B's portfolio (heavy on USD FDs, light on equity), they'll arrive at retirement with insufficient rupee savings and a currency mismatch.

If NRI B copies NRI A's portfolio (heavy on INR equity), they'll have unnecessary currency risk for money they plan to use in a dollar-pegged economy.

The return-to-India timeline changes everything about how a portfolio should be structured, what accounts to use, and which tax benefits to prioritize.

Explore our tools for comparing NRI FD rates and GIFT City mutual funds to find what fits your specific timeline.

The Risk Tolerance Mismatch

Your colleague invested ₹5 lakh in a small-cap fund and it's up 40% in 18 months. Naturally, you want in.

But your colleague might have ₹50 lakh in total investments, making that small-cap allocation just 10% of their portfolio.

They can absorb a 30% crash without losing sleep. If you put ₹5 lakh into the same fund but your total investment portfolio is ₹8 lakh, that small-cap fund is 63% of everything you have.

The same 30% crash doesn't just cause discomfort. It wipes out a meaningful chunk of your net worth.

Risk tolerance isn't just about personality. It's mathematical.

It depends on your total portfolio size, your emergency fund coverage, your job stability, your family obligations, and how close you are to needing the money.

Two people with the same salary but different financial responsibilities can have wildly different capacity for risk.

The NRI who recommends a high-return, high-risk fund usually mentions the return.

They rarely mention the sleepless nights when the fund dropped 25% in March and they held on because they could afford to.

You might not be able to afford to.

Read about choosing funds based on your risk appetite for a framework that starts with your situation, not someone else's returns.

Survivorship Bias: You Only Hear About Wins

Nobody posts their losses in WhatsApp groups.

The NRI who bought a mid-cap fund that's up 35%? They'll share the screenshot.

The NRI whose ULIP has delivered 4% annually after charges for 8 years? They say nothing.

The friend who invested in a "guaranteed return" scheme that turned out to be a fraud? They're too embarrassed to mention it.

This creates a systematic distortion.

Every investment recommendation you hear from peers is pre-filtered for success. You're not seeing a random sample of NRI investment outcomes. You're seeing only the top performers.

And when you copy those, you're acting on a biased data set.

Kellogg School of Management research found that when investment portfolios are transparent and high-performing, other investors rush to copy them, creating herding behavior that increases collective risk without improving individual returns.

The same dynamic plays out in NRI WhatsApp groups, just on a smaller scale.

👉 Tip: When someone shares impressive returns, ask: "How long have you held this?" and "What did it do in the worst month?" A fund that's up 40% in 18 months might have fallen 25% in between. If you wouldn't have held through that drop, the 40% return is irrelevant to you.

The Relationship Manager Trap

This is a specific form of copying that deserves its own section.

Your bank relationship manager calls during your India trip. They recommend a ULIP, an insurance-linked pension plan, or a "special NRI FD" with a slightly higher rate.

You trust them because they're from a reputed bank. What you don't see is that relationship managers have sales targets.

Products with the highest commissions for the bank are often the worst products for you.

ULIPs, for example, can have first-year charges of 15-30%, meaning your ₹2 lakh investment might only put ₹1.4-1.7 lakh to work (Source: IRDAI charge structure guidelines).

This isn't copying another NRI. It's copying the bank's incentive structure. And it's equally dangerous.

A term insurance + mutual fund SIP combination almost always outperforms a ULIP over 10+ years, with better transparency and lower total cost.

Read about common NRI investment mistakes to understand the products that are sold to NRIs versus the products that actually serve them.

What Makes Every NRI's Situation Unique

Let's stack up all the variables that make each NRI's financial situation distinct.

Copying makes sense only when every one of these matches between you and the person you're copying. In practice, that almost never happens.

Even if you and your friend match on 8 out of 10, the two that differ could make the entire strategy wrong for you.

The Real Cost of Copying: A Calculation

Let's make this concrete. Suppose you copy a friend's portfolio without adjusting for your situation.

Scenario: You're a UAE NRI. Your friend is also a UAE NRI. Same salary, same age. You copy their three-fund portfolio. Sounds safe, right?

But your friend plans to stay in the UAE for 20 more years. You plan to return to India in 5 years.

Your friend put 60% in a GIFT City USD FD earning 5% in dollars. Smart for someone staying in a dollar-pegged economy.

You do the same. But in 5 years, when you move to India, you'll need rupees.

If the rupee strengthens against the dollar during that period (which, while uncommon historically, does happen in shorter windows), your USD FD may return less than a simple NRE FD would have.

More critically, your friend's 30% equity allocation in Indian mutual funds is a supplementary position for them.

For you, who needs to build a retirement corpus in India, that equity allocation should probably be 50-60% to grow adequately over your 5-year remaining horizon.

The cost? If equity mutual funds deliver 12% annualized and the USD FD delivers 5%, the difference on ₹20 lakh over 5 years is roughly ₹6-7 lakh in foregone growth.

That's not theoretical. That's real money lost because the allocation was optimized for someone else's life plan.

Use Belong's tools to compare how different allocations perform for your specific timeline.

What Should You Do Instead?

Copying is a shortcut that backfires. Here's what actually works.

Start With Your Own Variables

Before looking at anyone else's portfolio, answer five questions:

Where am I tax-resident, and what are the reporting rules there? When do I plan to use this money (or return to India)?

How much can I afford to lose without it affecting my life? What do I already own in India and abroad? What specific goal am I investing toward?

These five answers will automatically eliminate most recommendations you hear from others, because those recommendations were built on a different set of answers.

Build a Simple, Purpose-Driven Portfolio

You don't need 15 products. Most beginner NRIs need 4-6 well-chosen investments that cover safety, growth, and currency protection.

Each product should serve a unique purpose. If a new product doesn't fill a gap, skip it, no matter who recommended it.

Read our guide on building an investment portfolio tailored to your goals.

Use the Right Account for Each Investment

Your NRE account and NRO account serve different purposes. GIFT City accounts serve yet another.

Using the wrong account for an investment can trap your money, trigger unnecessary tax, or violate FEMA guidelines.

Get the plumbing right before worrying about which fund to pick.

Get a Second Opinion From a Registered Advisor

SEBI-registered investment advisors (RIAs) are fee-only. They don't earn commissions on products they recommend (Source: SEBI (Investment Advisers) Regulations).

This alignment of incentives means their recommendations are based on your situation, not their sales targets. The RIA registry is publicly available on SEBI's website.

At Belong, our advisory is built around the NRI-specific variables that most generic advisors miss: residential status changes, cross-border repatriation, GIFT City tax benefits, and FEMA compliance.

Explore GIFT City AIFs and track markets via the GIFT Nifty to start building your own informed strategy.

Review and Adapt Annually

Even a perfectly designed portfolio needs review. Tax laws change. Your goals shift. Market conditions evolve.

The 2025 Income Tax Bill proposed changes to NRI residency rules effective April 2026. If you're not reviewing your portfolio at least once a year, you're not investing. You're just holding.

👉 Tip: Set a calendar reminder for January every year. Spend 2-3 hours reviewing: Are your investments still aligned with your goals? Has your tax residency or status changed? Are there new GIFT City products worth considering? This single habit puts you ahead of 90% of NRIs who invest on autopilot.

When Is It Okay to Take Inspiration From Others?

Not all peer input is bad. There's a difference between copying and learning.

It's fine to learn about a product category from a friend.

"Hey, have you looked into GIFT City mutual funds?" is a useful prompt.

"I put ₹10 lakh into XYZ fund, you should too" is not.

It's fine to use someone else's portfolio as a starting point for research. Just don't use it as an ending point.

It's fine to discuss strategies in a community. That's exactly what many NRIs in our WhatsApp community do.

They share knowledge, not directives. They ask questions, not give prescriptions. The difference matters.

The best investment conversations happen when both parties understand that what works for one NRI might not work for another, and the discussion focuses on principles rather than specific products.

Build Your Own Strategy, Not a Clone

The most successful NRI investors we've worked with don't have the fanciest portfolios.

They have portfolios that match their specific reality: their tax residency, their return-to-India plan, their risk capacity, and their family goals.

Copying someone else's investments feels easy. But it substitutes someone else's homework for your own, and your situation has variables they didn't account for. The gap between their context and yours is where money gets lost.

Take the time to understand your own variables. Use tools built for NRIs. Ask specific questions in communities where people share knowledge without pretending one size fits all.

Many NRIs in our WhatsApp community discuss exactly these kinds of decisions every day, sharing experiences, asking questions, and helping each other think through the variables that make each situation unique. Join the conversation.

Download the Belong app to explore NRI FD rates, GIFT City mutual funds, GIFT City AIFs, and the GIFT Nifty tracker.

Or browse our mutual fund platform to find options filtered for your country and goals. Your best investment strategy is the one built for you.