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Basically the money is sent as a financial support for my parents but they end up putting most of it in banks (FD)
Rising Star
I was sending money for a while to my parents for support even though my parents are pretty self-sufficient with their pension. They just kept putting it in FDs thinking that I had no sense of investment and would waste my money. I talked to them and stopped sending money unless when needed. Diversified my portfolio with FDs, stocks, etfs in both India and the States. I tell them what I do with my money when they ask me and they seem satisfied. After seeing my returns, I helped them with a stock portfolio in India recently.
Send them if they need it and invest smartly with the rest of the amount. Something as simple as VOO or QQQ will take you a long way than just FDs.
I have had lengthy whiteboard discussions on this with my fellow desi consultants and there is really not much benefit to sending money to India to invest especially in the medium term (less than 10 years horizon), after you account for taxes, exchange rates and factor in systemic risks to the Indian economy.
Fully agree with McK1 here, best to keep investing here in a vanguard or fidelity ETF(s).
Rising Star
Like P1 asked, $2.5k for their monthly expenses or sending them so that they are saving it for your future ? Very different situations so need to clarify. At the benefit of doubt, I think you sending it for savings, then I would not put money in banks (here or there). They just give interest that adjust inflation. You need to grow your money much beyond inflation (stocks, real estate,bonds, rental properties etc) for better & safer retirement.
Are you sending money to parents or sending it to deposit in FD?
Sending money to parents and they deposit that in a bank there
I send 20k per month . Recurred transfer.
M2 $200k base and 15% bonus
What do you use for recurring transfer
I transferred here. I transfer from my India account. Have money there.
It’s also important to ask yourself if that money will likely be used in India or here in the US. With the way the USD is performing against the INR, you stand to lose a lot if you’re planning to convert it back for use into USD.
I send about $1000 every month
I want to clarify that I was addressing OP’s proposition of Indian FDs only. Of course one can find pockets of outsized opportunity investing in Indian equities. But $ for $ there is not much normalized delta to investing in Indian FDs vs US CDs. One other thing that most folks forget is that inflation is higher in India, so even though you may get higher interest rates (in absolute terms) there is an accelerated devaluation of the INR especially if you are doing the NRE vs NRO FD route.
Those who are sending money to India and hold separate India accounts or hold jointly with parents, make sure you file FBAR form if you hold more than $10k outside US.