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Liquidity in terms of finance refers to the ability of an investment tool to be converted into cash or forms that are similar to having cash. Liquidating an investment means to sell an asset against cash or bring it to a form that can be converted to cash easily. In this article, we’ll be discussing everything you need to know about liquidating investments in UAE.
Fixed deposits or FDs are one the most liquid investment available in the market. Financial institutions typically offer a rate of interest varying from 1.05% to 1.85% for breaking an FD. The rate of interest that is charged on the fixed deposit is only for the time when the FD was with the financial institution rather than the original tenure.
Suppose you invested in a FD for five years at an interest rate of 6% pa and you break your FD within 1 year the interest that you would receive would be applicable for one year i.e. the time FD was with the financial institution, along with the imposition of the penalty. Banks and financial institutions allow investors to opt for loans against FDs which is a smarter way to counter your emergency cash requirement instead of liquidating the investment in UAE.
Mutual funds allow investors to withdraw from open-end equity funds at any given time. Although mutual fund investments are liquid in nature, short term gains of almost 15% are applicable if you liquidate your investment before a period of one year. If you liquidate your debt fund investments in the UAE before a period of three years then you’ll end up paying short-term capital gains. The average life span of a mutual fund lies between three to five years.
Stocks traded on the stock exchange are quite liquid assets that come with no penalties if your investment in UAE has completed one year. You can place a selling order with your broker which is the first step in liquidating your investment in UAE. Once the request is approved the next step is delivering the shares to the broker’s account which can be done by filing a transaction slip. After receiving the shares the broker provides a paycheque to the seller. The entire process of liquidating your investments in UAE typically takes three to six days.
A business asset is an entity of value owned by a firm or company. Business assets include real estate, vehicles, electronic devices, furniture, etc. If you are planning to finally wrap up your business, liquidating investments in UAE is an important step to extract the maximum benefit.
In order to liquidate your business assets in the UAE, you might need help from an insolvency practitioner if the process involves formal insolvency. The first step in liquidating your investments in the UAE is documenting all your assets which should essentially include the worth of intangible assets.
Very often sellers encounter situations where some of their assets are not worth selling and sellers should donate such assets that cannot be sold. Sellers can assess the value of their assets by online websites and auctions. Internet helps investors by connecting potential buyers and sellers which makes it even easier to liquidate investments in UAE.
It is very crucial to choose the correct method and chronology while liquidating your investment in UAE. Buying and selling via the internet has become very popular and minimizes cost, public auctions are an appropriate way of liquidating existing investments in the UAE.
It is recommended to contact interested parties directly while selling intangible assets. Dedicated investment liquidation companies offer quality services at an affordable cost which reduces hassle and stress to a great extent.