Smartest investment and life plans in UAE

Beginners Guide to Investing in the UAE

By PolicyBazaar
  | Published: 15 January 2020 | Last Updated On: 19 January 2021

Invest smart today for a better tomorrow

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Smartest investment and life plans in UAE

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Long term savings and investments in the UAE have several benefits. It safeguards and protects your loved ones during phases of financial instability. Moreover, it ensures that you and your family can enjoy every moment that you have planned for the future.

Saving money is not enough to meet your long term goals. While saving money people usually put a small portion of their total earning into a savings bank account that yields interest. Banks act as a safe home for cash but the rates of interest that are offered are quite low. With savings bank account the end return on your saving is minimal which makes it difficult to accomplish your long term goals.

Investment in UAE is allocating your money into specific investment plans, tools or products with the motive of multiplying and growing your capital. Whether you are in your early twenties and just started making money or in your late fifties planning to retire it is never too late to start investing. Although investment in UAE involves high degrees of risk when compared to savings, the returns offered by investments are much higher than savings. You can start investing with a small lump sum saved in your bank account.

Types of Investments

There are several investment options available however an individual should choose an investment tool based on their requirements, long and short term goals. The major investment tools are as follows-

Bonds are meant for short and middle term investors. Bonds are basically loans issued by the government or private organizations over a specified period of time in return for a fixed rate of interest along with returning the original capital amount. Different categories and types of bonds involve different levels of risk but are considered safer than stocks.

Real estate is another form of an investment option that appreciates its value gradually over time. Investing in real estate always provides an option of renting your property which ensures a steady flow of income in the form of monthly rentals. Real estate is less volatile and therefore a reliable form of financial investment.

Equities or shares are issued by private firms and companies in order to raise money with the motive to develop the business. Investors in UAE buy shares which are traded on the Dubai stock exchange. In the modern era, stocks are considered the best form of investment with the potential to provide long term returns. Shares are volatile and returns are dependent on the market situation that means their value is likely to fluctuate.

Mutual funds are an investment tool that works by pooling money from multiple investors and invest the money in stocks, bonds, and other securities. Mutual funds provide small investors access to a diverse financial portfolio.

Gold has been considered as an important form of financial investment since times immemorial. Gold has an inverse relation with depleting value of the currency. Gold provides a hedge against inflation by providing financial cushioning for you and your loved ones during phases of financial instability. Even today gold has managed to retain its value as a precious metal which gives gold the status of a good financial investment tool.

Planning your Investments

Now, that you’ve understood why to invest? And types of investments, we’ll discuss about planning your investments.

Once you’ve gathered the capital to invest it is always recommended to speak with your financial advisor who will provide you guidance based on your current financial circumstances. Financial investments should be centered on your long and short term goals in life. Assessing your goals will help you to analyze how much you actually need to invest. Apart from looking up to your goals, planning of investments should be done in such a way that the investments in UAE do not add a burden on your pocket.

Before investment planning it is vital to understand and analyze the degree of risk involved with the form of investment one chooses to invest in. Options that reap huge returns are often accompanied by high degrees of risk.

Building a Good Investment Portfolio

Different industries and their assets respond in different ways to market situations. An ideal investment portfolio should include multiple classes of assets to mitigate the risk of financial losses during phases of market instability. Consulting a qualified investment manager can help an individual to build a strong investment portfolio that offers financial security.

It is very likely that the overall balance of your investment portfolio will evolve with time and age and not with market situations. The appetite for handling risks along with investment and financial needs are highly dynamic factors that change through different phases of life each requiring a different balance mechanism within your financial portfolio.

In a Nutshell

As the old saying goes, ‘take care of your money now and it will take care of you later’. Investments that appear small might multiply and grow several times to provide huge benefits. Different financial investments strengthen your financial portfolio providing overall financial security. Investing and making wise decisions today help an individual to plan a secure future for themselves and their loved ones.