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Smartest investment and life plans in UAE
One of such strategies is the 3 bucket investment approach. This is a straightforward method to invest your savings. It accounts for your investment needs at different stages of your life in order to help you meet your desired financial milestones or goals.
This investment method involves three virtual buckets, which help to classify your savings in order to address your different financial goals and needs.
This bucket should be dedicated to your emergency savings and other short term goals. The savings in this bucket should be into liquid or near cash investments. The purpose of holding this bucket is to avoid any panic or borrowing that may be brought during an emergency. You can move onto saving for your financial goals after you have saved a sufficient amount towards your emergency savings. The short term financial goals vary from saving for a vacation to buying any electronics among others.
Focus on Liquidity
The aim of investing in this bucket is to hold liquid funds in order to manage an emergency or to meet short term goals and not to earn great returns. You should hold funds in this bucket that can be accessed within 24-36 hours. The returns on this bucket are usually low because the nature of the investments is very liquid.
People who do not hold any savings, usually find themselves in a situation where they might have to borrow funds on credit cards or loans. A lot of their money is drained on paying the interests and principal, which can be very stressful.
This bucket is allotted for an aggressive financial strategy that helps in achieving your short to medium period goals like:
All investments allotted to this bucket are usually less liquid in the short term. Usually, they hold a maturity period of 1-5 years. They may be in volatile assets.
How to Invest in UAE Using The Medium Term Investment Options
This bucket is the most important yet is ignored by many. This focuses on long term goals with a duration of more than 5 years, such as:
How to Invest in UAE Using The Long Term Investment Options
In a Nutshell
It is good to consult someone with professional experience if you have any confusion with how to invest in UAE in the investment that is most suitable for you depending on your financial goals, time horizon, risk tolerance, and financial standing. It is important to form a proper balance in your buckets, in order to achieve a healthy financial future.