Investment in Dubai

It is remarkable to witness the growth of Dubai from a quite port to a bustling metropolis that has emerged as a business hub in the Middle-East. Just fifty years from today Dubai was a small quiet fishing port that served as a gateway between the eastern and western world. Right from the land of sands to the modern-day business hub home to almost reputed corporate house and company Dubai has traveled a long way.

Investment Plans in UAE

With the growth of Dubai, the investment market also grew exponentially making the city the center for trading and investments. Investors from all across the globe have realized the importance of Dubai and have invested huge amounts of capital in the region which has led to the emergence of industries in the Middle-East.

There are several reasons behind the growing investment market in Dubai, out of which the primary reason is the lenient taxation system that promotes business and commercial activities in the region. It is a well-known fact that Dubai is home to the highest expatriate population in the world. A large number of expatriates migrate from their native countries in search of better job opportunities in the UAE. No matter whether one is an expatriate or an Emirati Dubai has something to offer to every investor.

Types of Investments in Dubai

The Dubai investment market is extremely diverse and filled with a plethora of options for investors willing to invest their surplus capital with the objective of growing it. Here’s a quick rundown on the types of investments in Dubai-

1.  Index Funds

Index funds are investment funds that hold every stock in a given index which means that instead of attempting to beat the benchmark, these funds aim to mirror the index they track. These funds are one of the best tools when it comes to adding diversification to one’s investment portfolio. Moreover, these funds follow the market performance instead of endeavoring to beat it.

2. Real-Estate

One of the most promising forms of investment especially for the Dubai investment market is real-estate. With the development and emergence of businesses in the city the demand for real-estate rose substantially within the past few years. However, there are some downsides associated with real-estate investments such as high initial cost, lack of liquidity, etc.

3. Gold

Dubai is also known as the city of gold due to its iconic gold souks that attract millions of tourists and gold enthusiasts from all across the globe. The precious yellow metal is not just limited to ornamental value but it is considered as a major form of investment for a lot of people in the eastern part of the world. Gold has unique abilities that provide a hedge against inflation. Furthermore, its high liquidity makes it one of the best investment tool for all classes of society.

Investments in gold can be made in the form of certificates, coins, bars, ETFs, and funds. Global equity valuations are usually high which is what makes gold a safe asset in case other assets are going down in value. 

4. Mutual Funds

One of the most popular and reliable forms of medium-term investments not just in the UAE but all across the globe are mutual funds that are created by pooled capital collected from several investors with the objective of growing their savings. Mutual funds are managed by professional fund managers that specialize in investment banking. The pooled capital is invested in different market-based securities that yield returns are provided in the form of dividends to the investors.

5. Stocks

The stock market is one of the most lucrative investment options for investors all across the globe. It refers to the collection of exchanges and markets where buying, selling and trading of shares of publicly-held organizations and firms takes place. The terms stock market and stock exchange are often used interchangeably.

6. SIP

A systematic investment plan commonly known as SIP is a type of investment vehicle where investors make regular contributions that are invested in different market-based securities to yield returns. One of the primary benefits of investing in SIP is that investors can save regularly even with small amounts of capital.

7. Bonds

National bonds are an ideal investment option due to the liquidity, safety, and the slightly better rate of return that they offer. It is easy to invest in national bonds. In most cases, the holding period for national bonds is 3 months after which they can be redeemed.

Investment Tips for Beginners

1. Small term investments

Small term investments carried out with the aim of fulfilling short-term goals. The savings in this approach should be extremely liquid investments. The main purpose served by this approach should be avoiding borrowing and panic during any financial emergency. The main purpose should be liquidity and not earning high returns. Investing in extremely liquid funds offers extremely low returns. People who do not have sufficient savings in bucket number 1 end up borrowing via loans or credit cards.

In order to make sure that willing investors choose the right investment vehicle we have come up with the list of some of the best small investments in Dubai, they are as follows-

  • Bonds
  • Fixed Deposits
  • Savings Bank account
  • Mutual Funds
  • Stocks
  • SIP

2. Diversification of Investment Portfolio

One of the important strategies that help investors to portfolio against various risks is by adding diversification. Portfolio diversification refers to the process of opting for various types of securities and investments that are inversely related to each other. When an investor invests in different securities that are not directly related to each there is safety and the degree of risk associated is considerably low.

Investors should always diversify their investment to make sure that their portfolio is safe against the strokes of uncertainties. According to financial experts’ diversification is a great strategy for investors looking forward to reducing the degree of risk associated with their investment portfolio. Typically, the process of diversification includes investing in different market-based instruments that reduce the risk.

How to Choose Best Investment in Dubai

The following steps will help you to choose the best investments in Dubai:

  • Assess your long- and short-term goals along with the time horizon and appetite for handling risks.
  • Research and look for investment tools that match your risk handling capacity and fulfill your goals.
  • Compare different investment vehicles on the basis of different factors like investment cost, time horizon, degree of risk, returns, etc.
  • Try and avoid investment vehicles that have high returns along with a high degree of risks as there is a probability that the investor might end up losing their capital.
  • Seek advice from a financial expert and then finalize your decision. 

Why Invest in Dubai

As mentioned earlier Dubai has emerged as the business capital of UAE that is home to almost every leading company in the world. With the development of businesses and industries in Dubai, there has been an exponential rise in the investment sectors that have managed to attract a large number of investors in the UAE. Another major reason that makes Dubai an absolute paradise for investors is its taxation system. Dubai is a tax-free zone with no tax on capital gains and income therefore investing in Dubai turns out to be quite beneficial in comparison to other regions in the middle-east.

Apart from being crowned as the city of gold Dubai is well known for its luxury lifestyle, shopping malls, low crime rates, nightlife making it the perfect place to spend life with one’s family. Moreover, the political situation in Dubai is quite stable which ensures that your investment will not be impacted due to geopolitical instability and disturbances. The location of Dubai makes it the bridge between eastern and western parts of the world.

Features and Benefits of Investment Plans in UAE

There are numerous benefits of investing, some of them are: 

1. Hedge Against Inflation

An individual due to inflation may end up losing money over time, which makes it important to invest funds and grow them. The rate of return earned on the funds helps in hedging against inflation since the value of funds increases.

2. Builds Wealth

Investing is the key to building wealth. There are numerous ways to invest in the market. However, one should create a proper investment plan that meets the objectives and needs.

3. Smooth Retirement

A smooth retirement with sufficient funds can be attained by making one’s money grow. The higher the amount of investment, the higher is the compound interest.

4. Meeting Financial Goals

One can even choose to invest in order to achieve a financial goal such as purchasing a car, financing a dream holiday, saving for a child’s further education, etc. The earlier one invests the money, the faster one achieves financial goals.

Investments Plans in Dubai/ UAE

There are numerous providers in UAE offering investment opportunities, some of them are:

Provider Name Investment Opportunities in UAE

Emirates NBD

  • Super Saver Plan
  • Income Builder Plan
  • Tawfeeq Investment Programme
  • Takaful & Savings Programme

ADIB

  • Short Term Investment
  • Investment Solutions

Rakbank (RAKinvest)

  • Fixed Income Products
  • Mutual Funds
  • Structured Products
  • Unit Linked Savings and Investment Plans
  • Whole of Life Protection Plans
  • Term Assurance

HSBC

  • Fixed Income
  • Mutual Funds

ADCB

  • ADCB Managed Funds
  • International Mutual Funds
  • Systematic Investment Plans
  • Structured Products
  • Trading Services
  • Investment Strategy
  • Whole of Life Insurance
  • ADCB Securities
  • Asset Management

Tips to Choose the Best Investment in Dubai/UAE

Use these key steps in order to find the best investment in the UAE: 

1. Clear Goals and Objectives

It is important for an investor to take time and think about his or her expectations out of the investment. Being well aware of the requirements and risk appetite helps in getting a headstart in the investment industry.

2. Time Horizon

It is important for an investor to know when he/she aims at getting back the money invested. The time frame varies as per financial goals, which impacts the level of risk one can take.

3. Diversify the Portfolio

The key role of investment is to diversify the investment portfolio with securities that are negatively correlated. Diversification helps in maintaining a balance between return and risk by spreading the funds.

4. Review the Charges

There is a fee involved in any kind of investment. It is important to properly research the charges involved in any kind of investment, and whether they are reasonable.

5. Review with Time

Investments are to be reviewed with time, especially as one crosses the important milestones in life. This helps in ensuring that an investor’s investments match his or her current financial position and requirements.

Why Should You Invest?

Ans:

Earning money at present is not enough as it may not be sufficient to fulfill the financial goals of life. Therefore, it is important to invest funds. The funds lying in the bank as savings is like letting an opportunity to earn money pass by. It is important to smartly invest in the various plans available in the market as per the one that is suitable for your goals.

By choosing the best plan, one can achieve maximum returns in the long-run, which can be accumulated as wealth to achieve major financial goals in the future.

What is the difference between Saving and Investment?

Ans:

The terms ‘saving’ and ‘investment’ are often used interchangeably. However, both are not the same. Savings are a form of account that holds no risk. The interest earned is on the money that is saved, and there are guaranteed returns. It is ideal for someone who wants to save for a short-term period purpose.

Whereas, investment plans aimed at creating wealth in the long run. The risk however in these plans is higher, which is why the potential returns are higher. In this, the investor’s money is invested in different kinds of investment vehicles that have a probability of generating high returns in the future.

When Should You Start Investing?

Ans:

The earlier one starts investing, the higher are the chances to benefit in the long run. The best age to start investing is when you start earning a stable income. By investing at an earlier age, you can take advantage of higher compound interest. It also helps in recouping any losses arising because of market conditions.

What is the Eligibility to Buy Investment Plans?

Ans:

The investment market is growing by the day with new innovations and products. The eligibility requirements for investing in the various kind of investment vehicles varies as per the providers in UAE.

What are the Best Investment in UAE for Expats?

Ans:

The best investment in UAE for Expats is in stocks, bonds, real estate, gold, mutual funds in UAE, or the other types of funds.

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