Know about Retirement Planning and the best time to start making investments for a steady stream of money after retirement.
Invest smart today for a better tomorrow
Smartest investment and life plans in UAE
Irrespective of where you go in the world, saving money is amongst the top priorities for the majority of people. However, only some of them are able to keep aside a huge part of their income for achieving their financial objectives in life and securing an easy and comfortable retirement.
Coming back to the Emirates, as per a survey, around 38% of the UAE residents have the ability to save only 10% of their income. While only 23% are able to put aside 10-25% of their income. And, the worrisome part of the statistics is 28% (around 3 out of 10) people who are not doing any savings.
If most of the earning population in the UAE earn less than AED 10,000 in one month, it means the majority of the people are hardly able to spare around AED 1,000 (or even worse, nothing at all) on each payday.
However, according to financial experts, the people who are determined to build their own income should not lose hope. This is because the amount of savings they make every month does not matter, be it AED 100, 250, 1,000, or 2,000, they can still add value to their money.
The solution is not to keep that unspent income inside a jar or put it in a no-interest bank account. Rather, invest it.
In fact, there is no need to keep aside a ton of dirhams for becoming an investor. You don’t even need a Ph.D. or a master’s degree for putting small amounts of funds to work.
In case you have managed to keep AED 2,000 aside, here is how you can put it to the best use.
ETFs or Exchange-Traded Funds can be bought at low costs from a broker, just like stocks. The investor has the option to invest the number of shares they find suitable.
The ETFs make use of pooled funds from different people for acquiring a diversified portfolio that may include bonds, stocks, and commodities. They can be traded just like stocks and can provide a good rate of return.
Since diversification is an important part when you invest in UAE, irrespective of the amount of seed money, you should keep aside a part of your AED 2,000 for investing in ETFs.
If you talk about the most popular investment options across all economies, Stocks will always be a part of the list, especially for those having a high net worth. They are pretty affordable, and you can purchase them from a few of your favorite companies at an amount as low as AED 100.
Investing in multiple stocks, say, a minimum of 5-6, for having a diversified portfolio can be a smart financial move.
However, keep in mind, that while purchasing stocks, you should enlist the services provided by the discount broker rather than a full-service professional, who works only with investors having a huge amount of money to invest in UAE, or the ones who have the capability of affording the payment of a high commission and minimum deposit.
For this, you can open an account with a discount brokerage firm online. The alternative is purchasing shares from a company directly, in case you wish to save money on the fees or commission of the broker.
Gold does not just hold a cultural value, but also a lot of wealth. It is recommended that you put aside around 5% of your income for investing in gold, in order to protect your savings from the impact of inflation.
Gold is one of the most commonly held assets in the case of diversified investment portfolios because it can help in hedging against inflation. It can be called a safe haven, which performs well at the times when the equities are underperforming.
This can add up to a good diversification for various traditional investments including mutual funds. Thus gold can prove to be a good investment for all.
In case you have a shortage of time for doing self-research for obtaining the best ETFs, stocks, or other small investment alternatives, mutual funds can be your solution.
When you choose to invest in mutual funds, you will get the advantage of the fund manager’s expertise, who is do all the necessary research and homework on your behalf. This may include choosing the best securities, or bonds and stocks, which could help in making your money grow.
Do you know what’s the good part? You do not need hundreds or thousands of dirhams for making the investment. The benefit of mutual funds is that the size of the ticket is not too large and hence, it does not include any entry barrier for anyone.
Mutual funds can prove to be an ideal option for those who wish to invest lower amounts as they offer an economical alternative for purchasing direct stock while still allowing for an adequate diversified portfolio.
You may wish to consider adding a part of your AED 2,000 in the bonds. Although it sounds like a good idea, especially when there are only a few options for bonds, which do not need a big investment, some financial experts advise the owner of the bond to remain cautious.
Bonds can prove to be a favorable class of assets as they offer a consistent income while also being considered a low-risk investment. However, it is recommended to take precautions when it comes to investments in bonds these days because the promise of a rise in the rate of interest comes along with an inevitable downfall in bond yields.
Generally, bonds have low liquidity and a heavy ticket size and are not a preferred class of assets for the investors from the lower & middle-income group. Some of the bond funds have the capability of making investments easy, though most of them are accumulators of different corporate bonds and hence, should be researched thoroughly before making the investment.
To Sum Up!
Just because you have already invested your AED 2,000 in the investment options suggested above, doesn’t mean you can now relax and wait for your funds to grow themselves.
It is essential to make your investment grow. Save more and then invest it. All of these investments must be done on an annual or monthly basis.