Key Objectives of Investments:
You can diversify your investments to reduce risk. When you invest, you work to meet the following objectives —
- To Keep Money Safe — Capital preservation is a key goal for many investors. Some investments, like fixed deposits, government bonds, and savings accounts, protect your money from erosion over time. Though these options may offer lower returns, they ensure your savings remain intact.
- To Help Money Grow — Another common objective is to grow your money into a substantial amount over time. Capital appreciation, usually a long-term goal, secures your financial future. Investments like real estate, mutual funds, commodities, and equity can offer significant returns. While these options may carry higher risks, they also promise substantial growth.
- To Earn a Steady Stream of Income — Investment in Dubai and UAE can also ensure a regular income. Examples include fixed deposits with regular interest payouts or dividend-paying stocks.
These income-generating investments can support your everyday expenses post-retirement or serve as supplementary income during your working years. This can help you with costs like college fees or EMIs.
Who Should Invest in Investment Plan in UAE?
Whether you’re a resident or an expatriate, you can easily invest your funds in UAE in a range of investment products. While there is no minimum age requirement for investment in Dubai and UAE, you can consider investing for your financial goals as early as possible.
Here’s a general age group categorisation of when people usually invest in UAE —
- Early 20s — To inculcate the habit of saving and investment to create wealth in the future
- Late 20s — To plan for a business or an early retirement planning
- 30s — To plan for your children’s higher education and future requirements
- 40s to 50s — To plan for the family’s future in case of the policyholder’s unfortunate demise or for nearing retirement age.
Note: If you earn less than AED 6,000 per month, you should consider investing in the UAE to generate a second source of income.
What are the Types of Investment Plans in UAE?
In the UAE, there are a variety of investment plans that cater to residents and expatriates. There are several asset classes you can consider investing your funds in and generate wealth to achieve your future financial goals.
The investment plans are categorised as per risk appetite. These categories are —
- Low-Risk Investments — As the name suggests, these investment plans have minimal risk factors.
Here are some of the best investments in UAE in this category —
| Type |
Understanding Types of Investment |
| Capital Guarantee Plans |
These plans are a combination of a ULIP plan and a conventional Guarantee Return Plan. Unlike most market-linked commodities, the funds invested in this plan remain 100% secure and there is a 100% capital return guarantee at the time of maturity. |
| Guaranteed Return Plans |
This investment in Dubai is another excellent low-risk investment plan. It is a blend of savings and insurance plans that helps you save a fixed amount regularly for several years. Upon policy maturity, you get an assured return. During the policy tenure, you receive life coverage, which secures your family’s financial security in case a mishap occurs. |
| Fixed Deposits |
This is another low-risk investment in UAE. When you open a fixed deposit account, you earn interest at a pre-determined rate by depositing a fixed amount for a specific period. The deposit offers an assured return upon maturity and works on the power of compounding. |
| Gold |
This is one of the safest and best investments in UAE. You can invest in gold bullion, gold certificates, gold stocks, gold ETFs, and more. When you invest in gold, you get its ownership and earn a profit if the price of the metal rises. |
| Money Market Funds |
This is a debt fund and a short-term instrument. Here, the money you use to buy the fund is invested in different instruments with an assured return of up to 1 year with high liquidity. The major types of money market funds are treasury bills, commercial papers, repurchase agreements, and more. |
| High-Yield Savings Account |
This is another type of investment in UAE and offers higher annual percentage earnings. While conventional savings accounts usually have earnings lower than 1% annual percentage yield, these accounts have higher fixed or variable APY. The interest, meanwhile, is compounded yearly. This type of investment plan is suitable for those with short-term savings goals. |
| Certificate of Deposits (CoD) |
These are fixed-term financial instruments with a higher interest rate than traditional savings accounts. The investment term is usually from 6 to 18 months. CoDs are often offered by banks and credit unions. |
| Recurring Deposits (RD) |
This is one of the best investments in Dubai that enables you to invest money and save every month. The tenure can vary from 6 months to 10 years. The amount gets debited automatically, saving the hassle of remembering the date for depositing money. |
| National Bonds |
This is a Shariah-compliant investment in UAE that is flexible and enables you to save and invest money as per your income brackets. You can buy national bonds from banks, exchange houses, and government-run organisations. The investment can begin with an amount as low as AED 100. |
| Endowment Plans |
As an investment plan with a low-risk profile, it is a combination of a savings plan and life insurance. In plain terms, Endowment plans offers returns that were fixed at the time of policy purchase. This is a safer way to grow money while also receiving life coverage. |
- Medium-risk Investments — These investment options are ideal for those who have moderate risk appetite and are ready to expose their funds to a certain level of market volatility.
Such investments also help in earning higher returns than low-risk investments. Some of these investments in UAE are —
| Type |
Understanding Types of Investment |
| Real Estate |
As one of the most sought-after investments in Dubai and UAE, it represents a tangible asset that helps you diversify your investment portfolio. When you invest in real estate properties, you reduce the overall potential risk. The long-term capital appreciation ensures promising returns on investment. |
| Structured Products |
Structured products are becoming one of the most popular investments in UAE. These products are financial instruments whose performance is associated with commodities, indices, interest rates, and stocks. |
| Exchange-Traded Funds (ETFs) |
This is another medium-risk investment in Dubai and UAE. Here, the funds are traded in stock exchanges and help you diversify your investment portfolio. The range of assets also includes equities, commodities, bonds, and more. |
| Hybrid-Debt Funds |
This investment product is a blend of debt and equity investments. A significant portion of funds is invested in debt securities while a smaller portion is invested in equities. This way, it becomes easy to balance income generation and capital appreciation. |
| Commodities |
Another medium-risk investment in Dubai and UAE, this is an ever-evolving sector and includes a range of products — energy resources, agricultural products, and metals. |
| Private Equity |
When you invest in private equities, you balance risk and earn high returns on investment. Most private equities include companies that are not publicly listed, providing a different risk-return profile than public equities and bonds. |
- High-Risk Investments — If you are a seasoned investor who knows how to invest, you are well-informed about high-risk investments in Dubai and the UAE. If you are someone who wants to try investing in these types of investments, you should know that you can earn high returns on investment. However, the funds you invest get exposed to high market volatility.
Here are the major high-risk investments in UAE —
| Type |
Understanding Types of Investment |
| Mutual Funds |
This is an investment asset that pools funds from several investors to invest in a diversified portfolio of securities like bonds, equities, and more. Such mutual funds are managed by professional fund managers. |
| Unit-Linked Insurance Plans (ULIPs) |
ULIP investment in Dubai and UAE presents a blend of investment and insurance. When you pay your premium, a part of it gets invested in market-linked assets like equities, hybrid funds, debt, or a mix of all. The remaining portion of the premium goes towards life insurance. Thus, as a policyholder, you can earn returns on investment and life coverage. |
| Stocks |
This is another popular high-risk investment in Dubai and UAE. Stock investment is one of the best long-term investment products where, as an investor, you get a share of ownership in a company or an entity. |
| Forex Trading |
This is another investment in UAE with a high-risk profile. When you participate in forex trading, you simultaneously buy one currency and sell another one. This trading market operates 24/7, with the returns usually being high. |
| Crypto Investments |
This is a high-risk and high-reward investment option. |
How to Calculate Investment Returns in the UAE?
To estimate the returns on your investments in the UAE, use an SIP Calculator. This tool allows you to input details such as your monthly investment, expected return, and investment duration to estimate your potential returns.
Steps to Calculate Investment Return:
- Enter the Monthly Investment Amount: The amount you plan to invest each month.
- Expected Rate of Return: The anticipated annual return on your investment.
- Investment Duration: The number of years you intend to invest for.
While it helps you understand the useful estimate of potential returns, keep in mind that actual results may vary due to factors like market fluctuations and investment fees. It doesn’t account for exit loads or expense ratios but is great for helping you determine how much you need to invest to meet your financial goals
