UAE specific investment options

UAE specific investment options

Investing your savings provides financial security to present and future for you and your family.. It helps you grow your wealth, generate inflation-beating returns, and helps create regular income. Investing some amount from your savings allows you to put your money in vehicles that have the potential to earn back strong rates of return and help you save for retirement.

The laws and transactions in the UAE are straightforward and encouraged by a business-friendly, well regulated financial environment. As one of the world’s fastest and freest economies, UAE has a global minded business culture with a stable and investor friendly global market.  The ever-growing economy of the UAE offers a multitude of choices when it comes to investing.

Investment in the UAE is growing at an incredible rate with an expanding range of asset classes to choose from. Amongst the multitude of choices, investors are welcomed to invest in stock exchange trading, bonds, real estate purchase, private pension schemes, funds, gold, and deposit accounts. Along with Dubai, Abu Dhabi, Ras Al Khaimah, and Sharjah are also attractive fonts for investments.

Benefits of investing in UAE

Having a global mindset and a liberal business environment, UAE is an excellent place to invest to grow your finances. The tax-free zones and various investment opportunities provide a dynamic financial sphere for investors to make the most of their money.

1. Economic stability and conducive business environment
2. Strategic location
3. Strong financial reserves and large sovereign wealth funds along with sustained government spending.
4. Freedom from tax
5. Growing tourism, thus growing economy
6. UAE ranks among the leading countries in the world in 100 global development indicators
7. Investors don’t need a residency visa to invest
8. UAE is a major player in the international trade networks
9. UAE allows 100% foreign ownership
10. Buying properties worth more than AED 500,000 means you become eligible for a residency visa as well

The world-class capabilities, services, legal frameworks, government aid, infrastructure, and resources available help international investors, entrepreneurs, professional talents, and start-ups to invest in the UAE market making it a very promising market, which has shown steady growth and development for several years in a row.

Investing in UAE

Whether you’re a an Emirati, or an expat residing in the UAE, the journey to invest and gain financial independence inevitably starts by learning how to invest money in the UAE. With the availability of multiple vehicles for investments and options, it can get challenging and confusing. You can invest your money as a lump sum or as a Regular savings plan/Systematic Investment Plan (SIP).

In lumpsum investments, you can optimize your savings to grow wealth or create a passive income. In regular monthly investments, you can accumulate capital and grow wealth for important long-term financial goals, for example for retirement.

Some of the most popular investments tools in the UAE are:

1. Stocks
2. Bonds
3. Mutual funds
4. ETFs
5. REITs
6. Real estate
7. Bank deposits
8. Pension plans
9. Cryptocurrency
10. Gold

Investing plan

In order to avoid the errors, an investor can make while investing it is essential to have an investing plan. The plan helps the investor in avoiding mistakes or following and trusting different sources blindly.

Some of the errors an investor can make are:

1. Stock investing in individual companies instead of diversified portfolios
2. Investing based on other’s advice without conducting research
3. Following the trends blindly even if it doesn’t match your goals
4. Being locked into insurance or saving plans for a long time.
5. An over-focus on real estate instead of stock market assets

Therefore, before starting your investments, you need to create an easily actionable investment plan to guide you in your wealth-making decisions.

• The first step is to understand your current situation and create an outline for your existing assets to understand where you stand currently.
• Create a list of all the debt you owe. For example, mortgage, business loans, credit cards, car, or property loans, etc.
• Next, create a clear investment goal for yourself and answer the question of why you want to invest. It could be for financial independence, growing your wealth, retirement, or capital for your business ideas.
• Once the investment goals are defined, they are converted into clear objectives.
• These objectives will further help you in deciding what type of investment you would like to carry out and what options are available for the best possible outcome.
• Once you have an objective it also becomes easier to create a budget and decide how much you want to invest.
• Financial planners often recommend the budgeting practice of following the 50:30:20 rule. In this plan, you allocate to spend 50% of your income on essentials, 30% on discretionary spending, and save/invest the remaining 20%.
• Doing so helps to build the habit of spending less than you earn and you will enjoy the benefit of compounding.
• Financial planners also advise on starting an emergency fund before investing.
• An emergency fund is money set aside to cater for unplanned and unexpected expenses resulting from job loss, medical crisis, natural disasters, unexpected repairs, etc.

Factors to consider when investing in the UAE

Before investing an investor would need to consider various factors that would come into play for investing in the UAE market. It is advisable to seek clarity and financial help to invest smarter and to make the most out of your investments in accordance with your goals and objectives. Some of the factors to consider are:

• The investment opportunities available to a foreigner or resident expat
• The stability of the regulations around foreign investment in the UAE
• The levels of protection available to foreign investors in the UAE
• The incentives provided for foreign investment in various sectors
• The aid and encouragement available from the UAE government
• The exchange rates of home currency and the currency of UAE
• The incentives provided by banks and financial institutions

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Types of investments

The UAE is one of the world’s easiest places to invest or conduct business in. With government encouragement, economic expansions, and a diverse private sector, investors can invest in different types of investments. Residents as well as expats and non-residents can start trading on the UAE Stock Exchange with minimal paperwork. Getting a business license to set up a local business to trade locally or internationally is also a relatively quick and easy process with many of them offering 100% foreign ownership. The real estate market is ever growing and in demand thus providing benefits to many foreign investors who reap the profits. Private pension schemes, mutual funds, gold, and other asset classes are also popular investing options there.

Some of the types of investments an investor can make are:

1. Property investment in the UAEReal Estate is a growing and in demand sector in the UAE with more and more expats investing in property in places like Dubai and Abu Dhabi for more than two decades. With the help of government incentives, straightforward paperwork, and tighter regulations limiting property speculation, real estate is creating a stable as well as an affordable market for investing.

2. Business investments in the UAE
   UAE government is welcoming expats and non-resident foreigners to set up a business in the UAE. With incentives like 100% ownership (i.e., no local partner is required) in a free zone, where incentives such as no taxes, no restrictions on business, employment, or a trade offer an exciting opportunity for investors. Expats can also set up an onshore company.

3. Investing in stocks and shares in the UAE
   Investing in the United Arab Emirates stock market is quite easy and straightforward. An investor would need to open a trading account with a broker registered with one of the exchanges in Dubai or Abu Dhabi and an Investor Number to trade. Dubai has two stock exchanges: Dubai Financial Market and NASDAQ Dubai. NASDAQ lists both domestic and international companies. It offers trading in REITs (Real Estate Investment Trusts) and equity derivatives (futures and options).

4. Investing in Mutual funds
   Mutual funds are one of the best investment options that can be considered by investors who wish to invest a smaller amount. They offer a good long term investment option with reduced exposure to risks. Mutual funds also offer a Systematic Investment Plan (SIP) where an investor can invest a certain amount monthly for a short period of time. financial institutions like ADCB, CBD, Mashreq, Citibank, HSBC, Standard Chartered offer mutual funds.

5. Deposit accounts and e-saver accounts investments in UAE
   These accounts designed specifically for banks to provide higher returns to the customers. Deposit accounts range from fixed deposits of 1-24 months with higher interest rates. E-saver accounts are offered by banks such as Emirates NBD, HSBC, Mashreq. Saving accounts are offered by ADCB.

What is an Investment Bank?

An investment bank is a financial intermediary that provides and performs a variety of services for its customers. Some of the services provided by an investment bank are underwriting and providing financial advisory, brokerage services for their clients and acting as an intermediary between the investing public and securities issuers.

Some of the most popular and revered names in the UAE are:

1. Emirates Investment Bank
2. Noor Capital
3. HSBC Financial Services
4. Rasmala
5. SHUAA Capital
6. Allied Investment Partners
7. Citibank UAE
8. Commercial Bank of Dubai

Investment Guide for Expats in Dubai

Along with residents and locals, a large number of expats and non-residents are investing in the UAE, more specifically in Dubai and Abu Dhabi. With a vast number of tools available for investors to invest in, there are a lot of risks to consider before investing. Expats would need to consider a few points in mind before investing in a foreign market.

1. The currency risk: There is a currency risk involved while investing and investors should keep a check on their home country currency as well and invest accordingly in USD or AED to avoid loss or decline in profits.
2. ETF: Exchange Traded Funds (ETF) is one of the most popular options that is considered by expats to invest in. ETFs are listed on the stock exchange and can be very cost effective for traders as they do not expose the trader directly to underlying assets.
3. Offshore investment: Places like Dubai have a number of financial institutions that provide services for offshore investment planning. For an expat, this is an attractive opportunity as holding a portfolio of investments outside their home country can help mitigate their risk. The financial planners will advise you on how to diversify your portfolio in a healthy and safe manner with stocks, bonds, individual trusts, mutual funds, unit trusts, etc.

The economy and the financial world of the UAE have evolved significantly over a few decades. With attractive incentives and government aid, the market in the UAE is growing more and more desirable. Residents, as well as expats, are using the markets to maximize their wealth to live a financially healthy life. Rather than keeping and saving the money only in the bank, people are choosing to understand the market and make their dormant money earn more money for themselves.

UAE is an oasis of the economic, financial, and political market on a global scale. The government’s ambitious development goals for the country offer a degree of certainty for investors and markets to keep investing in the UAE markets. With proven growth and handsome returns, many expats and non-residents are getting more and more confident and comfortable about investing in the UAE.

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The editorial team at Soulwallet is committed to accurate and relevant content intended to assist our readers while making personal finance decisions. We are glad to get feedback on the article and make necessary corrections if required. You can email the editorial team at support@soulwallet.com.  Our editorial advice, recommendations and product assessments are not influenced by business partners