A Guide to Investing in the UAE [+ 5 Best Options]

Do you get calls or emails from insurance agents and bank representatives about new schemes?

I’m sure you do.

But, think about this: Thousands of people in one city, say Dubai, receive the same persuasive chain of messages for taking action, for example, investing in a mutual fund for a secure tomorrow. Without question, we know this is not the best move for all.

This reality check gives way to an exciting discussion:
What are the best investment options for expats in the UAE?

Well, for starters, if you are a resident or expat living in the UAE, you hold a rewarding location advantage to explore your investment interests – both nationally and internationally. Scroll down to learn how.

Learn: Why Is Investing Better Than Saving?

UAE (Dubai): A Favourable Destination for Making Investments

Enjoy the glory of accessing global markets from Dubai. Unlike other economies that impose restrictions on accessing foreign centers, UAE expats can park their money in international offerings (example: US, Europe, Asia, etc.) to grow their fortunes.

Another significant benefit available to 8.84 million expats in the UAE lies in the jurisdiction’s decision of pegging (fixing) the AED-USD exchange rate (1 USD = 3.67 AED). We know that most commodities and assets are quoted in the US dollar. You, as a local investor, can benefit from this system. Wonder how? Simply convert your dirhams into dollars and invest them in the global markets from the comfort of your home.

Moreover, the country levies no capital gains tax and income tax, providing you an opportunity to multiply your ‘surplus’ money with the right set of financial products. So, if you’re holding back on making investments, I’d say you’re walking on the path of losses.

Lastly, Dubai is the hub of the rising real estate market. Global leaders strengthen their portfolios with
local properties – providing a solid reason for investors to keep their spirits high in the national markets.

Interesting Read: 6 Things Your Financial Advisor Helps You See Differently

Explore 5 Promising Investment Options for Expats in the UAE

UAE offers a range of investment opportunities for investors with different goals and risk appetites.

The following five are my suggestions from a broad perspective. The best way to learn the best-fit financial products for your portfolio is here.

1. Global Mutual Funds and Exchange Traded Funds for UAE Expats

If you’re looking for a diversified, reduced-risk, and affordable investment for your portfolio – explore Mutual Funds offered by the best investment firms globally, like Franklin Templeton, Blackrock, Goldman Sachs, and others.

Note: A mutual fund gives you access to global marks and asset classes. This diversification allows you to participate in the growth of various countries. At the same time, it protects your portfolio from major corrections in the individual markets.

Alternatively, an Exchange Traded Fund (ETF) tracks indexes. Think of their operations this way: Just as stocks trade on exchanges, ETFs, too, track market movements and trade on global exchanges (example: in US, London, Switzerland, Luxembourg, etc.). This lower-priced, diversified, and liquid investment option is a rising favorite among UAE expats.

These two offerings raise a commonly-asked question:
Why are Mutual Funds and ETFs classified differently?

Well, ETFs are like Mutual Funds in the essence that they, too, collect money from many investors and invest in stocks, bonds, and commodities. Yet, the difference lies in the way the two funds operate. ETFs are actively traded and passively managed. This keeps their costs significantly low. In comparison, GMFs are actively managed, hence have higher expense ratios.

However, each can make a place in your portfolio.

2. Bonds for UAE Expats

Do you want to tap into global investment opportunities but feel hesitant to level up your risk-taking ability? Don’t worry! You can expand your portfolio in the UAE with three types of bonds:

● National Bonds
With a minimum of AED 100, park your money in a stable, liquid, and good return instrument: UAE National Bonds. Usually, the holding term is 90 days, post which you can redeem the bond to cash in your profits (bonus: usually offers generous interest rate).

● Eurodollar Bonds
Spread out your portfolio’s risk with international bonds, like the Eurodollar. Here, a foreign company issues Eurobonds in the UAE in US dollars (i.e., Eurodollar bond).
This investing vehicle allows you to participate in foreign affairs with a sense of security. Wonder how? Well, you earn back your principal in dollars (with the related interest) on the bond’s maturity date.
Alternatively, for the bond issuers (MNCs), Eurodollar bonds are probably one of the most fruitful ways to raise money globally.

● Sukuks
If you are searching for a product that lowers your portfolio’s risk, preserves capital, is less volatile than equities, and generates stable returns in the UAE – consider investing in Sukuks.
A Sukuk, or Sharia-compliant bond, is an Islamic financial certificate that does not represent debt obligations. Instead, the issuer sells the certificate to the lender and uses the proceeds to buy assets.
Eventually, all partial owners (periodically) receive the profits generated from the underlying asset(s) and their principal investments on maturity

3. Gold as an Investment Option in the UAE

● Searching for a profitable long-term investment? Invest in Gold.
● Looking to beat inflation? Invest in Gold.
● Wanting to take advantage of market movements? Invest in Gold.
● Need a reasonably low-maintenance asset? Invest in Gold.

Hands down, Dubai – The City of Gold is an excellent market to expand your portfolio at a reasonable cost. The trust shown in the quality sold here plus the high re-salable value makes gold a winning offer.

While all looks good so far, be careful to get your buying timing right.

4. Stocks and Equity-Linked Notes for UAE Expats

Name the first investment option that you thought of after reading this blog’s title.

Was it Stocks?

In conversations with potential customers, I’ve noticed people limiting the concept of investing to the stock market. However, as we’ve seen so far, this should not be the case.

Residents and expats in the UAE can invest in global stocks using various platforms.
I know the stock market sounds like an exciting and rewarding form of investment. But, remember: It brings a bigger slice of risk than the other investing classes.

Disclaimer: I don’t offer suggestions for stocks listed on Dubai Financial Market and Abu Dhabi Securities Exchange.

Yet, if you want to participate in the stock market for a shorter duration (say, 1- 4 months) but wish to insure your principal against market uncertainties – sign up for Equity Linked Notes (ELN). You will receive your principal investment and the yield generated from the selected stock(s) on maturity. So, even if a stock goes downhill, your net return is not negative.

Explore: A Beginner’s Guide To Investing In The Stock Market

5. Invest in Yourself

The best way to become successful is to invest in yourself, or as they say, have the hunger to learn more.

Depending on your life stage, outline your:
● Goals – Personal and Monetary
● Interests / Passion
● Vision

Answers to these questions help you figure out action plans. For instance, if you’re passionate about writing and have the relevant experience – start a side hustle (freelancing) to make extra cash. Or, if you’re looking to upskill yourself, invest your time and energy into learning new skills and figure out ways to monetize your passion in the UAE.

Let’s Discuss Your Investment Options in UAE

If you want to grow your wealth, you need to dive into the investing world. It’s a non-negotiable. Given that the five investment channels discussed have their advantages, they play out differently for people. So break free from incomplete market insights. Secure your future in the UAE with me today