How to Invest AED 10,000 in UAE to Multiply Your Money? (2024)

Short-Term Investment Options in UAE for Higher Returns

The following are some short-term investment options in the UAE that can potentially offer higher returns:

Gold and Precious Metal

Investing in gold and silver involves purchasing physical metals or related financial instruments such as ETFs (Exchange traded funds),mutual funds, or mining stocks. Valued for centuries, Gold and silver continue to be popular investments. As the city of Gold, Dubai and the UAE are considered prime locations for these investments.

Advantages of Investing in Gold and Precious Metals in Dubai:

• First, they serve as a hedge against inflation, retaining value during economic instability.
• Second, physical gold and silver have shown long-term price appreciation trends, offering potential capital growth.
• Third, they provide tangible assets, offering stability compared to intangible financial instruments.
• Lastly, gold and silver are relatively liquid, making it easy to buy and sell through dealers or reputable online platforms.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are companies that own and operate income-generating real estate including apartments, office buildings, shopping malls, warehouses, and data centres. Instead of directly buying and managing properties directly, investors can gain exposure to the real estate market by purchasing shares in REIT, similar to investing in stocks.

REITs offer several advantages as an investment option in the UAE.

• Investors receive regular income from rent payments without the hassle of direct property ownership, enjoying regular rental income distributions.
• REITs provide indirect exposure to the real estate market, allowing access to diversified portfolios of real estate assets such as offices, apartments, and shopping malls, reducing the risks associated with single-property investments.
• Additionally, REITs are typically managed by experienced teams who handle property maintenance, tenant relations, and other operational aspects, making it a professionally managed investment option.

Exchange-traded Funds (ETFs)

Exchange-traded funds (ETFs) are investment funds that are bought and sold on stock exchanges much like individual stocks. ETFs track the performance of a specific index, sector, commodity, or asset class, offering investors with a diversified exposure to a range of underlying assets without directly owning them.

As an investment option in the UAE, ETFs offer several advantages:

• They usually have lower fees compared to mutual funds, allowing more of your money to go towards your investments rather than paying fund management fees.
• ETFs also provide easy entry and exit since you can buy or sell ETF shares on stock exchanges throughout the trading day, just like stocks.
• Additionally, they offer diversified exposure, meaning that by investing in one ETF, you own a small portion of many different companies or assets. This diversification helps spread out risk as poor performance by one company won’t significantly impact your overall investment.

Digital Investment Platforms or Robo Advisors

There are several digital investment platforms or robo-advisors that help you tailor your investments in UAE as per financial goals, investment tenure, and risk tolerance. Such a platform is an automated, algorithm-driven financial planning service and requires no human intervention.

In the UAE, robo-advisors offer several benefits:

• Personalization: They tailor investment strategies to your individual financial goals and risk profile, optimizing your portfolio accordingly.
• Cost-Efficiency: Robo-advisors typically have lower fees compared to traditional financial advisors, making them a cost-effective option for managing investments.
• Convenience: With user-friendly interfaces and automated management, these platforms simplify the investment process, allowing you to monitor and adjust your portfolio with ease.
• Accessibility: They provide access to a range of investment options and portfolios that might otherwise be difficult to manage or access individually.

Long-Term Investment Options in UAE for Higher Returns

The following are the major long-term investment options in UAE for higher returns -

Mutual Funds

This investment in UAE is perfect for everyone. Whether you are an amateur or a seasoned investor, mutual funds are a go-to option.

• When you invest AED 10,000 in mutual funds, the invested money is pooled together with other funds into a plethora of market-linked commodities.
• So, the money can be invested in bonds, equities, money market instruments, and other securities.
• The highlight of this type of investment option in UAE is that your funds are managed by professional fund managers.
• The profits earned are then divided among all the investors.

Note - If you plan to invest AED 10,000 every month for a specific period, say 10 years, you will earn a little over AED 1,000,000. This happens because of the power of compounding.

Stocks

Another way to build your wealth is to invest in stocks. Key considerations for investing in stocks in UAE are:

• When you invest in equities, you buy a small portion of a public company’s ownership.
• This investment option in UAE is suitable for seasoned investors who understand a company's performance well.
• So, if you are good at research, analysing the risks and have a high-risk appetite, you can easily earn high returns on your investments.
• Even small traders can participate in the stock market and invest in Dubai equities for higher returns.

Investing in Smaller Companies

Investing in smaller companies in the UAE can be a high-risk, high-reward strategy.

Even though start-ups are riskier investments in the UAE, they possess the potential for higher returns.

Here are some key considerations :

• If you invest your funds for a long term like 15 years, you can stand the volatility and periodic underperformance and earn higher returns in a longer time horizon.
• It is important to note that investing in individual companies can be risky. Thus, it is better to invest in Dubai, UAE via funds.
• Some famous funds investing in smaller companies like iShares MSCI EAFE Small-Cap ETF expose your money to start-up public companies in Asia, Australia, or Europe. Another top ETF is Vanguard Small-Cap ETF which exposes your funds to small companies in the US.

Such investments diversify your overall investment portfolio and reduce the risk of investment.

Unit-Linked Investment Plan

This is a unique investment option in the UAE and is a blend of investment and life insurance offering a unique approach to wealth accumulation. When you invest in ULIPs, you experience the following benefits -

• Achieving goal-oriented savings
• Flexibility to choose the funds in an investment portfolio
• Offers liquidity
• Transparency about returns

How to Create an Investment Plan in the UAE?

To create a solid investment plan in the UAE, you need to do the following -

• Identify Your Financial Goals - Start by identifying financial goals - determine what you want to achieve financially through your investments. It could be going on a vacation, creating an emergency fund, creating a down payment on a property in the short term or creating a retirement corpus, creating capital for a new business and more in the long term.
• Quantify Your Goals - Once you identify your financial goals, assign a monetary value to your financial objective. Calculate the exact amount that will help you achieve the goal and allocate the investment to it.
  Note - You can use an investment calculator for this.
• Set a Deadline for Your Investment - Establish the time-frame for your investment. Decide how long you plan to keep your money invested to achieve your goals.

These steps will help in creating a concrete financial investment plan.