UAE: 10 ways expats can invest and grow their money

Those who wish to secure their future have a number of options to increase their income

By Vijay Valecha

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Published: Fri 4 Mar 2022, 12:06 PM

Dubai’s new savings scheme for expats in the public sector has turned the spotlight on the need to financially prepare for retirement.

Studies have shown that many expat employees in the country don’t do enough to ensure a decent retirement life, with an overwhelming number of them counting on just their gratuity. Three in five even told a survey that they have no long-term savings at all.

Those who wish to secure their future and enjoy life after decades of working have a number of options to grow their income. Here are some schemes an expat can explore and 10 ways to invest, depending on one's risk appetite.

1. Try national bonds, a risk-free option

For investors looking for safety, the National Bonds of Dubai offers opportunities to make more money than their bank deposits through the two-year booster plans. The returns can be as high as three per cent per annum for virtually no capital risk. Investments can start with as low as Dh10,000.

2. Make the most of affordable mortgage plans in real estate

The UAE’s world-leading approach to the pandemic has piqued the interest of the world’s affluent, who continue to rush to the UAE, boosting real estate firms. Positive macroeconomic prospects — bolstered by higher oil prices, a high vaccination rate, and worldwide events like Expo 2020 Dubai —are projected to spur the UAE’s real estate market to recovery. The availability of mortgage plans from various banks has made the sector much more affordable. Also, there are now apartments available for as low as Dh300,000. Liquidity will be a concern as the ticket size is large.

3. Stay updated and find opportunities

With sanctions on Russia likely to impact oil production in the medium term, Saudi Arabia's most significant company Aramco will be a primary beneficiary. The company's market cap has already hit $2.36 trillion, and the dividend yield currently stands at 3.18 percent. There is a good probability that dividends can increase this year due to the rising profits. Moreover, the company is also a hedge against inflation.

4. Get to know top firms

The Abu Dhabi National Energy Company PJSC (TAQA) is an international energy and water company operating in 11 countries across four continents. It is a government controlled energy holding company of Abu Dhabi, United Arab Emirates. TAQA is one of Abu Dhabi's flagship companies and as such has a vital role to play in helping to deliver the economic strategy of Abu Dhabi. The company with a market cap of Dh143.91 billion is ideal for long term investment.

5. Go for long-term investments

Investing is a strategy geared towards managing and growing wealth in the market over a longer period of time — we’re talking years or even decades. Longer the money is invested in the market, the more opportunity one has capitalise on compound interest or returns. Using a Systematic Investment Plan (SIP) Strategy will help average out the costs and deliver great returns. A person who has invested $1,000 per month for 20 years at 8 per cent return would able to generate a wealth of $589,000 by now.

6. Consider dividend stocks

Dividends are recurring payments made by companies to owners of their stock. They share some of their profits back with investors in the proportion of their equity interest. Investors should ideally look for Dividend Aristocrats, companies that have increased their dividend annually over the past 25 years. Studies have shown that dividend stocks outperform non-dividend-paying ones by 2-3% per annum over the long term. In the US, dividend-paying stocks outperformed with a +9.7% average annual return.


7. Do some research on crypto

Cryptocurrency is a kind of digital electronic-only currency that is intended to act as a medium of exchange. It has become a hot topic in the last few years. Cryptocurrencies are good for risk-seeking investors in exchange for the potential of much higher returns. However, it’s essential that investors do their homework and invest only a small proportion of their bonus. And while they can buy cryptos on an exchange, the better bet may be to invest in a diversified crypto ETF.

8. Invest in gold

Investing in SPDR Gold Trust provides investors with a relatively cost-effective and secure way to access gold and diversify their portfolios. Since its listing on NYSE in November of 2004, SPDR Gold Shares is the world’s largest physically-backed gold exchange-traded fund (ETF). It offers extremely tight bid/offer spreads, which makes it ideal for investors.

9. Review commodity-focused ETFs and mutual funds

The price of a commodity is usually dependent on supply and demand factors. As a result, they’re typically more profitable during a supply chain crunch, such as now. But they’re still risky – a slight change in geopolitical situations, natural disasters, and droughts can all drastically impact your profits. As such, investors may prefer investing in commodity-focused ETFs and mutual funds over commodities contracts.

10. Explore investment-grade bonds

SPDR Portfolio Aggregate Bond ETF (SPAB) provides exposure to US investment-grade bonds, including treasury bonds, corporate bonds, mortgage-backed securities, and asset-backed securities. The ETF currently yields 2.16 percent.

Vijay Valecha is the chief investment officer at Century Financial

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