15 Best Short Term Investment Options in UAE

One of the major problems a first-time investor faces is where to invest money in UAE. Considering their lack of exposure to investments, it’s possible for them to end up making wrong choices. To avoid this issue, it’s important to understand the types of investments available in the country. 

Based on the tenure, you can invest in long-term or short-term investments. Long-term investments often include stock market, mutual funds, and real estate investments. Short-term investments, meanwhile, include venturing into money market funds, national bonds, and more. 

If you want to invest in short-term investments, here are some investment options in UAE presented just for you!

What are Short-term Investments? 

As the name suggests, short-term investment options allow you to invest your money in instruments for a short tenure. This period can be from a few days to around 3-5 years. 

Compared to long-term plans, these investments are generally more liquid. This way, you can easily access cash if your circumstances demand so.Another feature of this type of investment plan in UAE is the difference in the goal. 

While the aim of investment naturally depends on the investor, long-term plans are usually obtained for wealth-creation or the fulfilment of future goals — marriage, children’s education, and more.Short-term investment options in UAE, meanwhile, are usually popular among those who wish to protect their capital or get quick returns. 

Top Small Term Investment Options in UAE

If you are someone new to the world of investments, it’s obvious that you don’t want to venture into market-based investment options immediately. This is why starting by investing in a short-term investment option in Dubai is a better option. 

To help you start, we bring to you a curated list of some of the best investments in Dubai:

1. Certificates of Deposit (CD)

This is a fixed-term financial instrument that usually has a higher interest rate than your regular savings accounts. 

Features of Certificates of Deposit (CD) Investment Option in UAE:

• A secured and more traditional investment plan than stocks or bonds 
• Usually short investment tenure — from 6 to 18 months
• Assured rate of return — less risky investment option than volatile bonds and stocks. 
• Usually offered by banks and credit unions 
• The best CD rates are usually 3 to 4 times higher than the average interest rates. 
• Lock-in period for a specific term — fees may apply for early exits 

2. Money Market Funds

These are debt funds with low-risk tolerance. The money you use to buy money market funds is invested in different instruments to offer you promising returns for up to 1 year while ensuring high liquidity. 

Features of Money Market Funds Investment Option in UAE:

• Type of mutual fund that invests your money in high-quality, short-tenure debt instruments
• Low-risk investment option 
• Major types — treasury bills, repurchase agreements or repos, commercial papers, and more.
• Ideal for creating a temporary cash reserve 
• Option to withdraw invested money at any time without any additional fee 

3. High-Yield Savings Account

This investment option in Dubai is ideal if you want to earn a higher annual percentage yield. While the regular savings account usually earns below 1% APY, a high-yield savings account has a high variable or fixed APY. 

Features of High-Yield Savings Account Investment Option in UAE:

• Interest compounded annually 
• Ideal for those with short-term savings goals
• Easily accessible funds 
• Minimal or no maintenance fees 

4. Recurring Deposits (RD)

Recurring Deposits (RDs) are among the best monthly investment plans in UAE for those who prefer to save consistently over time. With an RD, you make fixed monthly deposits into your account and earn interest at a rate higher than that of regular savings accounts. This makes RDs a great option for planning long-term goals like education, weddings, or buying property. Offered by several UAE banks, RDs come with various terms, including different maturity periods, interest rates, and minimum deposit requirements.

Features of Recurring Deposits (RD) Investment Option in UAE:

• Among the best investments in UAE if you want to learn how to invest and save  
• Interest rate is usually the same as the fixed deposit interest rate — higher savings than regular savings accounts 
• No need to remember dates — you can simply opt for an auto-debit facility 
• An RD can be opened under a minor’s name but under the supervision of a parent or a guardian
• Premature withdrawal option available (subject to penalty) 

5. National Bonds

National bonds present one of the unique investment options in UAE. These bonds are flexible and help individuals make savings and investments across varied income brackets. These bonds comply with Shariah and function as per the Mudaraba model. 

Features of National Bonds Investment Option in UAE:

• Option to invest in national bonds via exchange houses, banks, and government-run organisations
• Low risk level and usually high returns on investment  
• Penalty applicable if you go for premature withdrawal 
• This is a community-oriented investment product
• You can start investing in this investment plan in UAE with an amount as nominal as AED 100

6. Gold Investments

Gold is one of the more traditional and highly popular short investment options in the UAE. Thanks to innovations in the field, you can invest in gold through various methods — physical gold, gold mutual funds, digital gold, gold mutual funds, and more. 

Features of Gold Investments Option in UAE:

• Hedge against inflation and devaluation of currency
• Easily liquidate the asset as and when required 
• Less influenced by market fluctuations than other volatile investment plans in Dubai
• This type of investment is always in demand
• Investing in gold can be either for the long or short term based on your risk appetite

7. Short-Term Fixed Deposits

There are two types of fixed deposits — long-term fixed deposits and short-term fixed deposits. You can opt for a short-term fixed deposit if you want high returns on investment in a short duration. Usually, the investment tenure for this investment option in the UAE ranges from 7 days to 12 months. 

Features of Short-Term Fixed Deposits Investment Option in UAE:

• Option to renew fixed deposit at maturity 
• Highly liquid with a higher rate of return than short-term contemporaries 
• Facility to add beneficiaries 
• Option to withdraw funds in advance (subject to a premature penalty) 
• Investment not affected by market fluctuations 
• Suitable for those with short-term goals like buying a new car or a gift for a family member.

8. Real Estate Investment Trusts (REITs)

While real estate is typically a long-term investment, REITs offer a short-term investment option with exposure to the real estate sector. These funds invest in properties and generate income through dividends. It is ideal for investors seeking exposure to real estate but not ready to commit significant capital. Unlike physical properties, which can take time to sell, REITs are traded on the stock market, making them more liquid (easier to turn into cash).

Features of REITs in UAE:

• Provides exposure to the real estate market without the need to own a physical property
• Regular dividend payouts from rental income and capital appreciation
• Can be bought and sold on the stock exchange, offering liquidity
• Diversifies an investment portfolio, reducing risk while still providing potential returns

9. Exchange-Traded Funds (ETFs)

ETFs are a basket of securities that can be bought and sold on stock exchanges. They offer diversification and are suitable for both short-term and long-term investors. By investing in an ETF, you gain exposure to a broad range of securities, such as stocks or bonds within a specific index, and help diversify your portfolio with a single investment.

Features of ETFs in UAE:

• Low-cost, diversified exposure to a range of assets like stocks, bonds, or commodities
• Can be traded throughout the day like individual stocks
• Highly liquid, making it easy to enter and exit positions
• Suitable for investors seeking diversification in a short period with the flexibility to adjust based on market movements

10. Stocks 

A stock represents a portion of ownership in a company, allowing investors to buy and sell shares in the stock market. You can earn returns in two ways: through dividends or by selling their shares at a higher price, generating capital gains. Stocks can increase in value over time. If you sell a stock at a higher price than what you bought it for, you earn a capital gain. For example, buying at AED 10 and selling at AED 18 gives you a profit of AED 8 per share.

Features of Stocks in UAE:

• Provides a stake in the company
• Shareholders can receive a portion of the company’s income
• Potential for profit when stock price rises
• Stock prices fluctuate, offering both high returns and risks
• Can offer substantial returns over time
• Historically outperforms inflation

Note: Stock prices can fluctuate rapidly due to market conditions, economic news, or company performance. This volatility makes stocks both risky and potentially profitable.

11. Annuities 

An annuity is a financial product where you make a payment to an insurance company in exchange for a series of future payments, either immediately or at a later time. Since annuities offer fixed returns, they help protect your investment from market downturns, preserving the value of your initial contribution. Some annuities provide a steady stream of income for as long as you live. This is valuable for retirees who want security in their later years.

Features of Annuities in UAE:

• Provides predictable income streams
• Helps in capital preservation and protects wealth from market volatility
• Some annuities offer payments until death
• Can be difficult to understand and may have high fees

12. Endowment Plans 

An endowment plan combines insurance with savings, providing a lump sum payout on maturity or to the beneficiary in case of death. These plans offer a fixed interest rate on the savings component, ensuring a predictable return. This makes them a more stable option compared to other investments. Besides saving, endowment plans also provide life insurance coverage. If you pass away before maturity, your beneficiaries will receive the sum assured, including accumulated bonuses.

Features of Endowment Plans in UAE:

• Fixed interest rate on the savings
• Combines life insurance and savings
• Offers lower returns compared to other investment options
• Funds are locked for a long period, with penalties for early withdrawal

13. Cryptocurrencies 

Cryptocurrencies are decentralised digital currencies, often seen as an alternative store of value and a high-risk investment opportunity. Like Bitcoin, they operate on decentralised networks, meaning they are not controlled by a central authority like a bank or government. This offers more freedom and autonomy over your investments. These digital assets have gained attention due to their potential for huge profits. The volatile nature of crypto markets can lead to significant price swings, both upward and downward.

Features of Cryptocurrencies in UAE:

• Operate without a central authority
• Potential for significant gains due to volatility
• Prices can fluctuate drastically
• Legal frameworks vary and are still evolving

14. Equity Derivatives 

Derivatives like options and futures allow you to speculate on future price movements of stocks. This leverage can result in high returns if your predictions are correct. These can be used to hedge against risks in a stock portfolio. For example, if you own a stock and are concerned about a potential price decline, you can use options to safeguard your position.

Features of Equity Derivatives in the UAE:

• Leverage can amplify profits
• Useful for managing investment risks
• Requires expertise due to their complexity and leveraged nature
• High potential for losses, especially in volatile markets

15. Structured Products

Structured products are investment tools whose returns depend on the performance of underlying assets, such as stocks, bonds, market indices, commodities, or currencies. These products often combine elements of fixed-income securities (like bonds) with derivatives (like options). This blend aims to offer investors customised returns based on specific market conditions or strategies.

Features of Structured Products in UAE:

• Tailored to individual risk tolerance and investment goals
• Guarantees return of principal if held to maturity
• Greater returns if market conditions are favorable
• Requires a deep understanding of derivatives and underlying assets

How to Choose the Short Best Investment in UAE?

With so many investment options, it can be difficult to decide where to invest money in UAE. For your convenience, the experts have come up with 3 major aspects to help you choose the best small investment plan:
Risk Appetite — Understand whether you can tolerate risk or not. Usually, short-term investment plans are less volatile compared to stocks, cryptocurrencies, and other options. 
Liquidity — One of the many features you should look into is its liquidity. With a good short-term investment, you should find it easy to cash out the funds whenever required. 
Costs — The best short-term investments in UAE are ideally those that are affordable and have fewer agents involved. 

We hope these aspects make it easy for you to select a short-term investment option in the Dubai.