ETFs – The Best Investment Option for Expats in the UAE

When it comes to choosing the best option to put money in, it’s not easy at all. And, this becomes even more difficult when it comes to picking the best investment in UAE for expats.  Everyone either lacks knowledge or tries to sell their awful investment plans. Therefore, figuring out the best investment options on your own is totally worth it.

So, what’s a good investment plan for an expat in the UAE? A good investment plan will be the one that will allow an expat to make maximum out of the money he/she has invested; provided the investing fee is as low as possible. One such popular plan that comes with low cost and ease to trade is investing in Exchange Traded Funds or ETFs.  But, what are ETFs, how to invest in them and is it safe to invest in ETFs. Here’s an article that will answer all your questions. Check it out:

What are Exchange Traded Funds?

An Exchange Traded Fund can be simply defined as a combo of both index funds as well as a share. It is an open-ended investment fund that is traded on stock exchanges in a similar way as that of stocks. An ETF holds assets such as bonds, commodities and stocks with an arbitrage mechanism that allows you trade without dealing with the underlying assets that might screw it up.

Why Invest in Exchange Traded Funds?

Apart from high returns, here are a few reasons that will convince you that ETF is the best investment in UAE for expats. Take a look:

Unlike usual stocks, ETFs can be traded at any time before the trading hours start; you don’t have to wait till the end of the day until fund net asset value (NAV) is announced. This trading flexibility of ETFs offers an added advantage of making timely investment decisions and placing orders in a variety of ways.

There’s no phenomenon of ‘minimum investment’ and thus every individual can invest in these. In particular, no minimum investment makes ETFs a great option for those who want to get their hands in the pot, without dealing with having to go all in.

Another thing that comes in favour of ETFs is portfolio diversification and risk management. ETFs are traded on every major asset class, commodity, and currency in the world. This diversifies the portfolio and as the portfolio is diversified, exposure to risks is minimized.

How to Invest in Exchange Traded Funds?

Since ETFs work just as stocks do, you will need to choose a broker that will buy you ETFs. Make sure that you choose the one that charges zero or minimal commission. This can let you save on the investing fee which you actually want as an investor. Also, make sure that the broker you choose has a clean background. In case you don’t want to involve a broker, you may seek help from execution-only investment platforms.

You can’t afford to skip research; do researches while keeping your investment goals in mind and stick with investment plans that have a low expense ratio. This is called smart investing. Ensure that the ETF you choose has a good amount of assets, preferably more than 10 million. Also, make sure that you look at the number of trade it gets each day.

One more thing to do is to note the difference between active and passive investing. Choose wisely, whether you will be managing ETFs actively or passively. Active investing is the one in which finance management is done by the investor on his/her own whereas, passive investing involves finance management through investment. Passive investing can help you cut off your stress. However, an extra layer of the cost may be added up.

Endnote

ETF investing could be a little tricky; at first, you may fear to choose one and invest. However, it’s nothing to be feared. Just do your research and make the decision as per your goals and risk tolerance. Although researching and making the right decision could be hard and time-consuming, ETFs worth them as investing in them can be very rewarding.

By now, you must have got a better sense of how to invest in the UAE, and what exactly an ETF can do for you! So, start investing right now.