Guide for Expats to start saving and investing in the UAE

For an expat living in the UAE the importance of consistent savings cannot be stressed enough, savings ensure the financial security of an investor and provide cushioning in case of emergencies. Expats should emphasize saving and investing as soon as they emigrate to the UAE to ensure financial security. 

Savings and investments have high levels of dependency on healthy financial habits. Easy access to banking services and credit facilities has led to an increase in the practice of overspending. Therefore it is very important to cultivate healthy financial habits to save and invest efficiently.

Very often instead of savings, our expenses tend to make their way on autopilot mode which is not suitable for investment and savings approach in the long run. If you are struggling to manage your expenses and unable to save a penny even after rigorous efforts we’ll help you to kick start your journey in the world of savings and investment in the UAE. 

Majority of the countries in the west use default programs that encourage residents to save a part of their earnings for their retirement or to pay for their insurance plan. Ideally, as soon as one receives their monthly or weekly pay they should allocate a small portion out of it for savings.

Once you manage to start saving and gather a lump sum amount you’re good to go for investment plans. Investments options in the UAE are diverse and offer a wide variety starting from few AEDs to several thousand AEDs. 

The list below covers some of the best investment options in the UAE-

Recurring Deposit

Recurring deposits often referred to as RD is one of the most consistent ways to save and invest money. Investors can put a certain amount every month as a saving that helps them to earn a little extra in the form of interest. Recurring deposits not only helps investors to cultivate healthy financial habit of saving every month but also provides considerable returns in the form of interest.

Mutual Fund SIPs

Mutual fund SIPs are ideal investment tools for investors who have a limited amount to stow away monthly. Mutual funds yield better returns than simple bank deposits moreover, mutual fund investments give the advantage of dollar-cost average, which means that regular investments help to get better returns when compared with lump sum investments.

When expats get back to their country of origin SIPs can be used for monthly expenditure. Most mutual funds are flexible and allow systematic withdrawals which are an excellent way of utilizing accumulated wealth. Some mutual funds offer returns up to 15% PA which makes them one of the best investment options in the UAE.

Gold

Financial experts often refer to gold in its physical form as the currency of God. This refers to the universal acceptance and high liquidity of gold as a financial investment. Gold has a rich history that is interwoven deeply into different cultures and traditions. Gold as a commodity in the modern era has managed to retain its value over time which makes it a suitable investment option in the UAE. The primary benefit of investing in gold is that investors can start with 1 gram and gradually increase the amount they hold.

Gold is an efficient tool to provide a hedge against inflation as gold has an inverse relationship with dropping values of international currencies like USD.

Real estate

Real estate is the most popular form of investment in the UAE that reaps huge returns. Expats should invest in real estate because the cost of mortgage in the country is near about the same as monthly rent, therefore investing in real estate allows investors to build an asset while living and working in the country. Rapid economic growth in the UAE particularly in Dubai has led to a rise in the demand of properties in the region that makes real estate one of the best investment options in the UAE.

Conclusion

Savings and investments are inter-related to each other hence before an investor starts investing in the UAE it is necessary to gather a lump sum amount that later will be invested.

As an expat savings and investments play a crucial role in diversifying and enhancing the overall value of an individual’s financial portfolio. Diversity in the financial portfolio helps to reduce risks and increase the returns for a particular investment option.

An investor must start early with the practice of saving and investment so that they have enough time to build a corpus that will help them to accomplish their goals and lead their lives peacefully.