UAE Investments: Where to Invest Dh10,000 for Maximum Gains

You would have heard this before: “If you start investing for retirement through your first full-time job, your investments grow gradually.” But such advice is still not pretty definite – for instance, let’s say you have Dh10,000 to invest – where would you invest to get the most gains?

“Dh10,000 can give a helpful jolt to your portfolio, whether you started investing last week or you’re close to retirement,” said Brody Dunn, an investment manager at a UAE-based asset advisory firm. “There is an abundance of profitable assets you can invest in today, depending on your goals.”

1. Mutual funds or exchange-traded funds (ETF)

“Mutual funds and ETFs are some of the most popular investments, and it’s easy to understand why. Choosing your own stocks and bonds can be a major challenge. Unless you’re prepared to monitor the market, it’s almost impossible to know which stocks to invest in,” Dunn added.

“With a mutual fund or ETF, the fund takes care of that for you. All you have to do is choose a fund that aligns with your goals. But most mutual funds require you to invest a minimum, Dh1,000 at the very least. And minimums of Dh3,000 are not uncommon – i.e. 30 per cent of your Dh10,000.”

It’s worth pointing out that there’s a big difference between mutual funds and ETFs. A mutual fund has managers who choose which stocks to invest in...

2. Real estate crowdfunding

“Real estate investment represents an excellent opportunity for long-term growth. You can invest in single-family property developments, large apartment buildings, or even commercial and industrial real estate,” said Mohammed Shaan, another UAE-based wealth advisor.

“With crowdfunding, you don’t have to be rich to invest in a major project. Via a peer-to-peer crowdfunding program, you can look at various properties and choose which one to invest in. These can be new properties or existing properties.”

With crowdfunding programs, some projects may be purchasing properties for the rental income, while others will buy properties, renovate them, and sell them for a profit...

3. Real estate investment trusts (REIT)

“If you like the idea of investing in real estate but are leery of crowdfunding platforms, there’s another option. You can invest in a real estate investment trust (REIT),” added Dunn. “An REIT is similar to a mutual fund.

“However, instead of investing in a swathe of stocks, you’re investing in a selection of real estate properties, most often commercial spaces. Investing in a REIT is also analogous to purchasing a stock. You buy a certain number of shares, which give you an interest in the REIT but not direct ownership of any of the properties.”

The most important advantage of a REIT is the dividend income. REITs are required to pay a minimum of 90 per cent of their annual income in dividends...

WHAT TO KNOW BEFORE YOU START INVESTING YOUR DH10,000

“Before you make an investment of any dirham amount, you want to understand your financial goals and priorities. Knowing why you’re investing in the first place will help you stay motivated so that you can eventually reach your goals,” added Shaan.

“To start, define your financial goals. This might include short-term and long-term goals such as saving up for a house, your child’s education, your retirement, or even buying your dream car! Any goal that you might have is valid.”

Shaan further explained that you should create a plan for how you plan to reach those goals, and then select the best investment options that will help you reach those goals in the defined timeframe for each.

“If you have any high-interest debt, such as credit cards or high interest loans, you may want to prioritise paying these off before you begin investing...

Bottom line?

Determining how to invest Dh10,000 comes down to your goals and how much risk you are willing to take on. However, all of these methods are an effective way to manage your money.

“Provided you choose the right method for your current life situation, you can find a lot of success even by investing Dh10,000. So take a leap, invest your money, and put it to work for you,” added Dunn.