This guide helps users to find the ideal investment opportunity and platform for trading and investing online in the UAE. Considering the different financial goals, users can choose between trading actively or investing for the long-term using the following markets: stocks, cryptocurrencies, mutual funds, ETFs, forex, commodities, bonds, real estate, savings accounts, alternative investments and derivative investments (options & futures, CFDs).
Users need to consider risk tolerance (safety), income generation and capital growth as investment objectives to choose the right asset class and trading strategy. Some are looking for quick profits and willing to take higher risks; others want to generate steady income or save for retirement, preferring low-risk investment options. There are also investors searching for opportunities to hedge against inflation or market downturn, asset (capital) preservation, or want to generate passive income to achieve financial freedom.
With the various local and international online brokers and exchanges available in UAE, it can be challenging for investors to select a provider with the ideal platform for their investment strategy and individual goals. To help beginners and advanced traders achieve their financial goals, this guide breaks down investment options available in the UAE and suggests brokers with the ideal trading platforms for certain investors goals and preferences.
Types Of Investments Available in the UAE
There are 11 markets available in UAE to invest money, each suitable for different trading goals and strategies. The safest way of investing is to diversify your portfolio between different assets and avoid overexposure to a specific market. A well-diversified portfolio helps achieving in achieving financial goals by limits the risk of losing money. Markets available in the UAE to invest money are listed below.
- Stocks
- Cryptocurrencies
- Mutual Funds
- ETFs
- Forex
- Commodities
- Bonds (National bonds)
- Real Estate
- Savings Accounts
- Alternative Investments
- Derived Investments (Futures,Options and CFDs)
Opportunities to invest finances in and from the UAE are examined in more detail below.
1. Investing in the Stock Market From UAE
Trading with stocks (shares) is a popular investment among retail and professional traders in the UAE looking for both; long-term investment possibilities or quick financial gains. Stock ownership allows shareholders to take part in the company votings and participate in their capital gains in the form of dividends (annual distributions of profits).
What Are The Most Common Investment Goals Of Stock Investors?
Stocks support both short and long-term investment goals. Financial goals that can be achieved with stock investments in the UAE are listed below.
- Capital Appreciation – stocks have the potential to grow in price over time and allow investors to profit from the difference in the buy and sell price.
- Income Generation – stocks represent partial ownership in companies and make the owner eligible for regular dividend payouts. These are payments (as cash or additional stocks) paid to shareholders as a way of participation in the company’s profits. As they are paid out regularly (monthly, quarterly, annually) they can generate a steady and passive income stream.
- Long-Term Investment Goals (retirement planning, long-term saving) – stocks are commonly used to increase the value of savings (retirement savings)over time. Shares in stable and reputable companies have the potential for steady growth over the long haul.
- Speculative (Short-Term) Profits – prices of certain types of stocks (penny stocks, blue chip stocks) are highly volatile, allowing investors to achieve high returns in the short term. Speculative investment can be used for different types of short term investment goals including saving for down payments, paying off debt, creating a security fund for covering unexpected costs and others.
How To Invest in The UAE Stock Market?
The most common way to invest in the UAE stock market is through a local stock broker or brokerage company with a valid trading license. Brokerage services that can be used to invest in UAE stocks are listed below.
- Local Stock Brokers – Users can pick and choose stock brokers on the DFM official website and sort them by their overall rating
- Local UAE Banks – Dubai’s major banks (Abu Dhabi Commercial Bank, Standard Chartered, and ENDB) offer brokerage services to foreigners and nationals in the UAE.
- Ras Al Khaimah Investment Authority – This UAE government agency offers brokerage services to UAE citizens.
Investors need to apply for a NIN investor number at the DFM in order to buy stocks listed on any of the exchanges.
Detailed information on how to invest in the UAE and Dubai stock market is available in the video below.
Stock Exchanges Available in UAE?
Stock exchanges in UAE are listed below.
- Dubai Financial Market (DFM)
- Nasdaq Dubai
- Abu Dhabi Securities Exchange (ADX)
- Dubai Gold & Commodities Exchange (DGCX)
- Dubai Mercantile Exchange (DME)
Here is more detailed information about the process of how how to invest in the UAE stock market
How To Invest In The International Stock Market From UAE?
The most common way for UAE citizens and residents to invest in international stocks is through local and offshore online stock brokers.
Online stock brokers allow users to invest in various different markets and asset classes from the same dashboard. They do not require users to register for a NIN investor number or TIN tax number. Furthermore, online stock brokers allow users to test trading strategies with virtual money, limiting the risk of investment losses. They also allow traders to use different research and analytical tools for better and more profitable investment decision making.
Here is a detailed list, review and comparison of the best online stock brokers in UAE
A video walk through online stock brokers with the best trading platforms in UAE is available in the video below.
2. Investing In Cryptocurrencies
Cryptocurrencies are digitally encrypted tokens that are traded on decentralized exchanges, meaning no central authority manages or regulates their value. Cryptocurrencies support different trading strategies, from active, passive trading to long-term investing.
The different ways investors can profit by investing in cryptocurrencies are listed below.
- Buying And Selling Cryptocurrency Directly – The most common way to invest in cryptocurrencies in UAE is by buying/selling them using fiat currencies (AED, USD, EUR) through crypto exchanges (centralized, decentralized). Cryptocurrency exchanges have built-in crypto wallets (custodial wallets) to store digital assets. Alternatively, users can invest in cryptocurrencies via online brokers.
- Investing in Crypto Companies – an alternative way to direct purchases of digital assets is investing in stocks of crypto-related companies or companies. Coinbase, Block, and CME Group are examples of companies that have (a part of) their balance sheet in crypto
- Cryptocurrency Mining – refers to lending computer power to support the blockchain network. By mining cryptocurrencies, users participate in a decentralized computer network that solves algorithmic puzzles and receives cryptocurrencies as rewards.
- Cryptocurrency Trusts or Funds – are funds that consist of different crypto products allowing investors to get exposed to the crypto market without directly owning digital assets. Investors receive shares in the trust, which reflects the fluctuation of the underlying crypto asset.
- Cryptocurrency Staking – is a crypto investment that allows users to receive passive income in the form of extra (earned tokens). Staking refers to lending (locking up the right to trade the crypto coin) your crypto coins for a certain amount of time to receive interest in the form of extra tokens. By staking crypto, you help Proof-of-Stake (PoS) blockchain to verify transactions.
- Yield Farming / Liquidity Mining – is a passive crypto investment strategy requiring the investor to stake or lend crypto coins to generate rewards in the form of more cryptocurrency.
- Crypto Lending – is a cryptocurrency investment strategy allowing users to achieve passive income through interest payments for lending their cryptocurrency to other traders.
- Masternodes – is a passive crypto investment strategy requiring the investor to hold a specific amount of cryptocurrency in a wallet and perform certain tasks for a blockchain network. Masternodes require a high volume investment and come with higher returns.
- Crypto Dividends – refers to a passive investment strategy in crypto coins that pay out dividends to their holders.
What Are The Most Common Investment Goals Of Crypto Investors?
Cryptocurrencies can be used for short and long-term financial goals. The most common investment goals that are pursued by cryptocurrency investors in UAE are listed below.
- Capital Appreciation – volatility of the cryptocurrency markets allow investors to gain significant returns through price appreciation (buying cryptocurrencies at low price and selling them at a higher price).
- Passive Income Generation – crypto 2.0 products that allow passive income generation in UAE include staking, lending, yield farming (liquidity mining) and crypto dividends.
- Speculative (Short-Term) Profits – price fluctuation of cryptocurrencies make them a great investment to gain short-term profits from the difference in the buy/sell price.
- Long Term Investments – certain cryptocurrencies with the potential of long-term growth like Bitcoin are a great asset for those looking to invest for the long-haul (retirement saving, wealth preservations)
How To Invest In Cryptocurrencies in UAE?
There are two ways to invest in cryptocurrencies in UAE: online (through crypto exchanges and online brokers) and in person (through crypto ATMs).
1. Investing In Cryptocurrencies Online Through Exchanges and Online Brokers
Most investors from the UAE buy, sell, and hold cryptocurrencies online through crypto exchanges and online brokers (platforms). While crypto exchanges offer lower fees, wider range of coins, and full control over crypto assets (private keys), online brokers have stronger regulatory background (accountability) and options to trade with leverage.
Here is a detailed list, review and comparison of the best crypto exchanges in UAE
A video walk through crypto exchanges with the best trading platforms in UAE is available in the video below.
2. Buying Cryptocurrencies in Person (With Cash)
The most common ways investors buy crypto coins in person in the UAE are listed below.
- Peer-to-peer (P2P) Trading Platforms (P2P Platforms that allow users to organize meet-ups to exchange cryptocurrencies for cash)
- Bitcoin ATMs (allow users to exchange cash for Bitcoins and other cryptocurrencies)
3. Exchange Traded Funds (ETFs)
Exchange-traded funds (ETFs) are investment funds that are traded daily on stock exchanges. They consist of various securities such as cryptos, stocks, commodities, and bonds tracking the performance of the underlying asset, index, commodity, or sector.
ETFs are a popular investment among beginners and intermediate traders in UAE looking for income generation, hedging against downsides, investment appreciation, long-term wealth growth, diversification, and flexibility. They are commonly used by inexperienced investors that lack expertise or time to research individual stocks looking for exposure in a certain sector or industry. ETF includes stocks of multiple companies from that sector, helping investors to benefit from the same diversification as if they would invest in all stocks tracked by the ETF.
What Are The Most Common Investment Goals Of ETFs Investors in UAE?
There are three types of ETFs available in the UAE supporting different investment goals and needs. Types of ETFs and financial goals they support are listed and explained below.
- Passive and Active ETFs: Passive ETFs track the performance of indexes rather than trying to beat their performance which results in lower expense ratios. Active ETFs are actively managed and come with higher expense ratios.
- Thematic or Sector ETFs: Track the performance of a sector (AI, clean technology, real estate) or industry by investing in companies representing that sector or theme. These are commonly used for long-term investment strategies (income generation, retirement saving) because of their steady returns.
- Dividends and DRIPs ETFs: Pay out dividends or reinvest them automatically via dividend reinvestment plans (DRIPs) which allows investors to generate steady and passive income.
- Leveraged and Inverse ETFs: Are riskier investments focused on short-term returns. They are used by advanced traders to hedge against market volatility or to achieve higher returns and quick profits.
How to Invest in ETFs in the UAE
The most common way to invest in ETFs in the UAE is through local or international online brokers. They offer access to a wide range of ETFs at low costs and allow them to buy and sell ETFs just like regular assets. Furthermore investors can use robo-advisors that create portfolios based on their investment goals including different ETFs. More details about the different ways to invest in ETFs are explained here.
Here is a detailed list, review and comparison of the best ETF trading platforms in UAE.
4. Mutual Funds
Mutual funds are investment vehicles that collect money from different investors with the aim to invest in different money market instruments. Professional money managers operate the funds by allocating assets to achieve potential capital gains or profits for the investors.
Unlike buying individual securities, mutual funds allow investors to gain exposure to multiple markets simultaneously, including bonds, equities, commodities, REITs, and others. This allows risk diversification and provides a great opportunity for inexperienced investors to profit from different capital markets at low costs. Investors that lack time or expertise can use mutual funds instead of directly investing in certain assets because of the professional management, great liquidity, diversification, and lower risk involved.
What Are The Most Common Investment Goals Of Mutual Funds Investors in UAE?
Mutual funds are used to achieve different long-term investment goals and objectives. The most common financial goals of mutual fund investors are listed below.
- Long-term investment (buy and hold) – high level of diversification and professional management makes mutual funds great investment vehicles for long-term investment strategies. Some of the common long term investment goals of mutual fund investors include retirement saving, wealth accumulation, financial independency and buying a property.
- Steady (Passive) Income Generation – certain types of mutual funds (bond and dividend funds) are an excellent investment to generate a steady and secure income stream. They are regularly used for retirement saving and other types of safe and steady income generation strategy.
- Asset Allocation – mutual funds can be used for asset allocation strategies (portfolio diversification) as there are mutual funds covering different market sectors or themes.
- Hedging – mutual funds can be used effectively to hedge against market downturns in times of market volatility.
How To Invest in Mutual Funds in UAE?
The 3 different ways for UAE nationals (citizens and residents) to invest in mutual funds are listed below.
1. Online Brokers
The most common way to invest in mutual funds in UAE is through a local or international online broker. They offer access to a wide range of mutual fund types, analysis tools and an intuitive trading interface.
Here is a detailed list, review and comparison of the best mutual funds trading platforms in UAE.
2. Direct Purchase from the Mutual Fund Company
Most mutual fund companies allow investors to buy shares in their mutual funds directly through their website or phone.
3. Alternative Ways
Alternatives to invest in mutual funds in the UAE are listed below.
- Local UAE banks
- Financial-advisors
- Robo-advisors (managed portfolio services)
- Retirement accounts
More detailed information on how to invest in mutual funds in UAE.
5. Forex
Forex (foreign exchange) trading refers to buying and selling international currencies against each other to profit from the price difference. It is a trading strategy that active traders commonly use to achieve short-term (1-5 years) oriented financial goals such as capital preservation, wealth generation, emergency fund or short term purchase finance build-ups. Forex trading is suitable for intermediate and advanced traders as it requires a certain level of knowledge and expertise from the trader, including an understanding of economic data, geopolitical events, and market sentiment. Trading with forex can be highly profitable, but it also involves a high risk of losing money.
Investment Goals Common For Forex Traders in UAE?
Trading with forex primarily involves short-term investment strategies, but also allows certain mid and long-term strategies. Financial goals that are common for forex trades are listed below.
- Capital Appreciation/Profits – the most common goal of forex traders is to increase the value of their initial investment and generate quick profits to accumulate wealth, achieve financial freedom, or get out of depth. Forex trading allows trading with leverage to amplify trading positions and increase potential returns.
- Active and Passive Income Generation – forex trading is a suitable investment to generate a regular monthly income. The most common active forex trading strategies for income generation are day trading, scalping, short-selling, and swing trading. These strategies are suitable for advanced traders.
- Passive Income Generation – is possible by using forex PAMM/MAM accounts, trading signals, copy trading, and automated trading systems (expert-advisors and robo-advisors). These strategies are more suitable for beginners looking for passive income options.
- Hedging – forex is an effective strategy for hedging against exposure to foreign currencies. This strategy is not used to achieve financial gains but to offset potential losses due to currency fluctuation.
How To Trade With Forex in UAE?
The most common way to trade forex in UAE is through local and international online brokers. These offer trading platforms that allow beginner and advanced traders to trade with different currencies from their computers or mobile devices (apps) using various trading tools and features.
Here is a detailed list, reviews and comparison of the best forex brokers in UAE
A video walk through forex brokers with the best trading platforms in UAE in available in the video below.
6. Commodities
Investing in commodities refers to buying, selling, and trading commodities. Commodities are materials (goods) used in commerce as a source for production of other goods or services. There are four types of commodities available in UAE: agricultural, energy, metals, and environmental. Commodities can be traded physically (spot trading) or as futures (contracts where traders buy and sell arrangements for future commodity delivery).
What Are The Most Common Commodity Investment Goals in UAE?
Investment goals that are compatible with investing in commodities are listed below.
- Speculative Investing To Gain Short Term Profits – volatile commodity prices make speculative commodity investments in the forms of futures and options an interesting option to achieve fast financial gains. Short-term strategies such as day and swing trading allow traders to speculate on short-term price movements in the commodity markets to achieve quick potential profits.
- Income Generation – shares in resource-producing companies or ownership of a particular type of commodity source right (natural water spring, coal mine) allow investors to generate a steady income stream.
- Protection Against inflation – buying and holding commodities is an effective investment to hedge against depreciating value of money (inflation). Commodity prices commonly rise with rising costs for products and services.
- Safe Haven – commodities like gold, silver and other precious metals are effective “safe haven” investments that can help maintain the value of investors’ assets in times of market turmoil or economic uncertainty.
- Portfolio Diversification – the commodity market is not directly correlating with the stock and bond markets which makes it an excellent investment for portfolio diversification and balancing exposure to risk.
How To Invest In Commodities in UAE ?
There are two ways to invest commodities in the UAE: indirectly (through futures contracts, commodity stocks, ETFs, and mutual funds) or by physically buying a commodity. The two ways of commodity investments are explained in more detail below.
1. Investing Indirectly Through an Online Broker
The most common way to invest in commodities is through an international or local online broker. These offer trading platforms allowing users to trade futures and options contracts on commodities listed on the Dubai Gold & Commodities Exchange (DGCX) and Dubai Mercantile Exchange (DME). They also allow users to trade on commodity derivative products including Commodity ETFs (Exchange-Traded Funds), Commodity Mutual Funds, Commodity CFDs, and commodity stocks.
Here is a detailed list, review and comparison of the best commodity trading platforms in UAE
2. Buying Commodities Directly
Alternatively, investors can buy certain commodities in its physical form and store it on their own. Commodities that are most commonly traded in its physical form in UAE are listed below.
Physical Gold in UAE
Investors can buy physical gold in UAE through gold dealers. It is a straightforward process that allows investors to buy gold online including cold- storage or in person. The best in-person and online gold dealers in UAE for investment of up to 15,000 AED are listed below.
- National Metal DMCC
- National Bullion House
- Gold Standard DMCC
- Dhab DMCC
- Kaloti Precious Metals
Other Precious Metals (Silver, Palladium, Diamonds)
Investors can buy precious metals in UAE through local dealers. The best silver dealers in the UAE are listed below.
- 4WSTAMPS AND COLLECTIBLES
- Al Abyad Jewellers
- National Bullion House LLC
- Regal Assets Dubai
- Kaloti Precious Metals
Are Profits Made With Gold and Precious Metal Investments Taxed in UAE?
The UAE does not charge any value-added tax (VAT) on purchases of investment-grade gold, silver, or platinum products. Investment-grade gold and precious metals refer to a 99% purity of the asset and are tradable in the international market.However, gold jewelry is not considered investment grade, therefore it does not enjoy this exemption and is subject to a 5% VAT.
The UAE does not apply a tax on capital gains made with trading (buying and selling) of gold, precious metals and other commodities by UAE citizens and residents.
7. Bonds (National and International)
Bonds are investments where the bond buyer (creditor) lends money to an entity (corporation, government, or municipality) in exchange for a periodic interest payment and the return of the investment amount at the bond’s maturity date. Bonds are low-risk investments, which makes them attractive for conservative investors and those seeking assets to reduce their investment portfolio’s risk exposure. They also provide a steady income stream, which makes them appealing to retired investors and others seeking for passive income options.
Bonds generate two types of profits for the investor; interest payments and capital appreciation. Both types are explained in more detail below.
- Interest Payments (Coupons) – are the primary way of how bonds generate income for the investors (creditor). The bond holder receives regular interest payments (typically semiannually) for lending money to the bond issuer until bond’s maturity date. These regular interest payments are called coupons and generate a steady and passive income stream for the investor (creditor) make it an ideal option for those saving for retirement or any other long-term investment goal.
- Capital Gains – Bond holders can generate capital gains (short-term profits) by selling the bond for a higher than the purchase price before the bond’s maturity date.
Factors that have an impact on the prices of bonds are listed below.
- Alterations in the levels of interest rates
- Fluctuations in the credit reliability of the bond issuer
- Changes in the overall demand for bonds
How To Invest in UAE National Bonds?
The three ways to invest in national bonds of UAE are listed below.
- In person through UAE post offices (at more than 700 locations)
- Online through the National Bonds official website (Savings Bonds package)
- Directly (in person) with the UAE treasury – T-bonds available in AED with two, three, five, and ten years maturity rates.
Investing in national bonds of UAE is available to individuals older than 21 years (UAE nationals and non-nationals) and corporations. The minimum required investment is 100 AED.
How To Invest in International Bonds From UAE?
The most common way to invest in international bonds from UAE is through local and international online brokers. These offer trading platforms that allow users to invest in international bond markets from their computers or mobile devices (apps) using various trading tools and features.
Here is a detailed list, review and comparison of the best trading platforms in UAE for bonds. More information on how to invest in bonds in UAE are available here.
Alternatively UAE citizens and residents can invest in international bonds using one of the options listed below.
- UAE Banks – The major banks have tight relationships with worldwide financial institutions making it easy for their clients to invest in international bonds. While banks commonly provide free financial advisory services and make the investment process more convenient for their users, their service comes with slightly higher fees compared to online brokers. The following UAE banks offer clients access to international bonds investments: Emirates NBD, ADCB (Abu Dhabi Commercial Bank), First Abu Dhabi Bank (FAB), Mashreq Bank, Standard Chartered UAE, HSBC UAE, Citibank UAE
- Bond Issuers – Some international bond issuers allow UAE investors to buy their bonds directly online. Purchasing bonds directly through the issuer helps avoid intermediary fees charged by banks and brokers.
9. Real Estate
Real estate are a popular low-risk investment in UAE to generate passive income and achieve capital appreciation long term. It is commonly used by beginners and intermediate investors looking for diversification, steady income generating options , or a “safe haven” investments to protect wealth against inflation or economic turmoil. The UAE has no property tax and even offers long-term residency visas to international property owners, making real estate investments even more popular also for non UAE nationals.
How To Invest In Real Estate in UAE?
The two ways for UAE citizens to invest in real estate in the UAE are listed and explained below.
1. Direct Investment (direct purchase)
The most common way to invest in the real estate market in UAE is by directly purchasing a residential or commercial property. Those can be researched, compared and reviewed through online portals, property listing websites, or real estate agencies. The best sources to find a property for direct purchases in the UAE are listed below.
- Property Finder (App For Buying and Renting Properties in UAE)
- Dubizzle (Online Marketplace to buy and sell properties)
- Dubai REST (App For buying, selling, leasing, mortaging and listing properties)FAM Properties (Real Estate Agency)
- Emaar Properties (Real Estate Website)
- Bayut (Biggest Property SellingPortal in UAE)
- Nakheel (Property building company)
UAE nationals (citizens and residents) that are older than 21 years get full ownership of real estate anywhere in UAE. The same goes for citizens of the following Middle East countries: Oman, Qatar, Saudi Arabia, Bahrain, and Kuwait.
2. Indirect Investments
Investors who want to get exposure to the real estate market without directly buying or managing a property can invest in the market using one of the indirect ways listed below.
REITs (Real Estate Investment Trust)
REITs are companies that own, operate, or finance commercial or residential real estate. REITs allow indirect investing in the real estate market without purchasing a property. It is a way to add real estate to your investment portfolio without managing the actual properties. This strategy allows portfolio diversification and yields steady income in the form of dividends.
The most common way to invest in UAE and international REITs is through online brokers. These offer trading platforms with access to a wide range of REITs, variety of research and analysis tools and other that support achieving their investment goals. This article explains how to invest in REITs in more detail.
Here is a detailed list, reviews and comparison of the best REITs trading platforms in UAE.
Users that prefer investing in UAE REITs only can alternatively choose a local broker registered with the DFM, or a local UAE bank with access to the Nasdaq Dubai Exchange.
The Emirates REIT and the ENBD REIT are the largest Sharia-compliant REITs in the UAE listed on Nasdaq Dubai Exchange.
Real Estate Crowdfunding
Real Estate Crowdfunding refers to a type of indirect real estate investment connecting multiple users intending to buy the same property. Compared to REITs, it is a more direct way of investing in real estate, which has less liquidity but a higher risk-reward ratio. Each buyer becomes a partial property owner, eligible for a proportional rental income and property appreciation.
Properties for real estate crowdfunding are listed on special platforms that allow potential investors to review the details of the real estate deals such as: location, expected returns, length of investment and others.
Here is a detailed list, reviews and comparison of the best real estate crowdfunding platforms in UAE.
Property Funds
Property funds offer indirect exposure to the real estate market through mutual funds that focus on real estate assets.
10. High-yield Savings Accounts With UAE Banks
High-yield savings accounts are a secure and straightforward way to store money or increase savings in UAE with minimal risk exposure. Several banks in the UAE offer savings accounts with interest rates of up to 2,7%. Saving accounts are ensured by government agencies in case the banks fail, which means that the initial deposits are safe. These makes them an ideal option for conservative investors looking for low-risk investments, high liquidity & accessibility, predictable returns, and short-term saving goals. Because of its simplicity, they are commonly used by beginners without any trading experience or investment knowledge. The most common goals of investors using high yield saving accounts include short-term saving goals including saving for a house, vacations, security fund or dept down-payments.
UAE banks with the best-rated high-yield saving accounts are listed below.
- Abu Dhabi Bank (FAB) – iSave Account
- Dubai Islamic Bank (DIB) – Long-term Wakala Deposit
- Dubai Islamic Bank (DIB) – Monthly Payment Wakala Deposit
- Abu Dhabi Islamic Bank (ADIB) – Savings Account
- RAKBANK – Savings Account
Here is a the full list including detailed breakdown and comparison of the best saving accounts in UAE
11. Alternative Investments in UAE
Alternative investments refer to investments in non-traditional (unlisted) assets traded on specific platforms with less transparency and regulatory oversight. Due to their structure, limited regulation, and lower trading volume they are not listed on regular exchanges, but commonly owned by institutional investors, companies or individuals of substantial wealth (accredited investors). Most alternative investments have the potential to generate high profits, but are also considered high risk investments. Key investment goals that can be achieved with alternative investments are listed below.
- Portfolio Diversification – alternative investments do not correlate with traditional markets (forex, bonds, stocks) and can be effectively used to balance the portfolio’s exposure to risk for times of volatility.
- Wealth Conservation – certain types of alternative investments have the potential to protect wealth in times of market volatility and uncertainty (collectibles and hedge fund strategies). It is often considered by conservative investors who prefer safe (fixed) over high returns.
- Hedging Against Inflation – investing in real estate, collectibles, and hedge funds is an effective way to hedge against inflation.
- Generating Steady Income – certain real estate investments, P2P lending, and equity crowdfunding can generate a steady and passive income stream for the investor.
- Retirement Saving/ Wealth Accumulation – investing in real estate, commodities (gold, silver), and certain collectibles allows investors to build capital for retirement and other occasions.
What Types Of Alternative Investments Are Available in UAE?
Depending on their financial goals, UAE citizens and residents can invest in 3 different types of alternative investments. All three are listed and explained below.
Investing in Debt (Crowdlending or P2P Lending)
Peer-to-peer lending is a type of crowdfunding that allows individuals or companies to lend money directly to each other without an intermediary. Lenders can review and invest in loan requests and receive interest payments. Crowdlending is an excellent investment for those looking for a short or medium-term income generation strategy with higher potential returns from fixed-income products (saving accounts, bonds).
Here is a the full list including detailed breakdown and comparison of the best crowdlending platforms in UAE
Investing In Private Companies or Businesses (Equity Crowdfunding)
Equity-based crowdfunding is a category of crowdfunding where investors receive equity (ownership in a company) in return for their investments. Compared to regular (reward-based) crowdfunding, backers of equity crowdfunding projects become partial owners of the company and receive shares of the profit in the form of dividends (regular payouts). It is an excellent investment to generate steady income or diversify the portfolio. While it can be highly profitable, it also involves a high risk of losing money. Most small-sized companies and start-ups that use this type of equity funding fail to succeed after the funding period.
Here is a the full list including detailed breakdown and comparison of the best equity crowdfunding platforms in UAE
Investing In Collectibles
Collectibles are alternative investments that refer to buying tangible items with the expectation of their future value increase. Collectibles include jewelry, antiques, art, coins and stamps, wine, cars, books, and comics. These types of investments are commonly used to achieve long-term investment goals, with the investors betting on appreciating their value over time. Investors also tend to use collectibles to diversify their portfolios.
Socially Responsible Investing (SRI)
Refers to an investment strategy that aims to combine the goal of financial growth with the achievement of positive social or environmental impacts. When making investment decisions, socially responsible investors look for profitability and aim to impact social equality, ecological responsibility, and governance accountability (ESG). They can achieve this goal by purchasing shares in companies representing the investors’ values or avoiding companies not aligned with their ethics and moral standards.
Here is a the full list including detailed breakdown and comparison of the best socially responsible investment platforms in UAE
12. Derivative Investments (CFDs, Futures and Options)
Derivative investment refers to speculative investments, where the investor speculates on the future price movement of an underlying asset without directly owning it. Compared to traditional investments, where the investors have ownership of the acquisition, derivative investments expose the investor to the price changes of the underlying asset (stock, bond, commodity, or other) without ownership. While traditional investments primarily focus on long-term financial goals, derivative investments focus on short and medium-term strategies. They are commonly used to hedge against declining prices of traditional investments or to achieve quick speculative profits.
What Are The Types Of Derivative Investments Available in the UAE?
CFDs
CFD trading refers to a trading strategy where the trader speculates on the underlying asset’s price movement, gaining or losing the difference between the original and the closing price. CFDs are traded based on contracts for difference between the broker and the trader, where the traders agree to pay the difference in the value of the underlying assets in a predefined timeline. These are speculative investments where traders speculate on the future price movement of an asset ( forex, stocks, futures, indices, commodities, cryptocurrencies, bonds, and ETFs) without directly owning it.
Here is a the full list including detailed breakdown and comparison of online brokers with the best CFD trading platforms in UAE
Futures and Options
Futures and options are speculative trading instruments commonly used by advanced traders to achieve short-term investment goals (quick profits) or protection against market volatility.
Futures and options represent types of stock derivatives acting as contracts between two entities that agree to exchange a share, index, commodity, ETF, or indices at a pre-determined price and date. By determining a fixed future price for the underlying asset, both instruments help to protect the investor from future investment losses because of price fluctuation.
Here is a the full list including detailed breakdown and comparison of online brokers with the best trading platforms in UAE for futures and options. This article will help you get started with futures trading and investing.
Common Goals Of Derivative Investments?
Investment goals, compatible with futures, options, and CFDs investments, are listed below.
- Hedging – the primary goal of derivative investment is to hedge against their exposure to price movements of the owned underlying asset. This strategy allows them to guarantee a specific price limit to reduce the risk.
- Speculative (Short-Term) Profits – futures, options, and CFDs are most commonly used to speculate on future market movements. While investors are not directly interested in owning the underlying asset, they profit from its price changes.
- Income Generation – specific options (covered call options) and CFDs on certain assets can generate steady income over time.
How To Choose The Right Investment and Trading Platform in UAE
Defining a clear investment goal is the first and most crucial step on everyone’s investment journey and is essential for choosing the ideal trading platform. Objectives that every investor needs to consider when selecting an investment portfolio are listed below.
- Risk Tolerance (Safety). The first step in the portfolio creation process is deciding how much risk investors are prepared to take. Investors who prefer safety will choose low-risk investments with lower returns on investment (have higher “opportunity risk”). Although there is no complete safety when investing, the following are among the safest investments in UAE: UAE Government Bonds, AAA rated corporate bonds, high-yield saving accounts, treasury bills, and certificates of deposits (CDs). They are common for retirees or near-retirees, first-time investors, investors with short-term goals, and high-net-worth investors.
- Income Generation. Investors wanting to generate a steady income stream prefer investing in fixed-income securities. These include government bonds, corporate bonds, CDs, dividend stocks of companies with a solid track record, crypto staking or lending, and crowdlending. Compared to other fixed-income securities, income-generating investments require greater risk exposure. Income generation as an investment objective is often prioritized by retirees, trusts, passive investors, and conservative investors looking for capital preservation.
- Capital Growth. Capital growth refers to selling an asset for a higher price from the buying price. Investors looking to achieve capital growth speculate on the future price growth of a capital asset. They are willing to take slightly higher risks with the potential of achieving more significant returns. The most common capital growth assets include stocks (blue-chip, growth, dividend stocks), ETFs, mutual funds, commodities (precious metals), and real estate. Capital growth is a typical investment objective of younger investors and more risk-tolerant investors, and those seeking more long-term goals (children’s education, buying a property, retirement)
- Liquidity. Liquidity is among the essential factors to consider when choosing a type of investment. Some investments are easier to sell (are more liquid) and can be converted into cash with a lower risk of losing money. While stocks tend to be less liquid (are harder to sell at any time without investment loss), bonds and bond funds have greater liquidity.
- Tax Optimisation. UAE investors (citizens and residents) are not subject to capital gain or personal income taxes according to United Arab Emirates tax laws. Non-UAE nationals need to consider tax benefits of certain investment types (stocks, individual retirement accounts, and others) when creating a portfolio.
What Are The Advantages Of Investing in The UAE?
Advantages of investing in the UAE are listed and explained below.
Stable and Diverse Economy of UAE
The UAE has an open and diversified economy relying on different investment sectors, including commodities (gas, oil), tourism, real estate, and financial services. Oil and gas contribute to around 49.8% of the UAE GDP, followed by 49.2% from the services sector, with wholesale & retail (22.7%) and financial services & insurance (11.9%) being the most significant contributors. The UAE economy is stable, backed by a strong national currency (AED) pegged to the USD. With a gross domestic product (GDP) of US$503 billion (AED 1.84 trillion) in 2022, the economy of the United Arab Emirates is the 4th largest in the Middle East (only trailing after Saudi Arabia, Turkey, and Israel) and the 32nd in the world. Thank to supportive fiscal policies, political stability, and friendly tax laws, the UAE has earned the top spot among Arab nations and stands 20th worldwide for the economic opportunities it provides to residents and investors.
What Is The Gross National Income (GNI) of the UAE?
The GNI for the United Arab Emirates in 2021 was 404,732 million US dollars. From 1972 to 2021, there has been a substantial increase from 1,789 million US dollars to 404,732 million US dollars, reflecting an average annual growth rate of 14.76%. Moreover, projections indicate that by 2025, the Gross National Income (GNI) in the United Arab Emirates will reach approximately US$0.45 trillion.
What Is The Gross National Product (GNP) of the UAE?
The GNP for the United Arab Emirates in 2020 was 358.406 USD bn.
Free Trade Zones in the UAE
The UAE has over 40 free zones designed to encourage foreign investment. Each economic free zone offers unique advantages to expatriates, foreign investors, and businesses, such as 100% tax and customs duty exemptions, 100% foreign ownership, zero restrictions on repatriation of profits, straightforward business set-up, and sophisticated infrastructure.
The 46 economic free zones in UAE and the emirates they are located in are listed below.
Dubai:
- International Free Zone Authority (IFZA)
- Dubai Auto Zone (DAZ)
- Dubai Cars and Automotive Zone (DUCAMZ)
- Dubai Flower Center (DFC)
- Gold and Diamond Park (DGDP)
- Dubai Industrial City (DIC)
- Dubai International Academic City (DIAC)
- Dubai Knowledge Park (DKP)
- Dubai Logistics City (DLC)
- Dubai Maritime City Authority (DMCA)
- Dubai Outsource City (DOC)
- Dubai Science Park (DSP)
- Dubai Silicon Oasis Authority (DSOA)
- Dubai Studio City (DSC)
- Dubai Techno Park (DTP)
- Dubai Textile City (DTC)
- Energy and Environmental Park (Enpark)
- International Humanitarian City (IHC)
- Dubai Wholesale City
- Jebel Ali Free Zone (JAFZA)
- Dubai Multi Commodities Centre (DMCC)
- Dubai International Financial Centre (DIFC)
- Dubai Internet City (DIC)
- Dubai Media City (DMC)
- Dubai Airport Free Zone (DAFZA)
- Dubai Healthcare City (DHCC)
- Dubai Production City (DPC)
Abu Dhabi:
- Abu Dhabi Global Market (ADGM)
- Khalifa Industrial Zone Abu Dhabi (KIZAD)
- Industrial City Of Abu Dhabi (ICAD)
- Zonescorp
- Masdar City Free Zone
Sharjah:
- Hamriyah Free Zone Authority (HFZA)
- Sharjah Media City (Shams)
- Sharjah Publishing City Free Zone (SPCFZ)
- Sharjah Research Technology and Innovation Park (SRTIP)
- Sharjah Airport International Free Zone (SAIF Zone)
Ras Al Khaimah:
- Ras Al Khaimah Economic Zone (RAKEZ)
- Ras Al Khaimah Free Trade Zone (RAK FTZ)
Ajman:
- Ajman Free Zone (AFZ)
- Ajman Media City Free Zone (AMCFZ)
Fujairah:
- Fujairah Free Zone (FFZ)
- Fujairah Creative City
Umm Al Quwain:
- Umm Al Quwain Free Trade Zone (UAQ FTZ)
Political Stability
The UAE is an elected monarchy federation of seven sovereign states (Dubai, Abu Dhabi, Fujairah, Ras Al-Khaimah, Ajman, Umm al-Qaiwain and Sharjah), each ruled by a hereditary leader known as an emir. These emirs collectively constitute the Federal Supreme Council, with one of them taking on the role of the president of the UAE. The president of the United Arab Emirates is elected for five years. The current president, elected in 2022, is Abu Dhabi’s ruler, Sheikh Mohamed bin Zayed al-Nahyan.
The well-established governance structure, homogenous population, and effective administration guarantee high political stability. It is a significant factor contributing to the UAE’s appeal as an investment destination, as it reduces the risks associated with political disruptions, policy changes, or governance issues that can impact the economy or business environment.
Beneficial Tax Laws
The UAE does not apply any personal income tax for nationals and residents. The same goes for self-employees and freelancers who reside in the United Arab Emirates. Consequently, there is no tax on capital gains made with investing.
The UAE has no corporate taxes except for oil companies and Banks, meaning companies are not taxed on capital gains made through investing.
The favorable tax environment is a significant incentive for businesses and individuals to invest in the UAE, potentially allowing higher net profits and returns on investment.
Protective Legal Framework
The UAE has a robust legal framework that protects investors. Investment laws are well-written and clearly defined, reducing uncertainty and providing investors confidence. Furthermore, the UAE also has legislation that safeguards investors from fraud and breach of contract. Investors are also protected through efficient legal systems and processes, including arbitrage and mediation centers that help resolve investment disputes and other disagreements.
Expats Friendly Regulatory Environment
The UAE has a welcoming legal and policy framework for foreign individuals (expatriates) living, working, or investing in the country. The UAE has low bureaucratic hurdles making it easy for expatriates to start and run businesses. They also have several visa policies tailored to expatriates, including long-term residency visas for investors and retirement visas for older expatriates. Expatriates are also allowed to buy, sell, and own property in designated areas in the UAE, which is not the case in many countries.
How Is Online Trading and Investing Regulated in the UAE?
The UAE has seven emirates (Abu Dhabi, Dubai, Umm Al-Quwain, Ajman, Sharjah,Fujairah, and Ras Al Khaimah), each with its own regulations in areas with no federal law. There are four primary legislation areas of regulation in UAE: the Federal judicial authority and three economic free zones: the Dubai Multi Commodities Centre (DMCC), Abu Dhabi Global Market (ADGM), and Ras Al Khaimah Economic Zone (RAKEZ).
Online trading and investing in UAE is on the federal level regulated by the Securities and Commodities Authority (SCA). The SCA oversees all non-banking activities in UAE, including the security and commodity markets (Dubai Financial Market and the Abu Dhabi Securities Exchange), CFD, Forex, and other trading and investing activities. Based on the Council of Ministers’ decision no. 11 of 2000 concerning the regulations as to market licensing and supervision, brokers are required to have a license from the Security and Commodity Authority (SCA) to offer online trading and investing services in the UAE. The SCA aims to protect investors from scams, manipulative tactics, and deceitful practices, including insider trading. This is achieved by monitoring and inspecting the work of exchanges, brokers, accredited individuals, and market activities in general. To protect investors, the SCA also imposes information disclosure on critical data regarding securities and their issuers.
The other legislation areas of regulation are three economic free zones with independent regulation of federal laws. The three legislation areas and their regulators are listed below.
- The Dubai International Financial Centre (DIFC) is an economic zone in Dubai founded in 2004. It was established as a special economic center for businesses operating in the Middle East, South Asia (MEASA), and Africa. The DIFC is independently regulated by the Dubai Financial Service Authority (DFSA), with its own courts and court system.
- Abu Dhabi Global Market (ADGM) is an economic free zone and finance hub, located on Al Maryah Island in Abu Dhabi. It is regulated by the Financial Services Regulatory Authority (FSRA).
- Ras Al Khaimah Economic Zone (RAKEZ) is a special economic zone located in the Emirate of Ras Al Khaimah, in the United Arab Emirates. Established in 2017, RAKEZ consolidates two major free zones; Ras Al Khaimah Free Trade Zone (RAK FTZ) and Ras Al Khaimah Investment Authority (RAKIA), creating one of the largest economic zones in the region. RAKEZ is regulated by the Ras Al Khaimah Economic Zone Authority.
How Is Trading and Investing With Cryptocurrencies Regulated in UAE?
Trading and investing with cryptocurrencies in UAE is regulated by the SCA Decision No. 23 of 2020 concerning Crypto Assets Activities Regulation (CAAR). The SCA regulates the offering, issuing, listing and trading with cryptocurrencies in UAE. UAE citizens are allowed to trade, hold, exchange and invest in cryptocurrencies.
Cryptocurrency businesses classified as Virtual Asset Service Providers (VASPs) on the government level must secure a license from either the SCA (the primary licensing body on the government level) or a local regulatory entity like the Dubai Virtual Asset Regulatory Authority (VARA) (on the economic free zone level) to legally offer their services in the UAE.
The Emirate of Dubai adopted additional laws to regulate cryptocurrency transactions on the free-zone level. The Virtual Assets Law treats cryptocurrencies like any other type of property, excluding investors obligation from paying taxes on crypto profits.
How Are Investors Protected In The UAE ?
Instruments that protect investors in the UAE are listed and explained below.
- Regulatory Requirements. The SCA imposes regulatory requirements to protect investors from scams, manipulative tactics, and deceitful practices, including insider trading. To protect investors, the SCA monitors all financial activities of licensed exchanges, brokers, and accredited individuals. On the other hand, the SCA allows market participants to file complaints about any suspicious practices used by licensed entities within its jurisdiction.
- Segregated Accounts. Online brokers licensed in the UAE must keep investors’ funds in segregated accounts. This gives investors full control over their funds at any time of their investment journey.
- Regular Reviews. Regulated brokers are required to submit their financial books for external review regularly. This measure protects investors from investing with only brokers with bad financial standings or possible risk of insolvency. Furthermore, brokers must have a minimum capital reserve to protect users’ funds in the case of bankruptcy.
- Transparent complaint protocol. Regulated brokers are required to provide reliable and effective customer service to resolve customer disputes.
- AML and KYC practices. Brokers are required to follow Anti-Money Laundering (AML) and know your client (KYC) practices.
Are Investors in The UAE Protected Against Broker Bankruptcy?
There is currently no legal framework protecting UAE investors in case ob brokers or exchanges bankruptcy in the form of a guarantee fund (compensation fund). However, investors are protected through other instruments listed above.
Conclusion
The UAE financial markets are stable thanks to its diversified economy, relying on various sectors, including commodities (gas, oil), tourism, real estate, and financial services. Investments are additionaly encouraged through beneficial tax laws that do not charge a personal income tax or tax on capital gains made with investing. With supportive fiscal policies and political stability, it creates a safe and resilient market attractive to national and foreign capital investments.
This guide breaks down investment options in the United Arab Emirates available to citizens and visitors (capital nomads) to invest in the UAE and international markets. Considering investors’ nationality, financial goals and individual preferences, it suggests online brokers with ideal trading platforms and conditions.
To find the ideal combination of investments and trading platforms, investors need to consider financial goals (retirement saving, income generation, short-term profits, financial freedom, wealth appreciation), risk tolerance (high risk, low risk), knowledge level (beginner, intermediate, advanced), and timeline (short, mid or long-term).