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The National
19-02-2025
- Business
- The National
How retail investing offers path to financial freedom
If you want to control your financial destiny, retail investment has become an increasingly sought-after option. It's not just the ultra-wealthy who are active in monetisable markets any more and the numbers reinforce this shift. The combined market capitalisation of the Dubai and Abu Dhabi stock exchanges surpassed Dh3.91 trillion ($1.06 trillion) in 2024, compared with Dh3.65 trillion in the year prior, according to state news agency Wam. This highlights how more people are generating wealth today. UAE residents are seeking digital investment platforms to diversify their portfolios. Technology has simplified investing, with online brokerage platforms offering low-cost or commission-free trading. It is imperative to understand how to harness this new investment age. Like anything in life, it all starts with the basics. To start investing, begin by deciding what you want to invest in. This can include stocks, bonds, real estate or mutual funds (among several other options), without relying on big companies to handle your money. This DIY approach grants more control over where you spend your money but also means that you need to evaluate your risk profile and conduct due diligence. UAE residents' investment choices are as diverse as the expatriates who make up the country's population. Yet, most of these individuals prioritise real estate and gold. Why? Because these assets maintain their value and stability throughout history. Consider Dubai's real estate market, it recorded Dh522.5 billion worth of deals in 2024. People renting property in key areas can expect to earn between 7 per cent and 9 per cent of its value each year. Meanwhile, more people are putting money into index funds and exchange-traded funds (ETFs) for wealth growth over time without paying high fees – but there are more options to consider. Green energy and technology start-ups, for example, are something new to try as these industries hold promising futures. With sustainability and technology at the forefront of today's global policy shifts, they are strong starting points – especially for new investors. However, a solid base is essential before diving in. An emergency fund covering three to six months of expenses provides a safety net for responsible investing. Achieving financial independence through retail investment starts with informed decisions: begin small. Low-cost index funds offer diversification and low fees, making them a great entry point. Due to their long-term stability and reduced risk when compared to speculative trading, these instruments are becoming increasingly popular among UAE retail investors. You can mimic the diversification strategies of high-net-worth individuals and ultra-high-net-worth individuals by expanding your portfolio across asset classes such as real estate, private equity and alternative investments. Investing does not follow a single approach. Each investor's risk appetite depends on things such as how much they earn, what they want to do with their money and what's going on in their life. Consider Warren Buffett, who takes a long-term, value-investing approach, compared to Elon Musk, who embraces high-risk, high-reward ventures in emerging industries. They are examples of polar opposite strategies, yet both achieved incredible success. Similarly, people who don't mind taking big risks might opt for stocks or less common investments, while those wanting it safe might stick to bonds or funds that pay regular dividends. What's happening in the market in 2025 should also guide how you invest. Big changes in the world economy, such as inflation and geopolitical tensions, are affecting how investments perform everywhere. What's most appealing about investing is the possibility of achieving financial freedom. Saving regularly, investing consistently and remaining patient present the opportunity to use compound interest to build wealth over time. This is especially true in the UAE where there is no income tax. With increased recognition for helping facilitate smarter financial decisions, retail investment is playing an important role in residents' money-making strategies. It provides you with endless opportunities: from fulfilling retirement goals to building wealth for your future generations. While investing is a promising path to financial independence, true financial freedom requires a multi-asset approach. Saving, budgeting and diversifying income streams in a disciplined manner will yield long-term benefits. Investing can be overwhelming, especially for those who are new to the playing field. If you fit into this category, reaching out to informed financial advisers to guide you will help ease that burden. Nonetheless, if you're embarking on an investing journey, the key to success is starting small, staying informed and remaining patient. Bas Kooijman is chief executive and asset manager of DHF Capital, a securitisation company for financial services
Khaleej Times
11-02-2025
- Business
- Khaleej Times
UAE retail investors upbeat amid economic growth, tech boom
Retail investors in the UAE are overwhelmingly optimistic about the prospects for the UAE stock market in 2025 with 80 per cent of a survey participants expecting growth. This optimistic outlook highlights a deepening confidence in the UAE's economy, particularly as it continues to diversify and modernise its financial landscape, a recent survey by trading platform eToro reveals. The survey, which assessed the investment attitudes of local retail investors, identified real estate and construction as the most promising sectors, with 53 per cent of respondents favouring these areas. Technology and telecommunications closely followed, garnering 43 per cent support, while banking and financial services were favored by 42 per cent of investors. George Naddaf, managing director for Mena at eToro, said as the UAE continues to advance its financial infrastructure and attract foreign investments, the economic outlook remains highly promising. 'The government's commitment to economic diversification and capital market development creates robust opportunities for investors," he said. In addition to local market confidence, UAE retail investors are also eyeing global investment opportunities. The survey found that 79 per cent plan to focus on financial services, 72 per cent on technology, and 70 per cent on communications in the first quarter of 2025. A significant driver of this optimism is the anticipated impact of artificial intelligence (AI), with 81 per cent of investors expecting stock prices of AI-driven companies to rise this year. The crypto market is also capturing the attention of UAE investors. A striking 81 per cent indicated plans to invest in cryptoassets in the upcoming quarter. This enthusiasm follows a remarkable surge in crypto prices, which recently surpassed $109,000. Additionally, 78 per cent of respondents are interested in commodities, while 77 per cent are looking at alternative investments, including real estate and private equity. "AI and cryptoassets dominated 2024 and continue to be pivotal in driving market momentum in early 2025. The sustained interest in crypto underscores investors' ability to identify and capitalize on emerging trends. However, it's crucial for investors to diversify their portfolios to manage risk effectively," Naddaf said. The robust market capitalisations of the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) reflect this investor confidence, with total market cap exceeding Dh3.91 trillion in 2024. The ADX alone reached nearly Dh3 trillion by the end of the year, while the DFM's market capitalisation climbed to Dh907 billion, up from Dh687 billion in 2023. This growth is attributed to a resilient economy and a surge in foreign investments, alongside a flurry of initial public offerings (IPOs). In 2024, Gulf IPOs raised a total of $12.1 billion, with 48 IPOs across six GCC countries, including seven in the UAE. The successful IPOs spanned various sectors such as retail, healthcare, and financial services, contributing to the deepening of the region's stock markets. Looking ahead, the IPO landscape in the GCC appears promising for 2025, buoyed by strong investor demand and continued governmental efforts to diversify economies. According to Kamco Invest, approximately 40 IPOs are in the pipeline across the GCC, with 30 already announced and several others rumored. In the UAE specifically, notable potential listings include hotel operator FIVE and two real estate offerings from Dubai Holdings. Other companies rumored to be considering IPOs include Dubizzle Group, Alpha Data, and ALEC Engineering & Contracting LLC. Kamco analysts highlighted the robust activity in GCC equity markets, noting that 2024 recorded the highest number of IPOs in the region since 2023, with total proceeds reaching $12.9 billion, a 19.8 per cent increase compared to the previous year. As UAE retail investors prepare for 2025, their confidence in the market, bolstered by advances in technology and a diversification strategy, indicates a bright future for the region's investment landscape.
