Build your wealth through an investment portfolio!
Maintaining a healthy financial investment is a must for any individual, to build wealth. If you are an expat, the need to stay invested in a diversified portfolio is multi-fold, as the uncertainties of globalisation such as currency and commodity fluctuations hover over your money.
WhatÔÇÖs an investment portfolio?
Investment portfolio is a bag of financial products that are intended to avoid and balance the potential risk factors that hinder wealth creation. A good investor is one who understands this. So he never puts all his eggs in a single basket. Depending on the investorÔÇÖs risk appetite, specific financial instruments are chosen for investing. An aggressive portfolio includes high risk/high reward propositions such as stocks. On the other hand an investment portfolio which contains debt instruments such as government bonds is known as a defensive portfolio.
We will introduce you to a few investments below.
National bonds and saving certificate
National bonds are issued by the government, it usually doesnÔÇÖt have a fixed interest rate but itÔÇÖs considered very safe. Savings certificates are issued by reputable regional banks and they have a fixed rate of interest. The maturity periods on both national bonds and saving certificates can be of small term and long term.
Consider investing in gold or gold related mutual funds if you have hard cash. The advantage of gold is easy liquidity and it generally goes up when other asset classes goes down.
When a company is publically traded, the company as a whole is valued in small units called stocks. Stocks allow stock-holders to own a portion of a public corporation. The UAE for example has three stock exchanges, Dubai Financial market (DFM), Abu Dhabi Securities exchange (ADX) and NASDAQ Dubai. Stocks of multiple companies are traded here from retail companies to financial institutions.
Mutual fund consists of mixture of stocks, packaged as a single unit; itÔÇÖs a pool of money from different investors that is used for buying products such as stocks and bond. Mutual funds are managed by experts of the financial field who have a higher chance of picking good stocks compared to people who have lesser expertise.
Initial Public Offering (IPO)
IPO is the first sale of stock by a company to the public. In a financial market like the UAE where multiple companies are being listed in stock exchange for the first time, your portfolio would benefit from buying these stocks, because the companies being listed are well run and profitable.
Exchange Traded Funds (ETF)
As their name suggests they are funds that are traded on Public Exchanges. What this means is that you can buy and sell the funds exactly like you would buy and sell a stock.
Ensure you connect with the best wealth management service provider, who can explain these portfolios in detail and help you make the right choice.