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How to invest money in UAE, using 3 Bucket Investment Approach?

How to Invest Money in UAE?

The best and the most useful of the investment strategies are always simple to understand and easy to put into practice.

The three bucket investment strategy is a very simple and straight-forward approach to investing one's savings.

It takes into account the different investment needs of an individual at the various life stages to fulfil diverse financial goals.

What is a 3 Bucket Investment Approach...

As the name and picture above suggest does it involves three buckets?

No not all, it is the classification of your savings into three different sections, called as buckets for easier understanding. 

Bucket No 1 

How to invest in UAE for short term goals

Bucket One is for your Emergency Savings and Short Term Goals and should be into liquid or near cash investments.

I would recommend an emergency savings of 3 months salary if you are single or a working couple without children.

If you have a family with children, I would recommend 4-6 months of salary(s) as emergency savings.

Bucket 1 consists of most Liquid investment for Emergency Savings and Short term goals

After you have reached your emergency savings limit, you can add more money into this bucket for short-term goals like Annual Vacation, Electronics like Mobile, Laptop, TV etc..

Also Read : 5 Important Differences Between Savings & Investing.

It is recommended to allocate about 20 - 25 % of monthly disposable income into this bucket.

How to Invest in UAE - Emergency Funds.jpgFocus on Liquidity

The idea of investing in this bucket is not to earn good returns, but to have liquid funds for managing an emergency situation or a job loss, and to meet short-term goals...

All or most of the funds in this bucket must be accessible in 24 to 36 hours...

Because your money is invested in very liquid or next to cash assets, the returns from this investment are usually very low..

People who do not have this type of saving, usually end up borrowing on credit cards or loans.

They spend a lot of money as interest before they repay the borrowed capital, which puts additional stress on their budget and savings.

Bucket 1 - Short Term Investment Options in UAE

1.National Bonds 

Investing in National Bonds is a good idea considering the safety, liquidity and a slightly better return on investment they offer.

It is easy to buy National Bonds, and one can buy National Bonds online, from Money exchanges and banks. The minimum investment is AED 100 and can be purchased in multiples of 100.

The holding period is 3 months, and they can be easily redeemed across the counter via certain Money exchanges.

Click here to visit National Bonds Website for more information.

2. E Saver Accounts 

Many banks in UAE like HSBC, EmiratesNBD, Mashreq, ADCB etc., offer these saver accounts, which offer slightly higher interest rates than your savings account offers.

Most e-saver accounts have restrictions on withdrawals, which discourages frequent withdrawals from such accounts.

3. Savings Certificates

Mashreq Millionaire and other savings certificates issued by reputable regional banks are also some of the options an individual can consider for investing under this category.

 Bucket No 2  

How to invest in UAE for Short and Medium terms

Bucket 2 is for an aggressive investment strategy, helping to achieve short to medium term financial goals like;

  • Down Payment for Property,
  • Fancy car, Expensive Vacation,
  • Investment in Land,
  • Settling a mortgage,
  • Saving for starting a business etc...

Investments in this bucket are less liquid in the short term, with a maturity between 1 year to 5 years. They may be risky like Stocks, Gold, Futures, Hedge Funds etc...

Allocation into this bucket can be between 10 - 20% of monthly disposable income...

Bucket 2 - Medium Term Investment Options in UAE


In the form of coins or Bars, Certificates, ETFs and Funds. Gold was stagnat in 2017, but has seen good growth in 2018. It is a safe haven when other asset classes are going down in value.

investing in UAE - Bullion.jpgStocks, Sukuks and Bonds
  • Trading in DFM, Nasdaq and ADX shares...( Emaar, Arabtec, Air Arabia etc....).
  • This s a good option if you have more than AED 10,000 to invest in a single transaction, as the minimum transaction fees are AED 75.
  • For investments less than AED 10,000 it is better to use other options.

NRI's can invest in Indian stock markets via Demat account online. If you do not have a Demat account, you can open a DEMAT account with Indian Banks like Axis Bank, ICICI Bank, and HDFC from UAE itself, as they have representative offices here.

One has to bear in mind the currency risk and market risk while investing in Indian stocks or Mutual Funds.

If you are a beginner, I would recommend starting investing in Blue Chips stocks, with a time horizon of 2-4 years.

Initial Public Offer (IPO's) in UAE:

UAE is maturing as a financial market, and many family businesses are considering going public. Due to the low Oil prices, many gulf companies are expected to issue public offering.

Some of the IPOs expected in the near future are; Abu Dhabi Ports, ADNOC Service stations, Emirates Global Aluminium, Emaar Real Estate, Senaat & Gems Education.

One can also invest in Sukuks issued by various companies in UAE, and some of them like DEWA sukuk provide good returns as well.

Fixed Deposit in India for NRI's :

NRE / NRO fixed deposits are not risky in terms of capital but are susceptible to currency risks.

FD's are ideal when saving for settling a mortgage in India, or when buying property in India, as the funds will be required in INR only.

It is not a good idea to save in FD's in INR if the funds are needed in currency other than INR - Eg: USD

Doing so will expose your savings to currency risk due to falling rupee. However you can invest in FCNR depostis in the currency of your choice.

Click here to understand, Why NRI should invest in USD or dirham denominated insurance and investment plans 

Bucket No 3

Bucket 3 is the most important but unfortunately the most ignored.  This strategy is focused on long-term goals with a time of 5 years and above, like

How to Invest in UAE for Long term Goals
  • Saving for retirement
  • Saving for Children's Education
  • Saving to move back to Home country for good
  • Investing in a Life Insurance ( Term Insurance, Whole of Life or Endowment Plans)
  • Saving for Daughter's Marriage
  • Saving for Legacy etc...

It is not surprising to read many articles on gulf news about people leaving UAE empty-handed after spending many years in Debt.

This happens because people ignore this bucket and focus more on the short-term financial goals and borrowing in case of emergency.

It is best to invest the biggest portion of your disposable income into this bucket, hence 50 - 70% is recommended under this category.

Bucket 3 - Long Term Investment Options in UAE

  • Generali Vision - Regular Savings Plan offering a direct funds investment platform, facilitating wealth accumulation and growth.
  • Zurich Vista - Regular Savings Plan provides a choice of 9 currencies and more than 200 funds of leading fund houses across the globe
  • Metlife UAE - International Wealth Builder
  • Friends Provident International - Premier Advance offers a distinct selection of funds facilitating wealth accumulation and income drawdown for retirement
  • Idikhar Plus from Salama: Idikhar plus is a Sharia-compliant regular savings plan providing a choice of Islamic Investment Funds
  • Educare from Noor Takaful: Is a unique education savings plan, helping you save and protect for your child's college fees.
  • Zurich Futura: Is a whole of Life Insurance plan. It offers instrumental additional benefits like;
    • Critical Illness Benefit
    • Permanent Total disability benefit
    • Family Income Benefit
    • Accidental Death Benefit
    • Hospitalisation Benefit
    • Dismemberment benefit etc...
  • Future Protect from MetLife: is a very unique insurance plan with Annuity benefits. It also enables savings for retirement, while protecting loss of income due to death, disability and critical illness.


It would be wise to hire an independent financial advisor to help you choose the most suitable investment or insurance plan, based on your goals, time horizon, risk appetite and current financial situation.

What about you? Are you investing to achieve your short and long-term financial goals?

If not! Why?, What is stopping you? Are you perturbed? Do not worry...

Arrange a free consultation to discuss investment options helping you achieve your financial goals/needs.

Click Here to Arrange a Free Consultation

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