4 Ways to Make a Monthly Income from Investing in UAE

Do you want to build a portfolio that will generate a monthly income? Are you looking for ways to get additional money that can cover your monthly bills? In this article, we will give you 4 ways to make a monthly income from investing in UAE.

What is Income Investing:

Income investing is simply buying assets that pay you back and will generate a frequent income.

If you are in your 20s, 30s or 40s, you can start investing in income-generating assets, these assets can generate an income that covers your monthly bills and loan installments, but if you keep on investing every month, by the time you retire in your 60s, you will have an income from your assets that can cover your whole month expenses.

Key Investments for Your Income Investing Portfolio

When it comes to building your income investing portfolio, you need to have the following buckets in order make a monthly income from investing in UAE

1. Dividend Stocks

2. Bonds

3. Structured Notes

4. Real-estate

1. Dividend Stocks:

Many companies distribute part of their profits to people that hold their stocks. The profit they distribute per one stock varies from one company to another. However, the average is between 1% to 5%. 

In other words, if you invest in a company that pays 3% as a dividend yield, it means that you will get 3% of the stock price for each stock you are holding.

Example: You bought 10 stocks for Coca-Cola. The stock price is $55, which means you paid $550 to get the 10 stocks. Coca-Cola Dividend yield is 3%, it means that you will get $16.5 ($55*10 stocks*3% – stock price*dividend yield*quantity).

Companies might distribute dividends annually, semi-annually, quarterly or even monthly, depending on the company strategy in distributing profits.

While the dividend yield might seem low, and you probably can get a higher percentage doing some other investments, but don’t forget that in many cases, you are benefitting from the stock price gains, on top of the dividends.

However, you need to be mindful that If a business pays out too much of its profit, it can hurt the firm’s competitive position. A dividend yield of between 2% and 5% is a healthy payout.

Invest in Dividend Stocks from UAE: Register here

Check out: How to Buy US Stocks from UAE

2. Bonds:

Bond is simply an investment where you lend money to corporations or governments, and it’s generally considered one of the lowest risk investments, but bond’s risk depends on the lender’s credibility and payback history.

Each bond has the following:

• maturity date (can be in 1,5,10,20 or more years)
• coupon rate (the interest rate you are getting for holding the bond)

As long as you keep the bond, you will be getting the coupon. Coupons can be distributed monthly, quarterly, semi-annually, or annually. 

However, you may choose to sell the bond before maturity if you need some cash. To do so, you would need to sell it through an international broker. Similar to stocks, bonds prices and values can go up or down. However, bonds price fluctuation is way lower than stock.

Invest in Bonds from UAE: Register here

3. Structured Notes:

Structured notes are complex products that usually combine bonds and derivatives. The bond component makes up approximately 80% of the investment and provides the capital protection and coupon payment to investors. The derivative component makes up the remaining 20% of the investment and provides upside potential to investors.

In simple words, structured notes are investments that invest in certain stocks and pay decent returns on a monthly basis, as long as the stock’s value of that structured note doesn’t go below a certain value that is clearly stated on the structured note fact sheet.  

Structured Notes generally have medium to high risk profiles, but they pay high returns. People who know how to manage it well, make a decent monthly income.

If you don’t have a prior experience in structured products, it’s not recommended to invest in it before getting the proper education. However, for beginners, the safest way to invest in structured notes is through a financial advisor who can choose the best structured product based on your risk appetite and manage it for you to maximize the profits and minimize the risks.

How to Invest in Structured Notes from UAE: Check out our Recommended Financial Advisors list and connect with them to check the structured products they have.

4. Real estate investing in UAE:

Investing in real estate is one of the best and most common ways of generating a monthly income. There are many people who own multiple properties and simply rely on the rental income as their primary source of income and don’t have to work.

There are two ways to invest in UAE real estate market and generate a monthly income:

Buy rental Property

Buying a property and renting it out generates a decent passive income in Dubai. Generally, the net rental income of a property in Dubai is between 5% – 7%, so having an apartment worth 1 million Dirham can generate a net passive income of 50,000 – 70,000 Dirhams annually.

If you want to get an advice from one of the best Real estate Advisors in Dubai, drop us an email on info@thefinancedean.com

Real Estate Crowdfunding in UAE

One of the problems with Real Estate investment is budget limitations. If your budget is tight, but you still want to invest in the Real Estate market, you can try out Crowdfunding.

Crowd funding is raising capital from a pool of investors, each of them contributes a certain amount, then the crowd funding company uses the investors’ capital to buy properties, rent them out and distribute the rental income to investors.

There are some legit platforms that offer real estate crowdfunding in UAE. One of the most famous platforms is Smart Crowd. The company lists properties on their website for people to invest in. You can invest as little as AED 5,000 and start earning income when the property is rented (Check out how Smart Crowd works in details)

Register to Smart Crowd here are get AED 250 discount on your first investment.  

Bottom Line:

The sooner you start building your income investing portfolio, the higher value it can pay you in the future. The most important thing is to keep investing in income generating assets every single month so it can pay you back later on.