Best 11 Short-Term Investment in UAE for High Returns 2024

Short-term investments have gained significant popularity in the UAE, driven by the country's robust economic growth and investor-friendly environment. Research by Saxo reveals that among Gen Z investors, 54% owned cryptocurrency, highlighting the rising interest in high-return short-term investments. As an experienced investment advisor, I’ve seen that options like peer-to-peer lending, real estate crowdfunding, and cryptocurrencies consistently offer high returns.

In this article, I will share the best 11 short-term investments in the UAE for 2024. Drawing from my expertise and understanding of the market, I will provide insightful recommendations for maximizing your returns. You can trust in the thorough research and consideration of these suggestions.

Methodology Behind This Data

In researching the best short-term investment options in the UAE, the following steps were taken:

• Latest Data: Utilized the most recent financial reports, market analyses, and expert opinions to ensure all information is current and relevant. I used UAE Central Bank reports, financial news platforms like Gulf News and The National, and market research databases like Statista.
• Risk Levels: I included various investment options with varying risk levels to cater to different investor profiles.‍
• Market Trends: Considered recent trends and regulatory updates in the UAE financial market. I Monitored UAE Securities and Commodities Authority announcements, financial market performance reports, and expert commentaries on emerging investment opportunities.
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1. Digital Investment Platforms or Robo Advisors

Digital investment platforms, known as robo-advisors, offer automated, algorithm-driven financial planning services with minimal human supervision. They provide users with tailored investment strategies based on their financial goals, risk tolerance, and time horizon. According to a report by Statista, the global assets under management in the robo-advisory segment are expected to grow worldwide by $1,8 billion in 2024. In the UAE, these platforms have gained popularity due to their accessibility, low fees, and the ability to offer diversified portfolios, making them an attractive and user-friendly option for short-term investments.

Risk Level: Medium
These platforms use automated algorithms that diversify investments, balancing potential returns and risks, making them moderately risky.

Difficulty Cashing Out: Low
Investors can easily access their funds with minimal hassle, providing high liquidity.

Fees: Low
Robo advisors typically charge lower fees than traditional financial advisors, making them cost-effective.

Returns: Variable, generally moderate
Returns depend on market performance and chosen investment strategy, generally offering moderate returns.
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Find out about Rama Vision Investments, which uses AI tools for investment management.

2. Precious Metals (e.g., Gold)

Investing in precious metals like gold provides various options, including physical gold, gold stocks, gold mutual funds, gold futures, and gold ETFs.

• Physical Gold: This includes coins and bars, offering a tangible asset often used as a hedge against inflation. According to the World Gold Council, global gold demand reached 4,021 tonnes in 2021, driven by investment in ETFs and bars.
• Gold Stocks: These are shares in gold mining companies, offering exposure to the gold industry’s growth.
• Gold Mutual Funds: These funds invest in a diversified portfolio of gold-related assets, including mining companies.
• Gold Futures: Contracts to buy or sell gold at a future date, allowing speculation on gold's future price.
• Gold ETFs: Exchange-traded funds that track the price of gold, offering a convenient way to invest without holding physical gold.

Gold ETFs, such as SPDR Gold Shares, are among the largest in the world, with assets under management surpassing $60 billion as of 2021. Investing in gold can be an effective way to diversify your portfolio and hedge against economic uncertainties.

Risk Level: Low to Medium
Gold investments are considered safe havens, with lower risk than stocks, but subject to market volatility.

Difficulty Cashing Out: Medium
Physical gold can be harder to liquidate quickly, whereas gold ETFs and stocks offer easier exit options.

Fees: Medium
Transaction and storage fees for physical gold can increase, while ETFs and mutual funds have lower fees.

Returns: Moderate, close to high
Gold typically offers stable returns, especially during economic uncertainty.

For expert guidance on investing in precious metals and other commodities, you can consult an investment advisor here: Rama Vision Investments, Commodity Advisory

3. Cryptocurrency

Cryptocurrency has become a popular short-term investment option due to its high volatility and potential for significant returns. Cryptocurrencies like Bitcoin and Ethereum offer investment opportunities through direct purchases, futures, and ETFs. According to a report by Statista, the global cryptocurrency market is expected to grow at a compound annual growth rate (CAGR) of 12.8% from 2021 to 2028, reaching USD 4.94 billion by 2028. 

Investing in cryptocurrency involves several methods:

• Direct Purchases: Buying and holding cryptocurrencies like Bitcoin or Ethereum.
• Cryptocurrency Futures: Speculating on the future price of cryptocurrencies, offering the potential for high returns.
• Cryptocurrency ETFs: Exchange-traded funds that track the performance of various cryptocurrencies, providing a more diversified investment approach.
• Staking: Earning rewards by holding and validating transactions on proof-of-stake networks like Ethereum 2.0.

Cryptocurrencies' high volatility can lead to significant short-term gains, but it also comes with considerable risk. For instance, Bitcoin's price surged from around $10,000 in September 2020 to over $60,000 in April 2021, demonstrating its potential for rapid appreciation. However, such investments require careful analysis and risk management strategies.

Risk Level: High
Cryptocurrencies are highly volatile and can experience significant price fluctuations.

Difficulty Cashing Out: Medium
Liquidity varies by platform and currency, but selling major cryptocurrencies is straightforward.

Fees: Medium
Transaction fees can be substantial, including network fees and exchange fees.

Returns: High
Potential for substantial returns due to market volatility, with some assets showing dramatic price increases.

4. Money Market Funds

Money Market Funds (MMFs) are mutual funds that invest in short-term, high-quality securities such as Treasury bills, certificates of deposit, and commercial paper. These funds aim to provide investors with a safe place to invest cash-equivalent assets, offering high liquidity and low risk. MMFs have become increasingly popular in the UAE due to their stability and reliable returns.

For instance, the Emirates Islamic Money Market Fund, a Shari’a-compliant investment, invests in a diversified portfolio of Islamic money market instruments. The fund aims to achieve higher profit returns than traditional bank deposits, reflecting the growing interest in money market investments within the region. Diversifying across different durations and liquidity terms maximizes potential returns while minimizing volatility.

According to Statista, the wealth management market in the UAE, which includes money market funds, is projected to grow significantly, highlighting the increasing trust and investment in these financial products.

Risk Level: Low
Investing in high-quality, short-term securities makes these funds one of the safest investment options.

Difficulty Cashing Out: Low
High liquidity allows investors to access their funds when needed easily.

Fees: Low
Management fees are typically low, making them a cost-effective investment option.

Returns: Low to Moderate
Returns are generally modest but stable, providing a secure investment.

5. National Bonds

National Bonds, a Shari’a-compliant savings and investment scheme in the UAE, offers a secure and rewarding way to save. Managed by the National Bonds Corporation, this initiative allows individuals to invest in bonds with competitive profit rates and the chance to win substantial cash prizes through regular draws. According to recent data from WAM, national bond investments have surged to a record AED 14 billion, reflecting its popularity and trustworthiness among investors. This makes it an attractive option for those looking to secure their savings while potentially earning high returns.

National bonds offer various products for different financial goals, including the myPlan, Save & Win, and Booster plans. Each plan maximizes returns while ensuring liquidity and security. The attractive profit rates and the opportunity to participate in monthly and annual prize draws make National Bonds an appealing option for those looking to grow their savings with minimal risk.

Risk Level: Low
Government-backed bonds offer a high level of security, making them low-risk investments.

Difficulty Cashing Out: Low
Bonds can be redeemed easily, though some may have a lock-in period.

Fees: Low
Minimal fees are involved in purchasing and holding national bonds.

Returns: Low to Moderate
Returns are stable and predictable, though generally lower than more volatile investments.

6. Crypto Staking

Crypto staking in the UAE has seen significant growth, reflecting the broader global trend towards cryptocurrency adoption. Staking involves holding and validating transactions on a proof-of-stake (PoS) blockchain network, allowing investors to earn rewards through additional coins. According to a report by Arabian Business, the UAE is among the fastest-growing markets for cryptocurrency adoption in 2024, driven by the increasing use of digital currencies for daily payments and investments.

Platforms like Ethereum 2.0, Cardano, and Polkadot offer staking opportunities with annual yields ranging from 4% to 20%, depending on the network and conditions. The UAE's crypto market is expected to grow by 7.89% annually, reaching a market volume of USD 395.8 million by 2028. This rapid adoption highlights the potential for substantial returns through crypto staking in the region.

Risk Level: High
The high volatility of cryptocurrencies makes staking a high-risk investment.

Difficulty Cashing Out: Medium
Staking requires locking in assets for a period, making liquidity moderate.

Fees: Medium
Network fees and potential platform fees can add to the cost of staking.

Returns: High
Staking can yield high returns, varying significantly based on the specific cryptocurrency and network conditions.

7. High Yield Savings Account

A High Yield Savings Account (HYSA) offers significantly higher interest rates than traditional savings accounts, making it an attractive option for maximizing returns on your savings. Online banks or financial institutions typically offer these accounts with lower overhead costs, allowing them to pass on the savings to customers through higher interest rates. According to a report by Bankrate, the average interest rate for high-yield savings accounts is currently around 0.50% to 0.70%, compared to the national average of 0.05% for traditional savings accounts.

HYSAs are ideal for individuals looking to grow their savings without the risks associated with investments like stocks or real estate. They also provide easy access to funds, typically with no minimum balance requirements or monthly fees. Additionally, these accounts are usually insured by the FDIC (Federal Deposit Insurance Corporation) for up to $250,000, ensuring the safety of your deposits.

Risk Level: Low
These accounts are very safe and insured by the FDIC in many regions, including the UAE.

Difficulty Cashing Out: Low
Funds are easily accessible, providing high liquidity.

Fees: Low
Typically, these accounts have no or very low fees.

Returns: Low to Moderate
They offer higher interest rates than traditional savings accounts, providing stable, moderate returns.

8. Fixed Deposits

Fixed Deposits (FDs), also known as term deposits, are a secure and reliable investment option where you deposit a lump sum of money for a fixed period at a predetermined interest rate. In the UAE, FDs are popular among investors seeking low-risk avenues with guaranteed returns. Banks typically offer various tenures ranging from one month to several years, with higher interest rates for longer terms. According to a report by the UAE Central Bank, the average interest rate on fixed deposits is around 2% to 3.5% annually, depending on the tenure and the bank.

Key benefits of fixed deposits include:

• Guaranteed Returns: Fixed interest rates ensure predictable earnings.
• Security: Funds are often insured up to a certain amount, providing safety for your investment.
• Flexible Tenures: Various maturity periods to suit different financial goals.
• Low Risk: Ideal for risk-averse investors seeking stable returns.

Fixed deposits are an excellent choice for individuals looking to preserve their capital while earning a modest return. They are suitable for short-term and long-term financial planning.

Risk Level: Low
Fixed deposits are secure, offering guaranteed returns with minimal risk.

Difficulty Cashing Out: Medium
Early withdrawal can be difficult and may incur penalties.

Fees: Low
Generally, there are no fees, but penalties may apply for early withdrawal.

Returns: Moderate
They provide predictable and moderate returns, typically higher than regular savings accounts.

9. Recurring Deposits

Recurring Deposits (RDs) are a popular investment option that allows individuals to deposit a fixed amount of money at regular intervals (monthly, quarterly, etc.) over a predetermined period. This systematic approach helps inculcate a disciplined savings habit while earning a higher interest rate than regular savings accounts. In the UAE, recurring deposits typically offer competitive interest rates ranging from 1.5% to 3.5% annually, depending on the bank and the tenure of the deposit.

Key benefits of recurring deposits include:

• Regular Savings: Encourages consistent savings over time.
• Fixed Returns: Earns interest at a predetermined rate, ensuring predictable savings growth.
• Flexible Tenures: Offers various maturity periods, typically six months to ten years.
• Low Minimum Deposit: This option allows investors to start with small monthly contributions, making it accessible to more individuals.

Recurring deposits are ideal for those who want to save regularly and earn a steady return without the risks associated with market-linked investments. They are particularly beneficial for young savers and those with fixed monthly incomes looking to build a financial cushion for future needs.

Risk Level: Low
These deposits are low-risk, ensuring steady savings growth.

Difficulty Cashing Out: Medium
Like fixed deposits, early withdrawal can be challenging and may incur penalties.

Fees: Low
Minimal to no fees, though penalties for early withdrawal may apply.

Returns: Moderate
Returns are predictable and higher than regular savings accounts, providing steady growth.

10. Equity Derivatives

Equity derivatives are financial instruments whose value is derived from the price movements of underlying equity assets, such as stocks. These instruments include options, futures, and swaps, which are used for hedging risks, speculating on price movements, and enhancing portfolio returns. In the UAE, the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) offer a range of equity derivatives, providing investors opportunities to diversify their strategies and manage risks effectively. According to the UAE Securities and Commodities Authority (SCA), the UAE's trading volume of equity derivatives has seen significant growth, driven by increasing investor interest and developing more sophisticated financial products.

Types of Equity Derivatives:

• Options: Contracts that give the buyer the right, but not the obligation, to buy or sell a stock at a predetermined price within a specified period.
• Futures: Standardized contracts obligating the buyer to purchase and the seller to sell a stock at a predetermined future date and price.
• Swaps: Agreements to exchange cash flows or other financial instruments between two parties, typically used to manage exposure to fluctuations in equity prices.

Risk Level: High
These instruments are highly speculative, carrying significant risk.

Difficulty Cashing Out: High
Liquidating derivatives can be complex and may depend on market conditions.

Fees: High
Transaction and management fees can be substantial, reflecting the complexity of these instruments.

Returns: High
Potential for high returns, but with corresponding high risk and volatility.

11. FMPs (Fixed Maturity Plans)

Fixed Maturity Plans (FMPs) are closed-ended mutual fund schemes with a fixed tenure, typically one to five years. They invest in debt instruments like bonds, government securities, and corporate papers, aligning the maturity of these instruments with the plan's tenure to ensure steady returns at maturity. FMPs have gained popularity in the UAE due to their stability and tax efficiency. According to a report by Emirates NBD, the demand for fixed-income products, including FMPs, has increased significantly as investors seek safe-haven assets amidst market volatility.

Key Features:

• Predictable Returns: By holding investments until maturity, FMPs aim to provide stable and predictable returns, minimizing interest rate risk.
• Low Risk: FMPs typically invest in high-quality debt securities, making them a relatively low-risk investment option.
• Tax Efficiency: Investors can benefit from indexation on long-term capital gains, potentially reducing tax liabilities.

Risk Level: Low to Medium
Investing in high-quality debt securities makes FMPs relatively safe, though subject to interest rate risk.

Difficulty Cashing Out: Medium
Liquidity is lower as funds are locked in until maturity.

Fees: Low
Management fees are generally low, making FMPs cost-effective.

Returns: Moderate
They offer predictable and moderate returns aligned with the fixed maturity period.

How To Choose the Best Short-Term Investment Option in the UAE

When choosing a short-term investment option in the UAE, consider the following key factors:

1. Risk Level: Assess how much risk you are willing to take. Low-risk options such as national bonds and money market funds provide safety. In contrast, higher-risk options such as cryptocurrencies and equity derivatives offer the potential for higher returns but have greater volatility.
2. Liquidity: Assess how quickly you need to access your funds. High-yield savings accounts and money market funds offer high liquidity, while time deposits and repayment plans may have lock-in periods, making them less accessible.
3. Returns: Compare the potential returns of different investments. Higher returns often come with higher risk. Look for options that balance risk and reward to suit your financial goals.
4. Fees: Be aware of the associated fees that can affect your profits. Low-fee investments, such as digital platforms and some savings accounts, can be more cost-effective than high-fee options, such as equity derivatives.
5. Diversification: Spread your investments across different assets to minimize risk. A diversified portfolio can protect against volatility in any market segment.
6. Market Conditions: Stay updated with current economic and market conditions in the UAE. Understanding market conditions will help you make more informed decisions and capitalize on favorable trends.

By evaluating these factors, you can select the short-term investment option that best suits your risk tolerance, financial goals, and liquidity needs, providing a balanced and effective investment strategy.

What are the Characteristics of Great Short-term Investments?

From my expertise, I would recommend paying attention to these characteristics when choosing short-term investments:

1. Liquidity: Ensure that investments are easily converted into cash with minimal loss of value, allowing easy access to funds when needed.
2. Low Risk: Look for investments with minimal risk of loss of principal, offering stability and predictability.
3. Predictable Returns: Choose options that provide stable, known returns to help you plan your finances effectively.
4. Low Fees: Choose investments with minimal transaction and management fees to maximize your net return.
5. Security: Prefer investments backed by reliable institutions or assets, such as government bonds or insured savings accounts.
6. Diversification: Spread your investments across different assets to reduce risk and protect against market volatility.‍
7. Flexibility: Choose investments that allow you to tailor amounts and terms to suit your financial goals and time frame

Conclusion

As such, the UAE offers different short-term investment options, each with its benefits and risks. Whether you prefer the stability of traditional savings vehicles or the high returns and volatility of modern digital assets, you have an investment strategy to suit your financial goals. By understanding these options and their associated risk levels, fees, liquidity, and profit potential, you can make informed decisions to manage and grow your wealth.