6 Investment Planning Tips for Better Wealth Management

Whether it’s financial freedom, a secure retirement, or a strong financial legacy for the next generation, we all have multiple financial goals to achieve. While saving money is crucial for financial stability, investing your savings helps you grow your money and build wealth over time. The UAE market holds tremendous potential for keen investors. As a resident of UAE, you can choose from a multitude of investment planning options to meet your financial goals.

Investment plans: What you need to know

Investment planning typically involves creating financial goals, assessing your risk tolerance, and finding investment strategies that help meet your long- and short-term needs. Many people start out by creating their own investment plans and experimenting with different investment styles and approaches. Mobile investing apps and platforms have made it much easier for individuals to explore different investment vehicles and products. For instance, Citibank Brokerage is an online trading platform that enables you to trade in equities listed in the US stock exchanges' list. The Citi Mobile® Banking App lets you easily invest in eFX, equities and mutual funds.

Tips for a stronger portfolio

Here are some simple investment tips that will help you choose the right investment instruments and build a good investment portfolio.

Start with a well-researched investment plan

A carefully devised investment plan is instrumental in helping you achieve your short- and long-term financial goals. Embarking on an investment journey without a plan could be risky as you may end up generating unsatisfactory returns or withdrawing from investments out of fear during market volatility. With a solid investment plan, you can stay focused on your wealth objectives and remain confident even when the market fluctuates.

• Creating an investment plan involves:
• Reviewing your finances
• Creating financial goals
• Understanding your risk tolerance and time horizon
• Choosing the right investment vehicles
• Evaluating your investments and making adjustments to your plan over time

There's a degree of experimentation involved if you're a beginner. Tracking your investments and monitoring your own changing financial circumstances can help you refine your plan with time.

Closely assess your finances

Reviewing your current financial situation is the first and most essential step in creating a sound financial plan. Consider the following:

• Your existing assets, including properties, savings, stakeholder shares in a company, and any investments
• Your existing debt, including mortgage, various loans, and credit card debt
• Your monthly income and expenses

Once you’ve achieved clarity on your financial standing, you can have a better understanding of how much you can put towards investments, and what you need to do to achieve your financial objectives.

Align your investment plan with your financial objectives

To get the desired returns from stock market investments, it’s important to invest according to your financial goals. You can choose different instruments for your short-term and long-term goals.

• Long-term: For long term goals like retirement, you can choose products like fixed income securities (like bonds), time deposits, mutual funds, and structured notes.
• Short-term: On the other hand, for your short-term investment goals, look for instruments like ETFs and stocks. You can also consider foreign exchange trades.

You can work with your relationship manager to identify investment options which provide you safety, liquidity and better returns on your investments.

Choose instruments that sustain market volatility

Before choosing an investment option, ensure that you fully understand the risks associated with it. You can opt for defensive sector stocks which act as a safety net in a bearish market and can balance your portfolio in a retreating market. They are also beneficial as investments as they pay annual dividends thereby reducing your initial cost. In the UAE, while looking for defensive sectors you can include telecom and banking sectors in your portfolio. You can also invest in pharmaceutical, healthcare and education stocks which grow rapidly in their initial years and develop into defensive high yield stocks.

Diversify your investment portfolio

Portfolio diversification goes a long way toward giving you good returns. Risks and investments go hand in hand. As an investor, it’s important not to put all your eggs in one basket. You can diversify your portfolio by investing across different investments of varying risks and returns such as mutual funds, bonds, stocks and ETFs. It is because, when one of them underperforms, there’s a chance that another asset class will perform well and balance out the resultant losses. Diversification helps smooth out the volatile roller coaster of investing and helps you stay invested with stable returns.

Invest in mutual funds

Mutual funds are professionally managed investments funds that pool money from the investors to purchase securities across different companies and asset classes. Mutual funds are a diversified basket of instruments that help you invest in schemes of varying returns and risks. As these are diversified, the loss of one instrument is neutralized by the profit of other, thus reducing the risk factor of your investments.

If you wish to invest in real estate with the benefit of market returns, you can opt for Real Estate Investment Trust or REIT. Currently there are two listed REIT on NASDAQ, Emirates REIT and Emirates NBD REIT.

Tailored investment plans for HNWIs

High-net-worth individuals may have unique needs related to succession planning, overseas business and real estate considerations, philanthropy, and more. These aspects require a more personalized approach. HNWIs may also lack the time to focus on their investments or may benefit from professional advice on how to best manage their assets. Working with a professional wealth manager can help HNWIs maximize their investment opportunities while minimizing risks.
As a Citigold client, you get access to a dedicated relationship manager who works with you to create bespoke investment plans. Along with the client advisory team, they create a plan of your financial goals, assess your risk tolerance, and take into consideration your knowledge of investment products. They use these details to create a set of principles that guide your investment portfolio strategy.

Final thoughts

The investment tips discussed above are a starting point. The most important step is regularly reviewing your investment plan and objectives to account for any changes and ensure that your strategy remains aligned with your goals.