People make investments for many reasons but the most common is the prospect of not having to work all your life, rather have something to fall back on. It is important to make your money work for you with a good investment instead of letting it sit safely in your bank account with minimal returns.
When you make an investment, there is the prospect of generating more money by earning returns on what has been invested. From a simple fixed deposit, to buying bonds, shares and investing in mutual funds, there are a range of opportunities to spin your money. The key objective, however, is to get the most returns from your investment.
For businessmen, the two main modes of investment are long term and short term. Investment in buying machinery to speed up procedures in your business can be termed as a long term investment while short term investments could be purchase of inventories, etc. But, for individuals seeking to earn returns, however, fixed deposits for a duration of a year or less could be a short term investment, while an insurance policy for a fixed term of 10 or 20 years or mutual funds for a prescribed term could be a long term investment.
Stocks and Mutual Funds
In Oman, if you are an expatriate resident or a citizen, and want to make good investments to get some extra income annually, there are a few opportunities to consider, provided you are able to put aside a part of your regular income or have some savings on hand. While fixed deposits in banks do not give any sizable interest, investing in stocks could be your next option. The procedures for investing in stocks are quite simple and quick in Oman, in the absence of income tax, due to which you do not need to submit scores of documents or follow cumbersome procedures.
You can study the movement of stocks and buy or sell shares at suitable intervals to get some extra income periodically. But, if you do not have the required acumen for researching companies and the movement of their stocks, you can invest in the stock market through Mutual Funds, wherein banks and financial institutions do all the needed research and decide on the best options for maximising returns on investments. However, the element of risk is not totally ruled out even in Mutual Funds.
Currently around 20 types of Mutual Funds exist in Oman and one has the opportunity of investing in stocks not just in Oman market but also those in GCC markets through these Mutual Funds.
Best option for small investors
The best opportunity for a small investors would be participation in an initial public offering (IPO) floated by any ambitious company which chooses to go public in order to expand its scope and prospects. However, currently, there are no IPOs in the offing. So one could wait for the opportune moment to purchase shares at offered price as a good investment and see them grow in upcoming months/years as the company’s developmental strides pick up and its shares grow steadily.
Investment in real estate
If the funds at one’s disposal are sizeable, investing in real estate is also a good investment opportunity for citizens as well as residents. One has an opportunity to invest in real estate via two real estate funds in Oman – Amman Real Estate Investment Fund and Oman REIT Fund.
You may also consider the option of purchasing a property in an esteemed ‘free hold’ residential township like Al Mouj (which offer long-term residential visas for expatriates) as an investment and letting it out to tenants on a monthly/annual rental basis. This way, the returns would be sizable annually, while the property becomes a lucrative asset and a good investment, indeed.
4 tips to make good investment decisions
- Develop a personal financial roadmap as investing can be a risky business for even experienced investors, and amateur investors can fae unexpected roadblocks. Look at your financial situation minutely, especially if you haven’t made a financial plan before. You can either make your own decisions or consult a financial expert. But, remember at all times, nothing is guaranteed in the world of investment.
- Examine your possible risks before you start making investment decisions. With this, you can decide what investment portfolio to put your money in. As a rule of thumb, the riskier the investment, the greater the returns. Yet, you must not throw caution to the winds. With your risks defined, you are in a better position to decide how and where to invest your money.
- Spread your investments in different portfolios to reduce the risk of losing substantially. No investment is fool proof or without risk, but to keep your investments returns up you need to invest in different markets and asset categories. The three major assets – stocks, bonds and cash – don’t move up and down at the same time. This means that if one asset is having a bad run the other asset will have a good run.
- Always have an emergency fund to cover you in case you lose your investments. Smart investors always put money aside in a savings account to ensure that they are covered if they lose all their investment. Smart investors also invest in life insurance policies to ensure all angles are covered. (A good rule of thumb is to keep at least 6 months of your salary in your savings for any rainy day.)