This guide breaks down the best ways to generate passive income in the UAE from trading and investing online. All trading and investment options in this guide allow to generate income with little engagement from the trader or investor. To help users increase chances for passive income, it breaks down the best suited trading strategies, investments (assets) and trading platforms available in UAE.
What is Passive Income?
Passive income is income generated without the trader or investor being actively involved on a regular basis. It is a type of income income can provide financial stability over the long run as it allows individuals to earn money without full time engagement.
What Are The Best Online Trading Strategies To Make Passive Income in UAE?
Passive income trading strategies allow the traders to generate income without requiring the trader to be actively engaged full time. The strategies differ based on the level of passivity of the trader. The most common online trading strategies that help to build passive income in the UAE are listed and explained below.
- Automated Trading – refers to the use of trading systems that trade automatically following predefined algorithms (market trends or technical indicators). The most popular types of automated trading systems are Expert Advisors and Robo-Advisors. Automated trading systems do not require the trader to actively monitor trades and market trends. To be successful, automated trading systems need the right set-up and parameters.
- Copy Trading – allows traders to copy trades of professional traders on auto pilot. Traders can decide which traders to follow and potentially earn a passive income by copying their trading strategies. Copy trading does not require prior knowledge or market experience from the trader. The best broker and platform for copy trading is eToro.
- PAMM/MAM Accounts – PAMM (Percentage Allocation Management Module) accounts are trading accounts that allow investors to allocate funds to professional traders (money managers) for them to trade on their behalf. MAM accounts are similar to PAMM accounts but allow money managers full authority over investment decisions. MAM account managers have full responsibility for the profitability of the account. Both accounts are suitable for investors seeking passive income, as they transfer forex trading decisions to professional account managers.
- Trading Bots – are automated trading software programs that buy and sell forex, cryptocurrencies, and other assets based on pre-set parameters. Trading bots generate passive income by taking profits in time of market volatility and movements.
- Trading Signals – Trading Signals are price alerts that are sent to traders in the form of push notifications. They follow technical indicators to warn traders and investors of profitable trading opportunities. Apart from technical indicators, trading signals may use fundamental analysis or market data such as price movements, volume, and other data to identify potentially profitable entry and exit points.
The most suitable investments to generate passive income are reviewed below.
What Are The Most Suitable Online Investments To Build Passive Income?
The most suited investments to build passive income in UAE are listed and explained below.
1. Dividend Stocks
Dividend stocks are shares of companies that pay out a portion of their profits to shareholders in the form of dividends. In other words, dividend stocks allow investors to receive a part of the company’s earnings periodically (annually, semi-annually, quarterly, or monthly). They are a great investment to generate passive income as they provide a steady income without requiring any engagement from the investors. Companies that pay out dividends tend to have a stable growth over the long term.
|Company Name||Average Dividend Yield (Forward)|
|Dana Gas PJSC||10,74%|
Here is a list of recommended online stock brokers for UAE traders and investors.
2. ETFs and Mutual Funds
Exchange-traded funds (ETFs) and mutual funds combine money from multiple investors to invest it in well-diversified portfolios of stocks, commodities, indices, and other assets.
Both types of funds are managed by professional money managers and don’t require any active engagement from the investor itself. ETFs and mutual funds diversify their investment into assets that generate steady income including dividend stocks, T-bills, or government bonds.
|Ticker Symbol||ETF||ETF Database Category||Expense Ratio||Weighting|
|UAE||iShares MSCI UAE ETF||Emerging Markets Equities||0,58%||96,32%|
|EMFM||Global X MSCI Next Emerging & Frontier ETF||Emerging Markets Equities||0,55%||6,01%|
|SDEM||Global X MSCI SuperDividend Emerging Markets ETF||Emerging Markets Equities||0,67%||4,71%|
|DVYE||iShares Emerging Markets Dividend ETF||Emerging Markets Equities||0,49%||4,66%|
|FM||iShares MSCI Frontier and Select EM ETF||Foreign large Cap Equities||0,80%||4,21%|
3. Real Estate Crowdfunding
Real estate crowdfunding allows investors to invest their money into multiple real estate projects without having to buy entire properties. Real estate crowdfunding makes investing in real estates available to investors without enough capital to buy a property. This form of fractional investing can provide investors with decent returns from rental income and/or appreciation of the property. As it does not require active engagement from the trader, real estate crowdfunding is an attractive option for investors looking for passive income.
Real estate crowdfunding in the UAE is accessible through different platforms. The best real estate crowdfunding platforms in the UAE are listed below.
- Eureeca – Eureeca is a Dubai-based crowdfunding platform that provides investors access to a broad range of markets, sectors, and investment vehicles, including real estate. Eureeca enables investors to invest in convertible notes in real estate projects in the United Arab Emirates and abroad.
- Smart Crowd – Smart Crowd is a website that lists real estate objects for investors to invest in (fully or partially). Users can invest from 5,000 AED and start earning a passive income as soon as the property is rented out.
- Durise – is a real estate crowdfunding website with focus on properties in the UAE and the Gulf region. The website allows investors to invest in different stages of the property building and benefit from high yields through rental income and appreciation.
REIT’s (Real Estate Investment Trust) are companies that own, operate, or finance commercial or residential income-generating real estate objects. REITs work similarly to mutual funds and pool money from multiple investors to invest it in a wide variety of real estate assets.
REITs generate income through rental income or the appreciation of the properties within the real estate portfolio. They provide steady and passive income over the long run.
The two biggest REITs in the UAE are listed below.
- Emirates REIT was the first fully regulated Sharia-compliant REIT. It is a listed investment fund on the NASDAQ Dubai. This REIT invests in a broad portfolio of income-generating real estate assets in the UAE, including both residential and commercial projects.
- ENBD REIT is a Nasdaq Dubai exchange-listed REIT that focuses on investing in a broad portfolio of income-generating real estate properties within the UAE. It focuses mostly on office, retail, and industrial sectors. This REIT is actively managed by Emirates NBD Asset Management and focuses on providing a steady income stream to its investors.
Here is a list of recommended trading platforms for REITs in UAE.
5. UAE National Bonds
UAE National Bonds are government-backed bonds aimed to encourage investments and savings among UAE residents. UAE National Bonds were launched as a government saving program in 2006. They are run by the National Bonds Corporation (PJSC).
UAE national bonds are a sharia compliant investment that provides regular returns and does not require active engagement from the investor. They come with low risk, provide flexibility and tax benefits. Investors can choose between different bonds including fixed-term bonds, savings certificates, and other investment products available on their official website.
|Type of National Bond||Yield||Minimum Investment Required|
|2-Year Booster||Up to 6% for a 2-years investment plan||From 10,000 AED|
|Advanced Booster||Up to 12% annually for a 4-years investment plan||From 10,000 AED|
|USD Certificates||2,5% per year for a one-year investment opportunity priced in USD||From 100 AED|
|Booster 10||Up to 10% for a 3-year investment||From 10,000 AED|
|Pledging Scheme||Pledge Sukuk bonds and receive 90% of face value||From 10,000 AED|
|Accelerated Savings Plan||Up to 10% per year||From 200 AED|
|Saving Bonds||Varies yearly||From 100 AED|
Here is a list of recommended trading platforms in UAE for bonds.
6. Cryptocurrency Investments
Cryptocurrencies allow investors to generate passive income through staking, yield farming, nodes, and HODLINg. They are listed and explained below.
- Staking – refers to delegating digital assets to support the network’s blockchain transaction validations. Staking allows the owners of the tokens to receive staking rewards in the form of additional tokens. These additional tokens can provide a source of passive income.
- Yield Farming – refers to lending out digital assets to decentralised finance (DeFi) platforms. This provides the lender with returns in the form of token swaps and interest by providing liquidity.
- Master Nodes – Most cryptocurrencies require nodes to validate blockchain transactions on their networks. By running a master node, an investor can earn rewards in the form of additional tokens for securing the network. These tokens can be sold directly or held for a period of time in the hope that they appreciate in value.
- HODLing – HODling involves holding on to cryptocurrencies for a long period of time and ignoring short-term price fluctuations. Assuming the value of held cryptocurrencies increases over time, investors can generate passive income from the value appreciation.
Here is our list of recommended crypto trading platforms for UAE users.
What Are The Best Trading Platforms in UAE For Passive Income Generation?
Trading platforms that are best suited to generate passive income support passive income trading strategies and investments. The top 3 trading platforms in UAE for passive income generation are listed below.
1. Avatrade – Best Overall
Min Deposit: $100
Assets available: 4.9
Total Fees: 0.9 pip
71% of retail CFD accounts lose money
2. eToro – Best For Copy Trading
Min Deposit: $50
Assets available: 4.8
Leveraged and speculative product. Not suitable for all investors. You should consider whether you can afford to take the high risk of losing your money. Capital is at risk.
3. Charles Schwab – Best For Stock Dividends
How To Choose The Right Trading Platform?
Trading platforms have different trading features and support different trading strategies and investments. To increase chances for generating passive income, it is important to choose a platforms that supports passive income trading strategies and investments. Tips to help choose the right trading in UAE to make passive income in UAE are listed below.
- Availability of Investments. Platforms with access to a wider range of passive income investments trading should be preferred. They allow investment flexibility and increases chances for profit. The most common instruments to be considered are dividend stocks, ETFs, cryptocurrencies, bonds, REITs and mutual funds.
- Fees. Trading platforms have different fee (cost) structures. Platforms with lower overall fees increase profit and should be preferred.
- Supported Trading Strategies. Platforms that support passive income trading strategies should be prefered. the most common passive trading strategies include automated trading (expert advisors and robo-advisors), social copy trading, PAMM accounts, trading bots and trading signals.
- Third party integrations. A wide range of third party integrations are offered by brokerage firms. The most popular integrations are: MetaTrader 4 (MT4), MetaTrader 5 (MT5), cTrader, TradingView, TradingCentral and NinjaTrader. Traders’ knowledge level, trading style and trading goals should be considered when selecting the right choice.
- Reputation. Choosing a reputable trading platform helps to increase traders safety and avoiding scams. Brokers with a high number of users, positive reviews (feedback) and tier-one licences should be preferred.
- Personal Preferences. Trader’s preferences that should be taken into account include: religion (Islamic account options), language (Arabic, English, Malayalam, Kananda), investment style (automated trading, swing trading, day trading, algorithmic trading, leverage) and residential status in UAE (citizen, expat, tourist).
How Much Income Can Be Generated With Online Trading and Investing in the UAE?
The amount of passive income that can be generated through online trading and investing in the UAE depends on several factors including the amount of capital involved, the risk tolerance of the investor, asset class(es), and the current market conditions. These factors are listed and explained below.
- Capital – The amount of money invested has a significant impact on the amount of passive income that will be generated. More capital allows bigger profits. However, with more money invested and capital involved, the risks of losing more also increase.
- Risk Tolerance – The size of the income is directly proportional with the risk level taken by the trader. High-risk investments provide higher returns but, come with a higher risk of losing money. Lower-risk investments offer smaller returns but generally come with less risk.
- Asset Classes – The type of assets traded or invested effect the amount of income generated. Some assets involve more risk, but offer higher returns than others.
- Market Conditions – Market conditions, including geopolitical events, supply chain changes, and other economic indicators, can impact the amount of passive income generated with online trading and investing. The better the market conditions, the better the results. On the other hand, unfavorable market conditions can lead to reduced returns.
- Knowledge and Experience – traders knowledge and experience level impact the amount of passive income generated with online trading and investing.
How Much Capital Is Needed To Make An Income With Online Trading and Investing in UAE?
The amount of capital required to generate income through online trading and investing varies depending on a number of factors, including trading goals, asset class, trading strategy, and the risk tolerance of the investor.
A general rule of thumb to keep investors safe is to invest a maximum of 10% of the monthly income when starting out. The investment can be increased over time if the trading strategy is profitable on lower investments.
Is Income Made With Online Trading and Investing in UAE Taxed?
The tax law in UAE differentiates two subjects: UAE residents and non UAE residents.
Profits of UAE residents and companies registered in the UAE made with online trading and investing are subject to a 0% income tax.
Profits of non-UAE residents made through online trading and investing are subject to tax laws in their country of residency. However, profits of non-UAE residents are subject to a 15% withholding tax.
The exact taxation rates vary and depend on other factors like the residency status of the trader, the volume of trading activity, and the total profits made.
Can Passive Income Be Generated With Trading and Investing Online While Traveling? Is Online Trading and Investing Suitable as a Travel Job in UAE?
Trading and investing online in the UAE is a suitable occupation to generate passive income while traveling. It requires the trader to follow a passive trading/investing strategy, to have a stable internet connection and a device to trade with (computer, mobile phone or tablet). In other words, trading and investment strategies that allow to generate passive income, can be used from anywhere in the world, also while traveling.
Characteristics that make online trading and investing suitable for generating an income while traveling are listed below.
- Accessibility. Trading and investment platforms can be accessed from anywhere in the world. The platforms only require a stable internet connection and a device to trade with (computer, mobile phone or tablet). This allows the traders to participate in the markets from any location around the world and make it suitable as a travel job.
- Mobile apps. Mobile trading apps allow traders to trade on the go 24/7 also when traveling. They allow access to most trading features and tools that are available on the desktop and web versions to replicate the trading experience. Mobile apps need stable internet connection and software (Android or iOS).
- Real-time data. Trading platforms work based on real-time market data allowing traders the same trading conditions regardless of their current location and time zone. Real time data allow traders around the world to have similar trading conditions regardless of their geo location.
- 24/7 Global Market Access. Trading online is accessible 24/7 making no difference in which time zone the traders are located.
Following the findings from this guide, the best online investments to make a passive income in UAE include: ETFs and mutual funds , dividend stocks, bonds, real estate crowdfunding, REITs and cryptocurrency investments. The best suited passive trading strategies are: automated trading, copy trading, PAMM/MAM accounts, trading bots and trading signals.
To help users achieve financial freedom and stability with a passive income, it has tips to choose the right strategy, asset, trading platform and capital size.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
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