Investment is basically defined as putting money in any financial scheme, shares, property or any commercial venture with the expectation of exponential growth and returns.
Investors want to choose schemes that are low risk-taking and still provide sky-high returns. Investment products can be of two types of financial assets which includes mutual funds, fixed deposits, etc. and non-financial assets which include real estate and gold.
The best investment opportunities are:
Mutual Funds
Mutual funds can be defined as a fund that trades in diversified holdings and is professionally managed. These Funds gives one access to global equities, emerging markets, fixed interest etc.
Features and Benefits
- Usually, higher returns compared to fixed deposits
- They are managed by professionals thus reducing risk
- Reinvestment can be done for dividends that have been generated
- Mutual funds provide a kind of diversification to the portfolio, as many types of securities are available.
Banks like Standard Chartered, Bank of Bahrain and Kuwait have separate professional Fund Managers that manage the investment portfolios.
Bonds
A variety of bonds are issued for the purpose of raising funds for expansion of operations by the government and corporations.
The bonds can be issued by companies called the corporate bonds and by the government called government bonds.
Features and Benefits
- A yearly interest in paid by the issuer to the borrower called coupon rate.
- The bondholder will receive the face value of the bond at the time of maturity
- Coupon rate is set on the basis of the time duration of bonds.
- Bonds are less volatile compared to other securities
There are many bonds issued by the Bahrain government; two of the famous ones are listed below-
(i) Government Development Bond -Issue 17 which provides a coupon rate of 6.55% annually.
(ii) Government Islamic Lease (Ijarah) Sukuk -Issue 23 which provides a coupon rate of 5% annually.
Real Estate
Bahrain is one of the most preferred locations for investment in the Gulf region. With fluctuating oil prices, it has become one of the utmost stable choices for investment.
Features and Benefits
- The property prices in this region are cheaper compared to other neighboring locations
- It is one of the most open economies in the world with a ranking of 12 given by the Index of Economic Freedom
- 100% ownership in the Business and real estate is only offered by Bahrain in the region
- Capital repatriation is free of cost
- Real estate offers profits through rents.
- Ease of getting construction permits- in this criteria Bahrain ranks at 57 which in comparison to its neighboring places is appropriate for buying real estate.
- Special areas where non-residents can buy lands have been allocated.
Treasury Bills
These are short term investment solutions. Treasury bills(T-bills) are usually issued for a term of 1 year or less. T-bills are nothing but an investment in Government Debt.
Features and Benefits
- These are short term investments for 1 year or less
- Are highly liquid as the market for T-Bills is huge
- Can be bought at auctions
- No need of T-bills broker as one can directly buy them from the respective government offices.
There are a variety of T-bills are issued by the CBB on behalf of the government –
(i) Short Term Islamic Lease (Ijarah) Sukuk
(ii) 1-year treasury Bills- Issue No.53
Structured Notes
It is a debt product whose returns are linked to the underlying assets. The interest component or principal amount that is linked to the performance of the asset.
Features and Benefits
- Market opportunities are capitalized
- Some structured notes provide protection to the principal amount and some are non-principal protected
- Risks and returns both are high
- Performance of structured notes depends on the underlying derivatives.
Many Banks like standard chartered provides the option to invest in structured notes. These are mostly taken care by the Wealth Management division of any bank.
Investment Accounts
These are one of the safest ways to invest money with no risk. They provide low returns as well.
Features and Benefits
- Safe investment option
- The profits may be distributed annually or monthly
- The interest rate varies between 1% to 4%
- Investment can be made in a whole sum amount or on a monthly basis.
- Some investment accounts are shariah compliant as well.
- Many banks like Kuwait Finance House, Ithmaar Bank offer Investment accounts.
Stocks
They are a form of ownership to the business. Profit is only derived if the price of the stock increases, which is directly related to the performance of the company.
Bahrain Bourse is the stock exchange in Bahrain, it is licensed by the Central Bank of Bahrain and operated within their jurisdiction.
Features and Benefits
- They provide diversification to the investment portfolio
- Stocks are highly volatile
- Stocks are largely prone to market fluctuations.
- They are also directly related to the company’s performance
- They offer higher returns but are riskier.
Various investment options are available in Bahrain. One can choose the best alternative according to one’s needs. Bahrain has seen a tremendous increase in foreign investments due to its policy reforms such as ease of doing business etc.
