STUDY ON INVESTMENT PATTERNS AMONG PEOPLE

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A STUDY ON THE INVESTMENT PATTERNS AMONG PEOPLE IN UAE

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A STUDY ON THE INVESTMENT PATTERNS AMONG PEOPLE IN UAE

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INVESTMENT PATTERNS AMONG PEOPLE IN UAE

Abstract
This research aim to identifying the investment patterns among people in the UAE. A questionnaire was developing among slice of people to reveals the investments opportunities, their income, current investment pattern, accounting information and personal financial needs. Many factors and risks were discussed in the research shown the privileges of particular investments than others, and goals for the investor individuals and the time of the initiate of their own businesses.The most influencing factors in determine investment pattern was in order of importance:stocks shares and their quick and reliable revenues, mutual stocks also come in the second choice in order to attract investors, Gold or cryptocurrencies have a shares to be in third viral spreading option among people who are interest to invest with medium to long term investments.
the least factors where manipulating the decisions of investor individuals and decreases these patterns of the investment isLow returns from local small businesses, high expenses and costs, reduced risk and negative rumors circulating among the public regarding the current financial situation of global markets and the factorof family member opinions.

Keywords:

  1. Introduction
    Investment is a key factor in determining the gross domestic product on which the overall economic output of a country or region is measured. Encouraging investment and appetite by society increases the ability of these communities to produce more commodities and the aspiration for relatively low production costs that are directly proportional to the equation of supply and demand. Investment can be interpreted as the main motivation for increasing productivity and growth.
    Economists defined investment as spending money on resources, whether commodities, assets, or capital, which are used to produce goods or services for society and thus expand the capital ratio to match the realized revenue. For example, factories purchase an additional facility or equipment to provide better service or increase sales rates of goods. The same goes for the purchase of new homes by real estate companies.
    Investments among UAE investors and people are the new sight directions nowadays and in the nearest future where the research has reveals and identify the most mysteries about the investment environment in the UAE by answering he following questions:
     What is to investment and how it plays an important role in life an each and every individual?
     What are the different opportunities available for individuals to invest in UAE?
     How do one chooses the right investment considering the various financial goals in life and their priorities?
     How can one build an unique and diversified portfolio?
     How can we build a secure future for our self and our Families?
     Does the factors related to personal financial needs have an effect on the behavior of the UAE investor?, if so, what is the relative importance of the effect of each factor on such behavior?
  2. Innovative Aspects Of Research:
    Effects on gross Economical growth
    The productivity rates of the corporation or the general productivity rates of the region indicate the quantity of products and services provided per hour of work.
    Investing in labor-saving machines, for example, can save working hours and produce more products in less time. This reduces production costs by saving labor, which is one of the biggest costs of producing a product, according to Harvard economist Greg Mankiw, a former White House adviser.
    Implications of economic growth
    As mentioned earlier, investment is one of the main factors in GDP (GDP), so increased investment fuels economic growth, which is measured by annual increases in GDP. Mankiw provided data on economic and investment growth in his book “Principles of Economics” for 15 countries over a 31-year period, from 1960 to 1991. The highest economic growth rates for that period. These results indicate a positive relationship between investment and economic growth.
    Investment Resources
    The economy is all about scarce resources and investment resources. Mankiw’s warnings in his Principles of Economics about growing investments in societies are leading to lower spending and higher savings rates, increasing the resources of the financial and banking lending system, enabling companies to raise more capital to increase productivity and growth.
    Sacrificing current consumption frees more money for investment, enabling tomorrow’s consumers to enjoy more consumption in the future, as Mankiw described in his writing.
  3. LITERATURE REVIEW:
    It is truly a marvel to see how far UAE has come in a span of few decades. From being an impoverished desert region to becoming one of the largest and the most diversified economy in the gulf region, it has truly been a remarkable journey.
    According to AT Kearney, a well reputed American consulting firm, UAE is among the top 20 countries with regards to global service business. Furthermore, it is ranked at 31 in the list of countries best for business by Forbes.
    While UAE’s economy already enjoys a high per capita income along with a significant annual trade surplus, things are looking even better for 2019. According to IMF, UAE’s economy is expected to further strengthen in 2019.
    It can be safely said that the UAE market holds tremendous potential for willing investors. There are a variety of investment opportunities available to gain a high Return on Investment (ROI). However, it can be daunting to pick out feasible investments in the quest of seeking the best investment in UAE.
    Furthermore, there is also the unique predicament when you consider the fact that the population of UAE has a majority of expats. At one end of the spectrum, expats who are new to the country simply do not know how to invest in UAE, whereas on the other end, there are expats ready to make the most of the opportunities provided by the country.
    This means that the best investment in UAE for expats may differ from others and hence, the varying requirements of expats must be considered as well in the evaluation of different investment opportunities.
    According to the bank’s new quarterly Investor Sentiment study from its global wealth management team (2019), 83 per cent of UAE investors are optimistic about the local economy, while 78 per cent hold similar views towards the global economy. The survey of 3,600 wealthy investors and entrepreneurs was carried out in 17 countries, including the UAE
    It is encouraging to see such optimism paired with a strong desire to invest from UAE respondents,” said Ali Janoudi, head of Central and Eastern Europe, Middle East and Africa at UBS Global Wealth Management, who said the UAE is considered a growth region for the bank’s business.
    Investor expectation that the global economy was on track for a recovery this year was dented this month following the latest US-China trade talks development. The US hiked tariffs on $200 billion (Dh734.6bn) of Chinese imports to 25 per cent on May 10, as talks between the two countries broke down without a resolution.
    Despite the ongoing trade war, UBS said business owners and the wealthy across the globe are looking for opportunities to invest after markets rebounded in the first three months of 2019 from the late-2018 slump.
    UAE investors are particularly optimistic on equities, with 80 per cent of respondents to the UBS survey in favor of local stocks. They are also among the most likely to have plans to invest more with 62 per cent looking to part with their cash, second only to Latin American investors at 66 per cent.
    Globally, only 51 per cent of respondents held a positive outlook towards the world economy versus 21 per cent who had a pessimistic view. Investors were also bullish on stocks, with 56 per cent expressing optimism for equities in their own regions versus 49 per cent on global assets.
    In addition, almost three quarters saw the recent market volatility as an investment opportunity, compared with the 67 per cent still concerned about the market turbulence witnessed in the fourth quarter of last year.
    While four in 10 (42 per cent) planned to invest more in the next six months, 17 per cent planned to invest less.
    Sustainable investing was cited as a growing interest, making up 27 per cent of portfolios versus 22 per cent five years ago.
    For investors concerned about issues closer to home, 44 per cent cited their country’s politics as a top worry while 40 per cent pointed to national debt.
    In the UAE, investors’ top concerns were the possibility of a global trade war, market volatility and inflation. In its latest global data watch JP Morgan said the global economy entered 2019 facing headwinds that it “expected to weigh on growth at least through midyear” including the ongoing uncertainty around the US war on trade that has dampened business sentiment and spending.
    Kadiyala and Rau(2004) investigated investor reaction to corporate event announcements. They concluded that investors appear to under react to prior information as well as to information conveyed by the event, leading to the different patterns: return continuations and return reveals, both documented in long-horizon return. They found no support for the overreaction hypothesis.
    Merikaset.al.(2003) adopted a modified questionnaire to analyze factors influencing Greek investor behavior on the Athens Stock Exchange. The results indicate that individual’s base their stock purchase decisions on economic criteria combined with diverse other variables. They do not rely on a single integrated approach, but rather on many categories of factors. The results also revealed that there is a certain degree of correlation between the factors that behavioral finance theory and previous empirical evidence identify as the influencing factors for the average equity investor, and the individual behavior of active investors in the Athens Stock Exchange (ASE) influencing by the overall trends prevailing at the time of the survey in the ASE.
    Malmendier and Shanthikumar(2003) tried to answer the question: Are small investor naïve?. They found that large investors generate abnormal volumes of buyer-initiated trades after a positive recommendation only if the analyst is unaffiliated. Small traders exert abnormal buy pressure after all positive recommendations, including those of affiliated analysts.
    Hodge (2003) analyzed investors’ perceptions of earnings quality, auditor independence, and the usefulness of audited financial information. He concluded that lower perceptions of earnings quality are associated with greater reliance on a firm’s audited financial statements and fundamental analysis of those statements when making investment decisions.
    Krishnan and Booker(2002) analyzed the factors influencing the decisions of investor who use analysts’ recommendations to arrive at a short-term decision to hold or to sell a stock. The results indicate that a strong form of the analyst summary recommendation report, i.e., one with additional information supporting the analysts’ position further, reduces the disposition error for gains and also reduces the disposition error for losses
    Nagy and Obenberger (1994) examined factors influencing investor behavior. They developed a questionnaire includes (34) questions. Their findings suggested that classical wealth – maximization criteria are important to investors, even though investors employ diverse criteria when choosing stocks. Contemporary concerns such as local or international operations, environmental track record and the firm’s ethical posture appear to be given only cursory consideration. The recommendations of brokerage house, individual stock brokers, family members and co-workers go largely unheeded. Many individual investors discount the benefits of valuation models when evaluating stocks.
    Epstein (1994) examined the demand for social information by individual investors. The results indicate the usefulness of annual reports to corporate shareholders. The results also indicate a strong demand for information about product safety and quality, and about the company’s environmental activities. Furthermore, a majority of the shareholders surveyed also want the company to report on corporate ethics, employee relations and community involvement.
    De Bondt et al.,(1985) published a paper about behavioral finance in which they asked the following question: “ Dos the stock market overreact?”, the article gave evidence to support the hypothesis that cognitive bias ( investor over- reaction to a long series of bad news could produce predictable mispricing of stocks traded on the NYSE.
  4. HYPOTHESIS:
     This study considers only the individual investors and not the institutional investors.
     This study does not only target to a particular segment it considers different individuals working as well as non – working class.
     The study does not consider each and every individual to be fully equipped with financial knowledge about investment.
     As UAE society is a Moslem and conservative society it considers investment to be a bit stringent.
    .
  5. RESEARCH DESIGN:
    5.1. Data Sources
    This part will contain of the survey conducted taking a sample of people into consideration.
    Main Factors will considered
  6. Age
  7. Knowledge on the Investment Opportunities
  8. Saving Importance
  9. Income
  10. Expenditure
  11. Financial Challenges faced by Individuals.
  12. Current Investment patterns.
  13. Self- image/firm-image
  14. accounting information have an effect on the behavior of the UAE investor
    The current study considers two factors in which they are not considered before by previous published studies, namely the religious values beliefs and the creation of the organized financial markets( i.e. Dubai Financial Market and Abu Dhabi Securities Market). For the first factor, it is assumed that the religious reasons should have a strong effect on the behavior of the UAE investor because of the vital role of this factor in the UAE society as a Moslem and conservative society. It is also hypothesized that the creation of the two organized financial markets in this country would have a positive effect on the behavior of the UAE investors.
  15. Data Analysis
    The standard deviation (SD, also represented by the Greek letter sigma σ or the Latin letter s) is a measure that is used to quantify the amount of variation or dispersion of a set of data values. A low standard deviation indicates that the data points tend to be close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the data points are spread out over a wider range of values.
    This will help us to know how each factor used in the data respond to the need of investment among the people.
    Graphical representation of Income Vs Expenditure which will show the percentage of income set aside for Investment. It will also be used to show which type of investment is preferred by individuals among the various opportunities available in UAE.
  16. PROBLEM STATEMENT:
    This study will help us understand how we will fail in understanding the importance of investment and how we can set aside our savings to make a profitable investment and ensure that all our financial goals are being meet as on when they arise. As to how we can exploit the investment opportunities available in UAE to do so.
  17. Research Methodolgy
    8.1. Research Questions
    His study intends to find out the following questions:
    QUESTION 1: This paper aims at identifying factors influencing the UAE investor behavior. It develops a modified questionnaire.
    QUSTION 2: The purpose is to find out the various factors that influence the pattern of investment among the individuals of UAE
    QUESTION 3: To compare the patterns of investment among the individuals and how do they vary with the standard investment approach laid down by various Financial economist.
    QUESTION 4: For investors as decision makers, the most influencing factor/ factorson their investment decision is crucial because this would affect their future financial plans.
    QUESTION 5: To make sure that individuals exploit all the available investment opportunities available and to increase return on their investment.
  18. Data Collection
    9.1. different opportunities available for individuals to invest in UAE:
    Many financial experts in the UAE have proposed several means of investment since the beginning of the UAE’s economic recovery a decade ago. Statistics and studies have shown that many people living in the UAE believe that saving money is the first objective to ensure their financial stability, especially in the periods following retirement. Unfortunately, only a small percentage of those have actually been able to implement those goals and actually start saving for such a time period.
    According to Amazon’s payfort statistics, in 2018, among number of people in the UAE found that 38% of people living in the UAE (nationals and expatriates) managed to save 10% of their income while less than a quarter ( Only 23% managed to save 10 to 25 percent of their income). This questionnaire was able to show a high percentage of up to 28 percent of people, or about three people for every ten do not save anything of their income, as the majority of the population in the United Arab Emirates fall within the income earners equal to or less than 10,000 dirhams per month Thus, most people are barely able to save less than 1000 dirhams per month or may not be able to do so at all.
    According the financial advisors and experts who believe that this segment of people who did not succeed in this should try again and do not lose hope and start the process of saving as soon as possible , due to the market is still in need and expansion and that saving any amount, whether 100 or 1000 dirhams still gives people privilege, as experts express that the key of any capital growth is to avoid saving or stagnating funds either in a bank account or an interest-free account and to exploit time and allow that money to enter the investment and trade markets and benefit from it. Many of the tips and guidance that enables people to make use of their capital that ensure them less lose risk and more funds return to contribute to what aspire to them.
    If, after all this time, you have managed to put away only Dh2,000, here’s what you can do with it.

 Investing in stocks
Investment in stocks is one of the most common options at the level of middle and low-income people as it meets the needs of a relatively small amount of large investment rates in the region and an acceptable financial return if some shares can be bought to companies with reputable prices at a price not exceeding AED 100. The option also allows many who want to follow different and different methods in investing and investing in many projects in different categories and get a diversified portfolio that reduces the risk of financial investments.

 Think about the mutual funds
Like stocks, exchange-traded funds (ETFs) can be purchased at low costs through a broker, and the investor can invest as many shares as they like.

The idea of investing in trading funds is to allocate investment funds accumulated by several people in one diversified financial portfolio that includes various options of stocks and bonds as well as commodities that are traded such as stocks in the stock market and a good return. Because diversification is the most likely choice in investment operations, the allocation of AED 2000 in the opinion of experts to some investment funds is sufficient, regardless of the size of the savings available or available.

 Mutual funds
The option of the investment fund is the ideal solution for people who want to invest without the need for in-depth experience in financial and commercial analysis or for those who do not have time to follow the news related to the shares of a particular company, where the fund manager takes advantage of the financial expertise, to choose the best securities that suit investors The greatest opportunity for good financial return with the least risk, all this can be invested without the need for large sums that may be a hindrance to start such investments.And like stocks and ETFs, mutual funds have also offered good returns to investors.“Long-term investments in stocks, ETFs and mutual funds have shown to have outperformed almost every other asset class and they are poised to continue similar results for at least the next few generations,” said Vijay Valecha, chief market analyst at Century Financial Brokers . “The advantage of mutual funds is that the ticket size is not very big and thus does create an entry barrier for anyone.”

“Mutual funds [as well as ETFs] can prove to be a very attractive option for individuals wishing to invest lesser amounts, as they provide a cheaper alternative to direct stock purchases while still allowing for a sufficiently diversified portfolio,” advised Tyla Phillips, financial planner, Guardian Wealth Management.
 Go for gold/ Cryptocurrencies
There may be no dialogue or financial debate without mentioning the metal shiny and precious gold, as over all times and in general, the investment allocated in the gold market always return satisfactory results, as recommended by the economic researcher Phelps quotes in the allocation of a small percentage of capital to any Investor in these investments.
“Gold is also a commonly held asset in well diversified portfolios as it can be used to hedge against inflation. I would say that a 5 per cent holding in gold provides relative security, as well as adding to the diversification of a portfolio, ”said Phillips.
“Gold is a safe haven and does well when equities do not perform, which adds a good diversification to mutual funds and other traditional investments. Gold is thus a good investment for everyone,” addedValecha.
This does not necessarily mean that the tasks that the investor’s responsibility is over or that once you follow these tips he has to sit at home or follow his daily routine awaiting the results and financial returns and fantasy dreams that he is aiming for, but also to find other opportunities as well as follow up those investments and draw plans and strategies Periodic monthly or annual to keep up with the financial changes and rising welfare costs in the world day by day.
“All these investments should be done regularly in monthly or annual systematic investment plans (SIP),” said Valecha.
There are some clues and points that the investor should consider as he became one of the pioneers of the financial markets:
 Caution when investing in securities:
Many of the emerging investors’ ideas may be considered one of the surest investments in the preservation of capital on the opinion of many people, but the view of experts and financial advisors may be contrary to the opinion of many of them, and many of them are advised that it is better for the investor to be cautious.
Bonds can be a favorable asset class as they often provide a consistent income whilst also being considered low risk. However, I would recommend caution regarding investment in bonds currently as the promise of interest rate increases brings with it inevitable reductions in bond yields, said Phillips.
“A few bond funds do make it easy to invest, though most are accumulators of various corporate bonds and thus should be studied carefully before investing.”
valecha said
 Stay away from forex and futures trading:
Forex trading and futures contracts are complex options that may not match much or meet the ambitions and objectives of the majority of medium-capital investors, because of the high risk-taking potential, as well as the need for many expertise and market analysis and financial fall within the categories of those contracts and investments. They usually require specialized expertise for such financial sectors.
“Forex and futures trading are high risk and high reward investments,” warned Valecha. “They are usually very complicated in nature and thus should be avoided unless one has a very thorough knowledge of the financial industry.”
“For investors wishing to start saving for their retirement, I would strongly recommend avoiding highly volatile investments such as forex or futures,” said Phillips.
“Individuals in this position need professionally managed diversification, aligned with their long-term goals and attitude to risk.”
9.2. chooses the right investment considering the various financial goals in life and their priorities
The most appropriate decision-making regarding the right investment is due to several factors, the most important of which is the need for the individual at a certain age to invest and save the necessary money for the future, and may be the most prominent of these factors is the time that must be taken by the individual in a serious step and fully convinced of the need to invest him And his family.
It is inconceivable that the concept of investment may concern a certain age group or job center, is an idea in itself is also common and wrong in many segments of society and that investment is a lifelong process, even if the salary is low, as discipline and skills as well as experience gained An individual’s more experience in the markets will make him more prudent in making appropriate decisions in the process of investment and economic growth.
The first part of a successful investment strategy is the process of discipline in saving periodically, whether monthly or yearly, regardless of the reason for that savings and the extent of that goal, whether short term, medium or long, it may sometimes be difficult but strict at that stage, but must be followed no matter what The circumstances were, as they were often of great positive return.
When starting the savings process on a regular basis, the first ideas that should be thought out are the most appropriate time to choose between investing or staying on saving that money and also the appropriate time if the decision to enter into the investment without him, which is determined by the needs and priorities and also the extent of the risks It is the responsibility of any investor.
What is the purpose of saving or investing? A question whose answer will help determine whether a person is testing the possibility of determining whether to place savings in investment products with the potential to generate income, or focus on increasing the value of an investment, therefore more emphasis is needed on economic growth strategies to counter inflation and lower operations. Currency level, also to achieve income strategy in a timing that is proportional to the retirement period.
Time and risk tolerance
Determining the objectives and timetable required to coincide with achieving the desired objectives or required by the investor is the key to solve the equation required in the investment process, financial interventions and selection in a particular type, depending on the tolerance of price fluctuations in this type and the balance between the required return and the amount of risk that It must be borne by capital in return for this investment, since the only element controlling these decisions may always lead to the same answer, which is time. For example, planning for a long-term investment, the risk appetite may be acceptable to that type of investor because of the time and opportunities to compensate for any early loss, while short-term investment, which mostly serves the investor’s need to buy a house or expand its capital. Spending on personal matters may not be very susceptible, and getting liquidity for less risk is the basic requirement of that group.
Strategies to Consider
The principles of life, whether on the personal, social or physical level of the person may be unique and distinguishes each person from his counterpart, many studies have noted these behaviors and ideas for each person, and may apply such beliefs and suspicions on the financial level, but there are rules Fundamental to financial and market operations, which are not debatable or debated and followed by most investors if all.
First: the existence of liquidity for emergencies, and this may be through a bank savings account or savings bank sukuk meet the need regardless of age.
Second: Take a little risk and get some savings or protfolio in stocks so as to contribute to protect it from the process of devaluation and counter inflation
Third: Discussing investments and various financial portfolios with a financial advisor and scheduling these discussions annually in the framework of follow-up investments and the extent to which they achieve their objectives, as well as early detection of any risks or potential problems in the investment strategy.
Finally, take into account the tax status of investments and find out if the profits of that investment are subject to tax or selective tax or exempt from taxes and take this into account when preparing and reviewing the investment strategy.
Lifetime investment:
It is very common among investors that positions are considered by the majority to be the decisive factor in adopting the investment theory, as well as the mechanism of pursuing that investment and its purpose depending on the situation or ideas that revolve around investment and money, but in asking about age if it is the only factor in influencing the level of planning and foot in The investment process or other factors are associated with it.
To illustrate this, if we assume that one of them has a child in his forty year, he will need to balance the income and expenses and additional expenses of the child, therefore, the need to supplement income with an investment that will contribute to the increase of income is necessary and urgent. This would also embrace the investor ‘s ideas and theories that make him somewhat lenient with market and financial risks compared to the previous.
Therefore, investors and financial advisors have adopted some of the key steps over the lifetime of the individual to enjoy the process of balancing savings and investment and also between meeting the most basic needs common to all people around the world.
When you get a new job:
When running for a new job, the things that anyone should consider at that stage are the features and offers they will receive and how much they contribute to meeting the objectives and elements of the investment strategy.
Also consider options available in retirement income later, where the possibilities may include following the same plan or move to a new strategy commensurate with the income of the modern job, or confusion between them, or the establishment of a savings fund to be aretirement income later.
When you reach 55:
Taking into account the allocation of assets of the retirement fund in line with short investment strategies, and the increase of assets related to retirement savings would be of interest in the investor’s lifetime.
At retirement:
Examine the options offered by the company in obtaining the salary or retirement benefits available, and discuss them with a financial advisor to choose the most appropriate options available.
Review the total expected income, and reallocate part of it in the investment process to overcome inflation and obtain appropriate funding for subsequent years of retirement.
One of the most difficult things that lies with the investor is restraint in the process of saving and extracting part of the income regularly in the process of achieving investment objectives. Also, the option of hiring a reliable financial advisor is an essential ingredient in investment operations as it helps in reducing time and reducing many of the previous experiences in financial and market analyzes that you are going through based on his experience, sources and knowledge. They serve to build and adopt financial strategies for operations, and thus contribute to the practice of money management intelligently throughout the entire life.

9.3. unique and diversified portfolio

Diversification technology is one of the techniques used in the investment operations in the medium and long term because of its importance in reducing the risks and losses resulting from it by allocating investments between different financial instruments, industries and other categories where it aims to increase the return in various fields, each of which interacts differently with Event itself.
Although most experts and economists agree on the importance of diversification in investment sources, it does not guarantee the impact of the loss itself, but it will reduce the risk in the investment process through diversification in the resources and areas included in the capital and thus diversification is the most important element in access To long-term financial goals while minimizing risk. Here we look at why, and how to achieve diversification in your portfolio.

The main keywords
Diversification reduces risk by investing in investments that are interested in various economic and financial approaches as well as covering industries and the majority of society groups and requirements.
Risks can be either non-diversified, comprehensive, diverse and irregular
Investors may find it difficult and complex in balancing the diversified portfolio as well as the high cost of managing it. The overall return of the diversification component of the investment may be a low return on investment.

Types of risk for investment
Usually investors in all places face several reasons that will affect the extent of their desire to invest their capital in a certain region and not others, therefore, those areas are selected only in others in attracting investors because of the facilities and economic diversification in addition to political stability and regulations and legislation Which gives investors the security to save their capital and also maintain their profits.
From this, it can be generalized and from the view of the economic analyst that investors are exposed to two main types of risks when investing. The first reason The first is undiversifiable, And the second type of risk is diversifiable.

The first is undiversifiable, which is also known as systematic or market risk:
This type of risk is a general risk that may not concern the impact of institutions and not others and is comprehensive for all companies and all fields. Common causes of such risks are inflation, exchange rates, political instability, war and interest rates. This type of risk is not limited to a particular company or industry, and cannot be eliminated or reduced through diversification – it is just a risk that investors must accept.

The second of risk is diversifiable. This risk is also known as unsystematic risk:
and is specific to a company, industry, market, economy, or country.
This type of risk is specific to the company, industry, market, economy or country. Can be reduced through diversification. The most common sources of informal risk are business and financial risks. Therefore, the aim is to invest in different assets so that they are not all affected in the same way by market events.
Why should diversity
Let’s say that you have a bunch of airline shares only. If the airline pilots strike is announced indefinitely and all flights canceled, the share price of the airlines will fall. That means your portfolio will experience a noticeable drop in value.
However, if the capital is distributed among the aviation industry shares with some railway stocks, that negative impact will have little effect on the overall investment rate. There is a good chance of higher train stocks, relative to the use of trains as an alternative form of transportation.
The concept of diversity in investment is more comprehensive than these examples, as both trains and aviation fall under the heading of transportation, which may be adversely affected if one of them is exposed to negative news, due to the strong relationship between train stocks and air transport, according to the statisticians.
By diversifying, you’re making sure you don’t put all your eggs in one basket.

The importance of diversification among different asset classes is one of the most appropriate ways to minimize the risk of capital loss. Different assets such as bonds and equities, for example, will not react or be affected in the same way with negative news of global markets or economic fluctuations and thus the combination of Asset classes will reduce the portfolio’s sensitivity to those fluctuations. In general, insiders believe that bonds and stocks have an inverse relationship in the financial market, so the diversity in these categories in the investment portfolio will return a positive result against the other negative result.

Diversity may also include geographical boundaries, as diversification of investment assets over a geographical range may reduce the extent of risks to investments if they are within a single geographical boundary, as fluctuations in the US market may be offset by a rebound in the Asian or European market and vice versa. Geographical Protects the investor from undesirable negative results and thus reduce investment risks and evidence of this in the modern presence of DP World in almost all continents.
Diversification problems
While the benefits of diversifying investment may bring many benefits to investors and avoid many of the risks associated with financial markets, the downside of this strategy comes within the difficulty and complexity of managing these types of investment portfolios, and follow-up news as well as follow-up economic analysis of investment fields Various Not all investment vehicles cost the same, so buying and selling may be expensive – from transaction fees to brokerage charges. And since higher risk comes with higher rewards, you may end up limiting what you come out with.
Unfortunately, with the best economic and graphical potential and analysis of the company and its investment status, it cannot be guaranteed that it will not be in the category of losing investments, as diversity itself will not protect or guarantee loss, but can reduce the impact of such loss or exposure to fraud or Obtaining false or bad information in the field of total return on the investment portfolio.

The Bottom Line
Diversification helps an investor manage risk by reducing the volatility of an asset’s price movements.
The risks related to the financial markets are general and may affect each share in all areas as well, so the importance of investment diversification among different asset classes, as the secret of winning investment is to find a winning formula that guarantees the highest benefits and the least risk, thus ensuring the achievement of the desired financial objectives while continuing Get rest at night.

9.4. build a secure future for our self and our Families

Since the beginning of the journey in your life settings. The most secure in securing the future.
When it comes to future principles?

  1. Guarantee yourself first:
    Contrary to what many think, is this the first of its kind? The amount you lose in interest on debt is unlikely to match any interest you earn from savings in the current financial climate.
    Set clear financial targets
    Spend sufficient time to study the current financial situation. Set medium and long-term goals, and the amount or percentage of savings
    Think about the property
    One of the worst things in my family. Draw plans consistent with your exam plan?
    Savings Accounts
    Accommodates your accounts in our institutions, where you can turn into your lady. It has the lowest costs and within a broad programmed financial plan.
    4 – Get help if you need it. Sometimes to employ them in your life. It may show you that what you need is really a life insurance policy that you can afford without narrowing your budget or perhaps a combination of both.

9.5. factors related to personal financial needs have an effect on the behavior of the UAE investorand the relative importance of the effect of each factor on such behavior

that investors are inconsistent completely and they deal with choices that are, risk-taking to them simply because they want to increase their wealth at a shorter period as much as possible. Behavioral finance is a study which has brought out the role of behavioral aspects of investment decisions. Financial markets are analyzed using models that are less narrow when it comes to behavioral finance. It also examines the behavior of investors which directs to some market abnormalities. In the past, much research has been conducted on the behavior of institutional or organizational behaviors of the investors. Individual investors do participate in the stock market by purchasing and selling a variety of stocks. Therefore, it is very significant to identify various behavioral and economic motivations that directly or indirectly affect their decision of purchasing. This study aims at exploring the UAE investor’s behavior, representing the first attempt to be undertaken in the UAE. The study is important for individual investor, companies listed in Dubai Financial Market and Abu Dhabi Securities
Market and Government. For investors as decision-makers, the most influencing factor/ factors on their investment decision is crucial because this would affect their future financial plans.
personal financial need most influenced the behavior of the investors of UAE. Religious related factors were found to be the least influencing investor behavior. Among the five groups of factors influencing the UAE investor behavior, accounting information group was found to be the most influencing factor belong
namely expected stock marketability, corporate earnings, past performance of the firm’s stock, the condition of financial statements, dividends paid, and the expected dividends. The second group which was self-image/ firm-image coincidence group in which there were three factors influence the UAE investor behavior, namely get rich quick, reputation of the firm and perceived ethics of the firm. The third group was neutral information, followed by advocate recommendation and lastly personal financial needs. Other factors were also significantly affected the UAE investors’ behavior, for example, the UAE investors are mainly interested in stock marketability. This would affect the policies that to be followed by companies listed in the two financial
markets. Government holdings is also an important factor of the UAE investor behavior, where more than 50% of total respondents consider this factor, the most influencing factor on their investment decision.
accounting information and financial literacy does help investors in decreasing information asymmetry and also enables investors to invest in risky instruments. Despite this age and experience increase investors’ preference changes to a less risky investment, this does not mean that investors do not prefer to invest in shares, they wish to but with the intention of getting dividend return rather than capital gain.

  1. Summary and Conclusions
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