Global changes are Casting a Shadow on the Economy and Investment
In recent years, the world has witnessed tremendous political and economic changes that resulted from unexpected circumstances and crises because of the rearrangement of political and military influence in the volatile regions of the world. One of the most prominent of these crises was the Corona epidemic and the resulting closures and health arrangements to limit its spread, which in turn led to a major economic slowdown in several countries and huge economic shocks in other countries.
The world had barely recovered even slightly from the consequences of Corona until the Russian-Ukrainian war broke out, casting a dark shadow on several aspects of life, most notably the economy, affecting export and foreign trade operations and causing major waves of inflation and rising prices in all countries of the world.
The Priority to Preserve Capital in Times of Crisis
In such difficult circumstances, the most important economic target for those with money is to preserve their capital, secure their savings, and perhaps grow them, if possible, by participating in safe economic activities that are free of risks and not affected by inflation accounts and currency depreciation. Here, the importance of economic expertise and in-depth knowledge of the country’s market and people’s needs at the time appears. So the best choice is to use an entity with vision and experience in crises that can help you grow your money and protect your assets.
Various Sources of Investment and Savings, but which is the best?
Safe sources of saving and investment vary between purchasing precious metals such as gold, silver, and investing in fixed assets such as real estate and land. However, the problem is that choosing this investment over another requires investment expertise and knowledge of market conditions that may not be available to many, which is what makes choosing investment in investment trusts of all kinds an idea. Good, they do not involve risk and are suitable for capital owners busy with their work. These trusts are managed by an experienced and dedicated management keen to make the fund successful and grow its investments.
Investment Trusts: Unique Options for Preserving and Growing your Money
First, we must define the investment trust, which is a financial partnership between several individuals in which the savings of the participants are collected according to shares to be invested in commercial activities that generate a fixed income, and the profits are distributed to the investors, each according to his financial share and the number of shares.
Investment trusts vary according to economic activity, type of assets and savings, organizational structure of the fund, or degree of investment risk.
It is worth noting that most trusts do not involve risk when investing, except for some trusts that generate high profits commensurate with the amount of risk in the investment, according to the famous economic rule that the greater the amount of risk, the greater the expected profit.
Types of Investment Trusts
Before you decide to put your money in an investment trust, you must know the classifications of these trusts, which can be divided as follows:
According to the assets and savings in the trust
1-Stock Trust:
Participation in this trust is done by collecting money from a group of investors in the form of shares.
The gain and loss of a stock trust is determined by the actual value of the stock.
2-Debt Trust:
Investing in debt trusts is done through purchasing bonds and securities and is characterized by low risk and obtaining a fixed financial return, unlike other investment trusts.
3-Mixed Trusts:
It is considered a mixture between debt trusts and equity trusts. It is more exposed to risk than debt trusts and requires people who are able to bear risks, but it is more rewarding than debt trusts.
According to the organizational structure of the trust
1-Open Trusts:
It allows the investor to put financial savings at the value he wants without restrictions, with the ability to exit the trust whenever he wants, so they are called open-ended trusts. Sometimes it is not possible to accept new investors or increase the value of the trusts.
2-Closed Trusts
Specific restrictions and obligations are imposed on the number of units or savings for each investor that cannot be exceeded, and financial savings can be increased again when the trust is opened.
Depending on the Degree of Financial Risk
Although investment funds are managed with high expertise and dedicated individuals, some trusts aim to invest in economic activities with higher risks and greater profits. There are, of course, safe funds with little or no risk, such as real estate funds, which guarantee investment in remaining assets that preserve the value of money for investors even if it does not profit.
1-High risk Funds
Investing in economic activities with a high probability of loss is a risk, but it may be a great opportunity to multiply money and investments. Profits may reach 15% of the capital and may reach 20%. These funds are suitable for those with large and diversified savings who have the possibility of risking a portion of their money.
2-Medium Risk Mutual Funds
They offer good financial returns ranging from 9 to 12% of the capital value, and are often stock funds or debt funds.
3-Low risk Mutual Funds
It is considered the best option for small investors and those with few savings who prefer stable, stable financial returns, even if they are small and range between 6 to 8% of the capital. It is recommended to resort to this type of funds in times of inflation, major financial crises, and instability of the financial and business markets.
Real Estate Investment Trusts (REITs)
After we learned the idea and definition of the investment trust or fund, we move to one of the most important and best investment funds, which are considered stable and invest depositors’ money in fixed assets that do not deteriorate like ordinary goods, which are real estate investment trust (REITs), which are based on investing in real estate of all types, whether residential or commercial..
Who can invest in REITs?
Real estate investment trusts are available to individuals by purchasing units or shares. The trust is traded on the financial market exchange. Investing in a real estate trust is considered low-cost compared to other trusts, as about 90% of the profits are distributed annually to investors. Investors can buy real estate through the trust locally within the cities of the Kingdom globally and invest in it by selling or renting.
Real estate trusts have different and special tax treatment and are considered distinctive in order to target more investors.
Saudi Arabia has Extensive Experience in the Field of Real Estate Trusts
The Kingdom has great and extensive experience in the field of real estate trusts, which has made there a large number of real estate trusts, about 19, that provide safe financial options for the Saudi citizen that preserves the value of his money and guarantees him a rewarding return, especially in light of the major economic transformation that the Kingdom is witnessing to diversify its financial sources.
Vision 2030: Major Investment Opportunities
Among the major economic, social and governmental goals of Vision 2030, the Kingdom aspires to increase its real estate wealth in line with its plans for a better life for the Saudi citizen, as well as providing real estate that accommodates tourism, economic and development activities.
Therefore, real estate funds in the coming period will have huge opportunities for growth and profit that intersect with the great economic activity that the Kingdom is currently witnessing.
Aqarmap provides the most important statistics and investment ratios to determine the neighborhood and type of property that achieves the highest investment return
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