FAQs

General

baraka is a UAE-based fintech on a mission to connect young, millennial investors to regional and international investment opportunities through a vibrant and transparent open investing ecosystem.

baraka stands for growth, blessing and revelation. As such, we’re working on changing the perception of investing – getting wealthy is no longer a financial blessing, it’s a ritual; a way of life based on an understanding of how consumption drives financial markets. Designed with you in mind, baraka is all about creating opportunities and accessibility to the financial markets for everyone.

baraka is an open investing ecosystem that educates, empowers and enables you to take control of your investments, anytime, anywhere. With baraka, you can learn about financial markets, investing and more with market insights, educational quizzes, learn articles, daily newsletters and the baraka exchange.

You can take your investment knowledge to the next level with baraka’s market insights, test your knowledge with educational quizzes, subscribe to the daily brief for local and international financial news straight to your inbox, and join the discussion on baraka exchange.

Financial literacy is important for a variety of reasons. The main one being that it helps you understand your financial goals and objectives, and helps you make clear decisions on how to save and invest accordingly. There are many other reasons as well, for example, it helps you choose which credit card suits your budget or which type of real estate to invest in to fit your investment objectives and goals.

There can be many benefits to investing, but before you get started, we recommend that you learn and educate yourself about the financial markets. Research is important to understanding what strategies will best suit your financial goals and your risk appetite and threshold. Investing can help you reach your financial goals, especially if you invest for the long term and diversify properly according to your risk threshold.

Learning with baraka is free! We’ve made all our features on our website free, including our daily newsletter akhbaraka and baraka exchange, in an effort to create accessibility to the financial markets for everyone.

There are several ways you can interact with baraka, the baraka team and baraka tribe. baraka exchange is baraka’s online community, which was created to foster open communication between investors of all levels about the latest trending topics in the financial markets. baraka’s social media channels, including Instagram, Facebook, Linkedin, Twitter and YouTube, are updated daily, and here you can engage in conversations and dialogue about the topic of the day. If you have any feedback or suggestions about any of baraka’s content, feel free to email us at social@getbaraka.com.

baraka is based in the United Arab Emirates, but we are creating opportunities and accessibility to the financial markets for everyone. While we are primarily focused on users in the GCC region, our learning insights are open to anyone, anywhere.

akhbaraka is baraka’s 5-minute daily newsletter that helps you stay informed with local and international financial news. Wondering about MENA-related financial news? Or what about US stock market news? akhbaraka has both – subscribe today at https://getbaraka.com/subscribe.

akhbaraka, baraka’s daily newsletter, reports on local and international financial news every day, Monday through Friday. The Sunday Deep-Dive edition “deep dives” on a relevant topic each week.

You can subscribe to akhbaraka on our website at https://getbaraka.com and you can read previous versions of the newsletter at https://www.getbaraka.com/subscribe.

Investing requires you to stay up to date on news, whether it’s local news or international financial news or company related news. Many financial markets are interconnected between countries globally, so staying abreast trends, topics and insights is extremely important to keeping a well-rounded and diversified portfolio.

The deep dive is the Sunday version of akhbaraka, baraka’s daily newsletter. The deep dive digs deep into a trending topic related to the financial markets every week, in an easily-digestible format. To read past deep dives, visit .

baraka exchange is baraka’s online community, which was created to foster open communication between investors of all levels about the latest trending topics in the investing and financial markets.

Creating a profile on baraka exchange is simple. Visit https://tribe.getbaraka.com, click on one of the threads and click “Create new account”. From there, fill in your details to set up the account.

Topics on baraka exchange will be related to investing and financial markets, and everyone is encouraged to join the conversation, whether you are a beginner investor or professional.

General Investment

Investment can mean many things. Investment is the act of allocating money to earning a benefit, such as a profit. You can invest through many different avenues, such as the stock market, by investing in assets and securities such as stocks and bonds.

There are many types of asset classes and instruments for investments. Some of the famous investments include stocks, real estate and bonds.

An investment is an asset acquired with the goal of generating income or value appreciation. It’s a way of setting some money aside to make it work for you. An investment can be a variety of things, including cash, bonds, real estate and stocks, and they all function differently. It’s a good idea to do your own research into each investment type to determine which work best for your financial goals.

We recommend doing your research into the different types of investments, how each type can benefit or negatively impact your portfolio, your risk appetite, your long-term investment objectives and more. Educating yourself on these aspects will help you have a holistic view and can help you invest wisely according to your own goals.

There are many ways to start investing. Depending on your portfolio, your investment objectives and your risk-appetite, it’s best to learn and educate yourself on what types of investments best fit your needs and how to invest in them. Visit https://getbaraka.com.

To set your long-term investment goals, it’s a good idea to write down your end game, and work backwards. Think about attainable and measurable financial goals and what milestones you should achieve these goals at, in order to reach your long-term goals.

Your risk appetite is dependent on a variety of factors, the main being how well can you handle risk, how much risk can you take on in your portfolio to reach your long-term investment goals, and how much can you afford to lose. These three factors will enable you to come to a conclusion about your risk appetite and can help you make investment decisions accordingly.

There are many companies you can invest in through the stock market, but in order to get started, we recommend that you do your own research and educate yourself on how to diversify your portfolio, your long-term investment goals and your risk appetite. You can also do research on what stocks have performed well or even outperformed the stock market so far this year. Since these stocks are constantly changing, a quick Google search will help you out.

There are many different types of investments and strategies available for investors to choose from. Some of the more popular investment types include cash, bonds, real estate, stocks, mutual funds, exchange traded funds, options, annuities, commodities and cryptocurrencies.

Dividends are payments that shareholders receive from a company when it earns a profit. When a company is profitable, its management and board of directors can choose to either reinvest the profits back into the company or distribute their profits to investors in the form of dividends. Dividends are essentially a company’s way of saying “thank you” to their investors.

Bonds

A bond is like an IOU (“I owe you”) between a lender and a borrower, typically a corporate or government borrower. Bonds are used by corporates and governments to finance projects and are issued and securitized as tradable assets.

Bonds typically include details about the loan, such as the terms of the payments and the end date of when the principal is meant to be paid to the bond owner. When companies or governments want to finance new, large projects or operations, they may choose to issue bonds to pay for those operations. The bonds terms are outlined, and as such the borrower is typically required to make payments and interest until the bond’s maturity date.

Bonds are an investment vehicle where investors can earn interest. As set out in its terms, a bond’s interest rate is paid regularly to the bond holder until its maturity date. The initial price for bonds is typically either $100 or $1000, but the market price of bonds can appreciate or depreciate depending on a variety of factors including the credit quality of the issuer, market conditions, coupon rate and expiration date.

The seven most common bonds include treasury bonds, government-sponsored enterprise bonds, investment-grade bonds, high-yield bonds, foreign bonds, mortgage-backed bonds and municipal bonds.

There are several types of bonds, all with different types of risk involved. Typically, treasury and savings bonds are the least risky.

An example of a bond is the U.S. 10 Year Treasury Note. This bond is essentially a loan that an individual can make to the U.S. government that matures in 10 years.

Bonds are relatively low risk and can help bring stability and diversification to a portfolio. In addition, they provide a reliable stream of income with interest payments, in contrast to stocks, which can be volatile and do not always provide a reliable return.

There are some risks to investing in bonds, just like any other investment. These risks include a potential change in interest rate, issuer credit risk, inflation risk, liquidity risk and more. It’s important to do your own research into potential investments to determine which are best suited for your investment goals.

Bonds pay interest payments, not dividends. A bond’s interest payment is outlined when the lender and the borrower agree on its terms.

Stocks

A stock is a type of security that gives stockholders a piece or a share of ownership in a company. Stocks also are called “equities,” and the words “stock” and “share” are usually used interchangeably, since a share is the metric for a unit of stock. Companies sell goods and services and since their stock prices are tied to their underlying profit and future earnings potential, stocks have the potential to continue to grow over time as companies grow their revenue and profits.

The price of a stock is primarily driven by a company’s profits and investors’ confidence in a company’s profit potential but can be impacted both negatively and positively by several other factors as well. Being volatile and unpredictable in nature, stock prices can increase or decrease on any given day. As an investor, if you sell your shares on a day when the stock price is above what you paid for it, then you will make a profit. The opposite can also happen – if you sell your shares when the stock price is below what you paid for it, then you will lose money.

There are various reasons why investors buy stock, including potential for growth (capital appreciation), dividend payments and the ability to vote and influence company decisions – depending on the type of stock bought. Investors buy shares when they think that a certain company will be profitable, enabling them to potentially obtain a return on investment on their stock purchase. Investors buy and sell stock based on how much they think the stock will be worth in the future.

There are various types of stocks that an investor can buy and sell. Some well known types of stocks include:

  • Blue chip stocks: This type of company is well-established with a solid foundation. They usually provide stable returns and may offer dividends.
  • Growth stocks: This type of company is a relatively new company and shows explosive growth, leading to volatile stock price.
  • Speculative stocks: This type of stock is largely volatile during a trading day and easily influenced by news or information.
  • Range bound shares: This type of stock doesn’t rise or drop much; it stays relatively stable throughout trading cycles.

There are various reasons why investors buy stock, including potential for growth (capital appreciation), dividend payments and the ability to vote and influence company decisions – depending on the type of stock bought. Investors buy shares when they think that a certain company will be profitable, enabling them to potentially obtain a return on investment on their stock purchase. Investors buy and sell stock based on how much they think the stock will be worth in the future. Ownership is determined by the number of shares a person owns relative to the number of a company’s outstanding shares. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have claim to 10% of the company’s assets and earnings.

We always recommend that beginner investors should do their own research and learnings into stocks and the stock market before investing. This will ensure that the best investment is made that is appropriate for their portfolio.

There is no straight-forward answer to picking a good stock. There are many variables and no definition for a good stock. For example, if you are a young investor, you may be looking for high-growth stocks that may be more volatile, whereas an older investor with different investment objectives may be focused on blue chip stocks that are less volatile and pay dividends.

Not all stocks pay dividends. Typically value stocks pay dividends – value stocks are companies that are well-established and have stable financial performance.

There are two main kinds of stock – common stock and preferred stock. Common stock has its advantages, like how it entitles its owners to vote at shareholder meetings and receive dividends. On the other hand, preferred stockholders don’t usually have voting rights, but they receive dividend payments before common stockholders and have priority over common stockholders if a company goes bankrupt and its assets are liquidated.

ETFs

An ETF – an Exchange Traded Fund – is an investment fund comprising a collection of assets that tracks an underlying asset or index. An ETF can hold a wide variety of different types of investments, ranging from stocks, bonds, commodities, and can be comprised of various indices, a collection of stocks based around a theme, and more, giving investors exposure to a wide variety of different assets with just one single investment. Some ETFs are even grouped by risk level and dividend distributions.

ETFs provide a low-cost access to various underlying asset classes, geographies and sectors. However, they carry some risks of these underlying assets. Historically, ETFs have produced better returns over the long-term than actively managed portfolios, especially after taking fees into account. For example, the S&P 500 ETF, known as SPY has returned around 61% over the last five years for an annual return of 10.6%. That means that if you would have invested $100 five years ago, the value of that investment would be over $161 today.

Listed and traded on stock exchanges, most ETFs can be bought and sold throughout the day, just like stock. Because of this its share price often fluctuates throughout the day just like a single stock. But the main difference is that ETFs are a fund consisting of a collection of assets. ETFs give investors exposure to a wide variety of different assets with just one investment, unlike a stock which is just one asset.

Since ETFs track the underlying market, they can be especially prone to market fluctuation and the risks of their underlying investments.

ETFs can be a good idea for a beginner investor to include in their portfolio since they offer a variety of advantages including diversification, lower transaction costs than investing in the underlying assets, a wide range of investment choices, and more.

While ETFs tend to have lower risk than stocks, they still come with some risk of the underlying fund assets

Some ETFs may include stocks that pay out dividends in its holdings. Most ETFs pay out quarterly dividends to include all dividends paid by the stocks that they hold.

Mutual Funds

A mutual fund is an investment fund that includes a pool of money from investors to purchase securities, such as stocks, bonds and debt.

Examples of mutual funds include money market funds, fixed income funds, equity funds and index funds. Examples of what mutual funds invest in include stocks, bonds, and short-term debt.

Mutual funds are considered relatively safe investments since they provide diversification, transparency, liquidity and have regulatory oversight. But, they do come with some risks, like all investments do. Those include lack of control over investment decisions and diluted returns.

The three main types of mutual funds are equity funds (stocks), fixed-income funds (bonds), and money market funds (short-term debt).

Yes, depending on what is earned from the assets within a mutual fund, investors can receive monthly income in the form of capital gains distributions or dividend distributions. Interest that is earned is paid as dividend distributions.

A blue chip fund is a mutual fund that invests in blue chip stocks, which are well-established companies with stable financial performance.

Since mutual funds provide more diversification than owning just one stock, it could mean that mutual funds are relatively a safer investment due to the extra risk that comes with owning just one stock.

Options & Futures

A stock option gives an investor the right (not the obligation) to buy or sell a stock at a certain, agreed upon price at an agreed date.

A stock future is a derivative financial contract that obligates the holder to buy a specific stock at a predetermined date and price.

An investor can purchase a call option on 100 Microsoft shares (MSFT) at $250 that expires in 3 months. If the stock price, at the expiration date, rises above $250, the investor would have the option to buy the 100 shares at $250, regardless of the market price.

Options, like any investment, come with their own risks, especially if they are not understood and utilized properly. However, if used properly, they have the potential to serve as a hedge against market volatility and downside risks. In addition, options do not pay dividends either, whereas many stocks offer dividends.

Yes, you can trade and invest with any amount of money. But, depending on your broker charges, you will need to consider transaction costs and weigh that up against your initial investment of $100 plus earnings to see if it’s actually worth it.

The two different types of stock options are:

  • Call option: This gives the holder the right to buy the stock for a specific price (strike price) at a specific date (maturity). This option will generate returns for the investor if the stock price rises above the strike price at maturity, as the investor has the right to buy the stock at a lower price than the market.
  • Put option: This gives the holder the right to sell the stock for a specific price (strike price) at a specific date (maturity). This option will generate returns for the investor if the stock price falls below the strike price at maturity, as the investor has the right to sell the stock at a higher price than the market.

Both options and futures are derivatives for the underlying assets (e.g. stocks). The main difference is that futures contracts oblige both parties to buy or sell the asset that is under contract, whereas options do not oblige the parties but give them the right to buy or sell the asset.

Every investment comes with its own risks. But, since futures are a contract obliging the two parties to either buy or sell an asset at a predetermined price and date, this may be seen as more risky compared to options, since options are not an obligation and only give the parties the right to buy or sell.

An example of a futures contract is if an oil trader enters into a future contract in January with an expectation that the price will be higher in March. An example of an option (also known as stock option) is if an investor purchases a put option for Microsoft (MSFT) at $250 that expires in 3 months. Let’s pretend that the current price of the stock is $255. If the stock dips below $250 to let’s say $244, the investor has the right to sell the shares at $250 until the expiration date of the option.

Roll forward refers to extending the expiration of the option by closing the initial contract and opening a new contract for the same underlying asset at the new market price at the roll forward date. THis allows the investor to maintain the desired position in the option beyond the expiration of the initial contract.

To trade futures, you should first educate yourself and learn about the markets you intend to trade futures in. Once you’ve done this, you should do your research in reputable futures brokers and choose one that is right for you and your financial goals and objectives.

If an oil trader enters into a future contract in January to buy oil in March at a predetermined price, with the expectation that the price will be higher in March. Another example is when farmers use futures to lock in prices for selling their products.

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