How to Maintain and Multiply Your Money
It’s hard to make money and even harder to save it, especially in a city like Dubai where a lifestyle of travel, dining out, and weekly mani-pedi’s is commonplace. If you have been diligent enough to set some cash aside or if you’ve recently come into some money, it feels wonderful to have a safety net, or at the very least, to be debt-free. Once you’re in this comfortable zone, there are basic investment techniques to help you maintain—and even multiply—your earnings.
Putting cash under the mattress may not be the ideal place for your money if you expect to make any returns. Consider a fixed deposit at the bank and be sure to ask about decent interest rates. Websites like www.souqalmal.com make it easier to comparison shop so you’ll know which bank, or which fixed deposit scheme, will offer you the best deal. Money in the bank means you will have 24-hour access to your account through
phone banking and ATMs. If you put your money in a three month, six month, or one year fixed deposit, you can still break into it as an emergency fund if need be - otherwise, hands off and keep saving! For a more long-term view, banks often offer retirement accounts or saving schemes so you can set money aside for children’s education or a mortgage on a home.
“Doing a bit of homework about what to do with your money, even if it is just about deciding on a fixed deposit at the bank that suits your financial needs, will give you a sense of control,” says Nima Abu-Wardeh, a financial expert and founder of www.cashy.me, a regional financial advice site. “You will feel empowered!”
The Stock Market
Buying stocks can be a good way to make money if you’ve got cash to spare and have done a bit of research. Before you choose this route, make sure that you’ve talked to a financial planner or read up on the specific companies you’re interested in investing in, because it is not enough to see that a stock has been gradually increasing in value for three months and then want a piece of the pie. That’s not investing, that is more like just speculating. For example, now that the economy is doing well again, investments in construction companies and banks are a good bet; research which companies just won big contracts and look into their financial statements, which are publicly available, to understand more about their business. If you get the timing right and invest wisely by buying low and selling high, you can make much higher returns than interest rates in a savings account at a bank. With companies listed on the Dubai Financial Market for Dhs1 per share, spending part of your money on stocks is a good diversification strategy.
If the ups and downs of the stock market are off-putting to you, consider bonds. You can buy government bonds that pay out annual dividends and a full amount at the end of a specified term, say 10 years. The downside is that your money is locked up for long periods of time, but the upside is guaranteed decent rates of return. If this sounds like it’s for you, do your research into companies and governments that issue bonds, such as Emaar or the Abu Dhabi government. Always know what you are getting into by doing plenty of research; financial advisor Rupert Conner of Abacus Financial Advisors says: “Bottom line: if it looks too good to be true, it probably is—no magic financial solutions exist.”
Owning some precious metal is a good way to park money and keep up the pace with inflation. Gold cost about $40 dollars four years ago and has climbed to thousands of dollars today. While the value of gold is just as unpredictable as those of stocks, many investors are firm believers in this investment for its timeless value, compared to fluctuating share and currency prices. These precious metals normally are not taxed, can be easily stored, and can be bought and sold with ease. “Gold prices will remain volatile as investors decide whether it is good value or not, but investors like to hold gold and I don’t see the price collapsing,” says James Thomas, an independent financial advisor at Acuma.
Dhs 100,000 can be enough for a down payment to a property, if you’re willing to take on a mortgage. Prices of homes in big cities, including New York, London, and Dubai, have skyrocketed this year thanks to a rebound in the global economy and renewed vigour in the construction industry, but research into some other markets might prove very profitable. Western European countries, including Greece, Spain and Italy, have been slower to grow out of the recession and still have decent prices for some amazing properties. Perhaps the next time you’re planning a holiday to the French Riviera or a Greek island, you should seriously consider those acres of green land or quaint little home in a historic district – more than just pretty to look at, it could appreciate enough in value in a few years to help you land that dream apartment in your own hometown.
If you’re looking for a more sophisticated investment, talk to a financial advisor about options to safeguard you for the future. Companies like Acuma, www.acuma.ae, have consultants who can give you professional advice about where to put your money for the best returns. You can also peruse websites like www.cashy.ae to get regular updates on money matters.