Everyone looks like a star when the economy is strong and business is easy, but the difficult times separate ‘men from the boys’. The tough business environment is an opportunity to open new doors of personal growth as well as a time to get a grip on your finances.
Having said that, brighter days for the economy may be round the corner. A recent survey of wealthy investors in the GCC shows overwhelming optimism for the prospects of the Gulf economies in the medium term. With abundant oil resources, cash reserves and developed infrastructure, future for the Gulf is bright. However, budget and spending cuts across government and private sectors have affected individual sentiments. Now is a chance to focus on improving your personal core competencies and also to realign the investment portfolio to make it a reliable safety net to tide over difficult times.
On the personal front, one can monitor several parameters and work on them. We all have some educational qualifications but very few of us have worked on keeping these competencies strong enough to match the developments in our industry. It is now easy to find courses to get stronger in one’s own field. Several are available free and manageable during free time over the weekend or in the evenings.
Personal growth cannot be complete without a growing level of happiness. Generally we experience volatile patches of happiness and sadness. This constant struggle can be eased a little bit by evolving oneself spiritually. Personal growth is supported in a big way by charity. A lot of us think about charity as something to be done upon reaching a certain financial status. However, anything done to help the less fortunate, whether small or big, whether involving money, time or contributing with soft skills, are all very uplifting. Various online portals make donating to your favourite cause easy, and feedback on your donations is assured.
Management of personal finances of one’s life cannot be ignored and is not only for the wealthy. Everyone needs to be control of their finances irrespective of the quantum.
Here are some pointers towards getting more out of your own personal portfolio, however small or big.
While constructing an investment portfolio, make sure that there is a high degree of certainty of returns, while ensuring that only a small amount of capital is at risk. Once that risk is identified, it is easy to build on the rest to ensure healthy returns on the portfolio.
Debt brings a high level of certainty in the portfolio by getting regular income. It is important to keep monitoring the health of these issuers and taking corrective action to ensure that there are no sudden surprises of default along the way.
Equities are a significant tool to get big returns but they also have their own risk. Today’s well developed equity markets offer opportunities to invest not only in the developed markets but also in the emerging and frontier markets around the world. Capping the overall exposure into equity as per the ability and appetite is also crucial. One has to be prepared and capable of absorbing fluctuations from equity investments with possible losses too.
Investing into properties has been a profitable experience for most investors based in the Gulf. Some simple yet vital learnings are- to buy from builders who have a track record of delivering properties, to buy at popular locations, even though these are more expensive. If a loan has been taken on the property, care should be taken that the loan amount should not be so high, that in case of a tight financial situation one is not able to manage the instalments.
A good investment adviser should be able help you with equity and fixed income investment so that the best opportunities can be accessed. A leverage or loan can be used where necessary, to enchase the yield from these investments. The adviser will also help identify the risks in these investments, risk of leverage and monitor these investments on a continuous basis. Life and medical insurance need to be a part of the investment portfolio- they help avoid sudden economic impacts from unforeseen events. Look at term insurance plans which require minimum premium while offering maximum cover. These keep other funds free for investments.
Succession planning has always been a difficult topic for discussion among residents in the Gulf. This can be managed in a systemic way by creating a Will. Those who have a more complex or larger pool of assets can create a Trust and a succession plan together with the Will.
The pleasures of living in the Gulf are here for us to enjoy. These can last longer if we take some time off to focus on the softer areas of personal growth and better control of personal finances
— Disclaimer: Any views or opinions expressed in this article are that of the author’s
(The writer is the managing director of Alpen Asset Advisors Limited.)
