Dubai: For a lot of people, winning instant wealth is the ultimate dream. Many have spent years trying to hit the jackpot in various games of luck and raffle draws. But what comes next after the quest for instant riches has been attained?
How do you deal with the sudden gush of liquidity? Should you give part of your winning to charity, buy holiday tickets for your friends and family, go on a spending binge or tuck away the money somewhere? And if you do decide to hold on to it, how do you optimise your windfall?
These questions didn't gnaw at Roshni Kalati, 25, after she won Dh1 million in the National Bonds draw last year. Unlike probably many people her age, the Indian national knows exactly how to deal with instant riches.
Kalati has a graduate degree in finance and a Masters degree in wealth management. Shortly after her win, the young millionaire put her finance background to good use and map out an investment strategy. Today, almost a year after she invested the jackpot, Kalati is confident about what her financial future holds.
"I did get constant advice from many people including family, friends and colleagues. I have made some conscious and fruitful investments and thanks to their backing," she says.
Kalati still works as an assistant manager for product development at a Dubai-based mortgage lender. But she hopes to be able to retire from the corporate world early, run her own business and, perhaps, pursue her passion for writing.
The Indian national comes from a middle-class family. Before she won the National Bonds, money was not much of a problem, given that she was making good income from her job and she's free from the financial responsibilities of a family life. So, hers is not one would call a rags-to-riches tale.
"To be honest, winning Dh1 million has not changed my life considerably, but it gave me leverage over others," she points out.
Kalati started buying bonds in October 2008, with the intention to get a little more out of her savings. Regular bank deposit schemes in the UAE did not prove to be very lucrative for those with small nest eggs, considering the low interest rates.
"I was just going through savings plans and I heard that National Bonds offer better returns, plus it seemed like it's guaranteed by government. It's a better option when compared with other saving schemes like fixed deposit accounts in banks since it provides almost the same return as fixed deposits plus a probability of winning some prizes," she says.
Not too long after, good luck struck her. By March 2009, when she had already purchased about Dh50,000 worth of bonds, she won Dh1 million in the National Bonds draw. "That's a really good return on my initial investment," she adds.
Kalati took things easy after her win. Of course, she did take some time to enjoy her winning by going on a holiday and lavish expenditure, but she locked away a good part of the prize money in "safer" investment vehicles.
She secured the lump sum in fixed deposit accounts in India and Dubai, and spent some in equities and life insurance. Losing a lot of money in the stock market or in just about any market-led investment is the last thing she would imagine.
"I wanted to be quite safe with money. Cash is king. Considering the economic climate, I feel cash is the biggest advantage one could have for today. So, I divided the money between here and India. I know the returns are not very high. It's almost equivalent to cash, but it's the safest investment. I'm just playing a little slow right now," she tells Gulf News in an interview.
However, she's not turning her back completely on the stock market. So far, she has invested about Dh50,000 to Dh75,000 in stocks, mostly in India. Using the cost-averaging technique, she times her purchases when prices go down and keeps an eye on companies that are stable.
In the UAE, she has purchased around Dh5,000 to Dh10,000 worth of stocks from companies like First Gulf Bank, Dubai Financial Market (DFM) and Air Arabia. The young investor apparently did a thorough planning before playing in the stock market. She purchased more stocks in India because she believes it's not one of the hardest hit markets.
"In the UAE, I invested in stocks from First Gulf Bank because it's backed by Abu Dhabi, which is doing well as of now. FGB is a consistent performer and adequately capitalised. I also chose Air Arabia because aviation industry is booming in the Middle East and especially the low-cost carriers like Air Arabia are going to reap the benefits of the growth in the GDP [gross domestic product] in the GCC [Gulf Cooperation Council] region," she explains.
"[As for DFM], it's one of the most actively traded markets in GCC. Due to the financial crisis, the volumes have come down, but with the revival in the economy and increase in confidence in markets, I'm sure DFM will see a surge in volumes and profitability will increase," she adds.
To secure her retirement, she also picked up two life insurance policies, each has Dh250,000 cover. "I have linked insurance to investment. Every year, I pay about Dh12,000 to Dh15,000 for each. I expect that investment to give me a good return when the right time comes," she adds. With her savings in India fixed to earn 7 per cent to 7.5 per cent a year and the ones in the UAE expected to pay 5 per cent annually, Kalati is sure to reap some good rewards from her bank accounts. She's also expecting to gain 10 per cent to 14 per cent return on her equity investments in the long term.
The young investor is constantly on the lookout for more ways to secure her future further. "I will look at property investments in India in my next trip. I want to buy a house there," she says.
Nevertheless, Kalati says she doesn't have big financial ambitions like making mega millions over a certain period. All she wants to do is put her current resources to good use and enjoy life at the same time.
"Even before I won Dh1 million, I never fancied that kind of money. As far as my career is concerned, I work not for the money. I work because it gives me a sense of fulfilment and it keeps me occupied," she says.
However, the young investor has some advice for people who have idle nest eggs. For those who are looking to stay in Dubai for a long time, she recommends investing any surplus cash in property. She notes that there are affordable housing units in areas like Jumeirah Lakes Towers, Marina and Arabian Ranches.
"Valuations for these properties are very low right now and I believe these will double in the next five to seven years, considering the vision Dubai has had for itself," she says.
"For people who want to [spare] part of their income on a monthly basis, I would recommend investment in National Bonds, some smart investments in equity markets and other fixed deposit accounts. Considering the market conditions, these investments can easily be converted to cash, as and when required," she adds.
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