Current low markets ideal for saving

For many people in the region, now isn't a time they'd consider starting a savings plan.

The global economy is extremely challenging and closer to home there's still a feeling of uncertainty causing most investors to be cautious about where to put their money, but with stock markets so low, a wise investor knows now can be the ideal point to enter a medium to long-term investment plan.

The reason most people save is for retirement or their families' futures, and many expatriates moved here with the intention of starting a savings plan to create wealth. Now they may be considering suspending these plans or halting them altogether with the economic uncertainty that's presently gripping the world. There's a reluctance to commit money to a scheme that might tie up cash when one may need to have the flexibility to access it in times of need. If you find a scheme that offers this flexibility, then now is the time to get serious about saving.

With falling global markets there is value in nearly all asset classes. As potential or current investors we should look to buy low and sell high - now is the time to take advantage of the low cost of buying into global investment funds. For people already investing regularly into savings plans it is an excellent opportunity to buy cheap units in volume today that may benefit from future market recoveries. Nobody can time the point of recovery and it's therefore important to have time in the market as opposed to trying to time the market.

The relative low price on stocks currently means greater purchasing power for each investment, so now is an optimum time to invest in funds that spread the risk. Funds typically invest in about 40-80 different companies and are considered less risky than investing in one company. People need to diversify into many assets and those with limited amounts may benefit from investing in funds rather than individual shares.

Residents of the UAE who access their investments while living here have additional benefits due to its current tax free status. Savers who plan to move on elsewhere should seek advice on the tax laws applicable to the country they wish to draw down their savings in.

The community of expats in the region should seriously consider the financial benefits available when living here. The cost of delay in setting up a savings plan, even by a few years will considerably increase the amount they have to save to reach their goal.

All too often people postpone saving until a later date, but the combination of the tax benefits in the region and current low markets make now an ideal time to start investing.

- The writer is General Manager, Friends Provident Middle East and the opinion expressed here is his own and do not necessarily reflect the views of Gulf News.