To start at the beginning: you need to get into some sort of saving habit and invest smartly. Now, do you make the investments yourself or do you get someone to make them for you? If your investment decisions are going to be based on the hours spent watching the markets all day, I reckon you'll be alright. But if you don't have that kind of time or discipline, work an eight-hour job like me and then have to spend time with the family and pack in some R&R during the weekend, then leave your investment with the experts. It is their job to make your money grow. All you've to do then is keep your end of the deal by ensuring your salaried account keeps ticking.
Markets are volatile and it's debatable whether now is a good time to invest or not. However, if you have a regular savings/investment pattern going, then market fluctuations can do little damage. In most cases, these fluctuations can give you a better buying opportunity. I actually like periods of market lows (recessions and so on) for the one reason that I now get to buy my funds/stocks/shares at lower prices. At times like these I actually increase contributions into my savings plans as I'm now buying more for a lesser price. The more units I buy at these prices the better my chances at getting a better overall performance.
This is effortless investing. The key to this form of investing (referred to as dollar-cost averaging) is to keep buying regardless of market situations. Allow me to explain in more detail. Basically, dollar-cost averaging is about investing equal monetary amounts (in any currency) regularly over specific time periods ina particular portfolio. This allows you to buy more shares when prices are low, fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment giving the investor a lower overall cost for the shares purchased over time.
Contracts or investment plans are available today to allow clients to invest anything from $150 (Dh550) per month upwards. Plans are also available for terms as low as five years and in some cases even contracts that do not bind you to a term. Most of them even allow you to add a lump sum to the plan on an ad-hoc basis. The best feature of any of these contracts is that they build and nurture a habit of saving. Spending your entire income on things you don't need is an easy Dubai habit. If anything, the downturn in the economy over the last few years should have impressed upon all of us the need for a good savings plan. No one should leave the country due to unsettled credit card bills, car loans and personal loans. Start saving today.
Rickson D'Souza, is director of wealth management at Pinnacle Insurance Brokers, Dubai
