How to achieve a dream lifestyle? The secret according to some readers is savings, taking up loans for investments, buying bonds and certificates and how to manage them. Gulf News Community Journalist Manuel Almario speaks to five readers who seem to be successful at saving.
Saif Al Deen Adam Ali
Investment plan: Buying gold coins, bonds and millionaire certificates Saif Al Deen Adam Ali, from Karachi, Pakistan, is working for airport services. His best practice for making money is to buy gold coins, bonds and millionaire certificates on a monthly basis.
"I think it's the same as when I buy grocery or pay electricity charges every month — I buy saving schemes, too. Well, if I win a big fortune in any of these schemes, I will invest my money in real estate, as the real estate market is excellent in Dubai. I will take my family for a cruise holiday, and I will buy a luxurious car," he said.
Ali thinks that it's a good habit to invest in bonds and certificates, and everyone should do so.
He said: "I have not touched these certificates for a long time even if I needed the money. This is a very good investment and a nice saving scheme, and if I win something it will be an added bonus."
Z.S.
Investment plan: Buying as many bonds as possible
Z.S., 33, from Pakistan is working as a business development manager for a local company in the education sector.
She said: "My formula for saving is simple — I try to keep a manual of all our expenditures at the end of the month. We identify expenditure, which was totally unnecessary; something that we could have done without.
For example having coffee every day from outside or eating outside is something her family avoids.
She said: "We have a monthly budget whereby we keep aside the money for utilities, rent, entertainment and groceries. The rest of the amount goes into savings — and we save by buying bonds, which gives a relatively better interest rate compared to anything else in the market."
When they get a salary increment, the amount is added to the savings each month.
"At the end of the month, if we have any money, which hasn't been used up — we end up buying bonds instead of spending it on unnecessary items," she said.
"We don't use credit cards unnecessarily. We use debit cards, which are much better and one doesn't go overboard with spending, unless one has totally lost control over his/her finances."
If they happen to use their credit then the total amount is paid off to the bank, as their standing instructions to the bank.
"We also avoid carrying the credit card with us in our wallets," she added.
Dar Danesh
Investment plan: Buying bonds and real estate
Dar Danesh, 40, is married with two children. He is a Canadian citizen living in Dubai since 1995. He works as a training advisor at Jebel Ali in Dubai.
He said: "I do have bonds, as I felt this was a good safe opportunity to save a bit, and hedge, but it's not based on any economic measure. Remember you might be saving with the bonds, but your money is also losing value as inflation is growing faster than the interest/profit share earned … it is not financially viable to keep all your money in one place."
Danesh said that investors would need to diversify into other higher interest earning products and the best is real estate.
Mohammad Sajid Ali
Investment plan: Long term buying into the stock market and equity funds
Mohammad Sajid Ali works as a finance officer in Dubai. He said: "I go with my late father's advice — do not fly high until you know that the flying range is within your limits."
He said that it is very hard for a middle class person to maintain a reasonable life nowadays because of high inflation.
"We should first address our immediate day-to-day needs requirements then invest in stock market, bonds, gold and so on."
Sajid Ali believes that inflation reflects the rate at which the general prices of food and other commodities increase over a period of time. This ultimately leads to a decrease in purchasing power of money and that is what actually affects the public.
"This means that what you can buy for Dh10 today will cost you almost Dh17 five years down the line for the same commodity considering inflation rate stays put at 11 per cent. The effect of inflation not only leads to hike in prices of commodities and food but also eats away into the returns on the investments of your hard-earned money. This again hits you where it hurts the most — your pocket," he said.
He claims that stock market is one investment avenue, which can beat inflation. "Although it gives you sleepless nights due to the market risk, it is good if you stay invested for the long term — at least eight years or more," he said.
He added that the same is also true for equity funds, too. The best bet to select from equity funds would be diversified equity funds as the portfolio is well diversified among different sectors.
"Staying invested for the long term is the key to earning good returns as well as beating inflation. It averages out the volatility of the stock market and gives a steady return."
Recent years have seen lot of interest in gold. Why so? He said: "The biggest factor is the weakening of the US dollar. Universally, gold is inversely linked to the value of US dollar; hence with weakening of the US dollar demand for gold has increased. Gold has always been stated as a good hedge against inflation. It is considered as a store of value next only to the US greenback."
Sohail Gill
Investment plan: Buying millionaire certificates and bonds
Sohail Gill, 47, a Pakistani expatriate, is working as a manager in a company in Dubai. He said: "To tell you the truth, it's all about human temptations and greed, which influences us to go for moneymaking gimmicks. To me, someone who wins the lottery is one in a million plus number of people and is considered a ‘lucky winner'."
He said that certificates and bonds are a safe investment in terms of low risk and are worth buying, if one has substantial amount of money to spare. "But speculative investments such as currency trading, apart from hedged positions is an absolute risky business and many of us have burnt their fingers while dabbling in it ... so be careful," he said.
He believes that the financial sector including banks, in this part of the world are so aggressive that every single day, there is some promotion, attraction out to induce people for putting their money in credit cards and personal loans like a mouse trap for an easy life.
Gill said: "Do it but use your brain and never put your all eggs in one basket."
