Ahmad may be young, but as a teenager his father helped him pinpoint investment opportunities, and he’s been going it alone for the last two years. As he explains, he has clear ambitions and long-term goals when it comes to growing his finances. “My dream is to enhance my family’s lifestyle,” he says, “to have enough money to allow my kids to pursue their dreams, and for my wife and I to have access to things we never thought we could.” In fact, he is already keeping an eye on life in his 60s and beyond. Ahmad is currently planning for his retirement and has been in talks with a financial adviser to further help grow his portfolio.
Studying for an MBA had depleted much of Ahmad’s savings, so he started off with a modest amount of AED 5,000 to invest and key goals to:
Save at least AED 30,000 per year to allow for an overseas holiday
Buy a bigger sedan/ SUV in three years, costing around AED 160,000
Purchase a house in three years, worth at least AED 1,600,000 ideally before the age of 35 (which may require debt financing)
Build savings of at least AED 1,600,000 in the next 18 years to support his children’s education
Invest in another house in the next 10 years, worth at least AED 1,600,000 (especially if he can save more and service the debt on the first house faster)
Saved enough money for an annual family holiday
Achieved 33% towards his dream of buying a bigger sedan
Accumulated 10% towards buying his first house (a sum will increase going forward now that he doesn’t have the expense of funding his own education)
Succeeded in tracking towards building his savings to AED 1,600,000 and buying a second house within his expected time frame
Tip #1 Pay yourself first
Every month, at least 30% of Ahmad’s salary is automatically debited from his main income account into his
savings account. “You should have no access to this as part of your monthly expenditures. Be sure not to view your savings account as your ‘go-to’ bank account – this small tweak helps with savings immensely,” he advises.
Tip #2 Build splurges into your budget
“It’s okay to splurge as long as you do so responsibly — we should also enjoy our life!” he adds. “When I travel, for example, I budget a certain figure and then add a 20-25% contingency, due to the exchange rate or price increments at the destination.”
Tip #3 Start investing only what you are prepared to lose!
“Start off with a modest amount that you are prepared to lose, to gain real experience in monitoring investments,” says Ahmad who started off with AED 15,000
Tip #4 Be patient, it’s a long journey
Planning for the long term is key, investments will not grow your wealth overnight. Having a long term goal that has milestones along the way, like Ahmad , helps to keep focus. When deciding on his goals, Ahmad looked at what he missed out on when he was growing up, and what is important to him in the future.
Tip #5 Make friends with your bank
“Banks are a good resource for structuring your investment activities – for low risk”
Tip #6 Branch out to minimise risk
“Do not concentrate your investments in a certain company or even asset class,” advises Ahmad . Diversification is good, as it spreads the risk.
Tip #7 Build your investment knowledge
“One of the best pieces of advice I received is that you should always understand what you are investing in,” explains Ahmad . “This includes knowing the downsides, not just the up sides. When it comes toinvestments, I go through the data and market updates provided by my bank before I make my decision on whether to invest or not..
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