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Q: I am a South African woman, 54, and have been living in Dubai for five years. I have a well paid job, and intend to work for the next five years. I am looking to make a sound investment over the next five to 10 years, with a return better than the current bank rates. All of my savings are in a property in Portugal, where I hope to retire. I can afford to invest $3,500 per month in new investments now. Can you please help?
A: The first stage of investing in your retirement can be a daunting task, as you are putting money aside for a time when you won't be taking a salary. It is important that you get a return from your investments that match the lifestyle you want to lead once you finish work.
While property in the UAE does offer a good chance of capital return, there's no such thing as a sure bet. Don't tie up all your funds in a single property or even across a range of properties, try to spread your assets across a broad base.
Spreading investments is generally the right approach for the first time investor. Generally, this approach generates a good return in healthy economic times, and protects you in difficult ones.
There is as variety of options available to you with the amount of money you are able to invest right now. Unless you are certain of your current investment opportunities, I would suggest that you sit down with an independent financial advisor, and look at a variety of investments - don't put all your eggs in one basket!
By investing in just one area, in this case property, you expose yourself much more to changes in the market, both positive and negative. As you get closer to retirement, it is recommended you get more conservative in your investments, to protect the assets you already have.
Some investment in property in the early stages of your career can build big returns later in life, however there are a number of other options available. The bond market is a fixed income market, where you can buy and sell debt securities. A bond is effectively an agreement with an authorised issuer, whereby you lend them money, which they agree to repay, with interest, at a later date.
If you put all $3,500 into one policy however, you may be tied into a lengthy deal, which could cost you money to finish early. If you invested in a mix of long and short term investments and also medium and low risk, you are less likely to struggle if the economy turns, while during the good times you can take advantage of a mix of economies.
Maximise returns
You may want to also consider the equity that is in your property in Portugal and here in Dubai. Releasing the equity in the property now, could generate a bigger return, but be careful as the income generated by investments made with this lump sum will be sufficient to cover the payments and contribute to your retirement lifestyle.
Another thing to think about is in which country you want to invest in. If you are planning to retire in Europe, then consider an investment that gives return in euros. As the dirham is linked to the dollar, investments in that market will bring the strength of the dollar into play.
Even in retirement, though, it's important to find a balance between growth and preservation, especially during your early retirement. Keep in mind that your retirement is likely to span thirty years or so.
Consider keeping some of your money invested in stocks or stock funds, which will allow your assets to grow both to support the later years of your retirement and to keep pace with inflation.
It is always a good idea to plan for your retirement, and the sooner you start investing, the more return you will have when you finish work.
The writer is director of general insurance at Nexus, a leading regional financial adviser. The opinions expressed above are the writer's and don't necessarily represent the views of Gulf News. Please send your questions to advice@gulfnews.com.
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