The economies of the Middle East may be booming but expat investors should be wary about where they place their funds.
Those new to investment can follow this quick guide on what you should be looking for and, hopefully, join the 500,000 high net worth people who now live in the Middle East, according to the World Wealth Report.
But the booming economies which have created so much wealth have also created hurdles for new investors who may be confused about whether they should invest in equity, bonds, real estate or gold.
Investment check list
To help clarify the process, Omar Shelbaya from Friends Provident International has detailed 10 factors for investors to consider.
- Diversification of assets which will spread the investor’s risk and points out that a percentage of the portfolio should be allocated across high and low risk funds.
- Time Horizon is important to many because of the global economic slowdown which means they are investing for the long term gain which brings more confidence in the returns.
- Risk Appetite. Most UAE investors choose risk-averse strategies which avoid investments which are liable to fluctuate and so are suitable only for those who can, and want to, risk losing their money.
- Inflation eroding fixed income assets also needs considering. In a few years’ time the well-priced return may well be eroded by the rise in inflation.
- Reasons For Investing. Omar says investors should decide from the outset why they are investing their money – is it to provide for retirement? Or to buy a house? Making this decision early on will help you choose the most suitable investments.
- Financial Advice is crucial, especially with many potential investors sceptical about the prospects for global stock markets.
- Past Performance of any potential asset is not an indicator of its future performance
- Volatility in the short term is to be expected. Remember that in the long term time is generally on your side and your investment will bear fruit.
- Geographical considerations come to bear as investors flock to countries that appear to be doing well without doing their homework properly. There are always a number of factors to consider when investing abroad.
- Cost of Investing should always be considered. Independent advice costs money as do portfolio transactions which quickly rack up charges such as commissions and stamp duty.
For investors who thought picking stocks was hard enough, these top 10 tips for investing give even more food for thought.
Find out more about the Friends Provident International Savings Plan