Smartest investment and life plans in UAE

Here's How You Can Preserve Your Wealth!

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  | Published: 02 May 2020 | Last Updated On: 20 January 2021

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Smartest investment and life plans in UAE

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If you are someone who is looking to turn a big paycheck or some assets you hold into long-lasting wealth, you will need to learn how to properly manage your money, and how to make choices to ensure that the assets remain strong. There are certain steps that can help you ensure that the money or assets you hold are sufficient to last you for your entire lifetime. This process of preserving your wealth, or you can say ‘staying rich’ is divided into 3 parts detailed below.

Part 1: Organizing Your Finances

Diversification is The Key

Diversification is the key to both – building wealth, and sustaining the wealth you have. It is essential for you to ensure that the money that you wish to invest, is well-diversified among the options available for investment in UAE. You can spread it across the wide range available for investment in UAE such as bonds, stocks, mutual funds, cash, and real estate. In the market, different areas respond in a different manner to the same event. If you have invested in different types of investment in UAE, your one instrument may take a hit but the other investment vehicle can help in offsetting that loss.

There are a few factors to consider during the course as investors in UAE:

  • Risk Objective: Your risk objective can be different from the time when your goal was to build wealth. It could be that capital preservation is becoming more important than the risk that comes along with an aggressive investment in UAE.
  • Risk-Return Tradeoff: This states that the higher the risk you take, the higher will be your potential returns. You should be aware of your appetite for risk, and then understand how to properly balance your investments in order to achieve proper returns.
  • Liquidity: Liquidity is defined by how easily and quickly an asset can be converted into cash. It is important to keep the liquidity of your investment in UAE in mind.

Invest in New Options

Ideally, you should continue to build wealth even if you are rich. You should make your money earn for you instead of you earning the money. You should look out for options to invest in and build the wealth you have.

Make Your Money Last

You should aim to live on your income and not on the liquidation of any of your assets. You should avoid spending the liquidity of your assets on items that do not retain value or are just a mere “want” for you. This is not a good way to make your wealth last.

Make a Budget

You should always live on a budget, no matter how wealthy you are. This is because of two simple reasons:

  1. A budget helps you avoid the possibility of developing the “bottomless pit” mindset. This is when you think to have an infinite supply of money. In such a mindset, you are likely to burn through your money and lose it. There are better chances of you to preserve your wealth if you maintain a budget.
  2. A budget will force you to itemize your spending. It also helps in practicing financial discipline with your hard-earned income.

Avoid Temptations

You should not be tempted to show off your wealth to anyone by spending it on luxury items that do not retain or add any value to your investment portfolio. This hampers the chances of you preserving your wealth.

Preserve in a Fund

If you wish to preserve your funds for future generations, you can consider the option of a trust which ensures that your descendants get the money you wish to pass to them.

Part 2: Get Advice

It is good to take professional advice regarding the wealth you are holding. An expert will suggest you regarding how you can manage your wealth and preserve it. They can help you in proper management and planning for your finances along with helping you in setting financial goals to use your finances in a way that provides satisfaction.

Getting advice helps in reducing the stress and challenges one may face in dealing with recent changes around their investment in UAE.

Part 3: Develop the Right Frame of Mind

It is important to have the right mindset while you aim at preserving your wealth. You should always aim at keeping your emotions out of your goal for wealth preservation. One key rule to follow is not to get caught in the trend and maintain a financial mindset while evaluating an opportunity.