“Wide diversification is only required when an investor does not know what they are doing” – Warren Buffett.
From off-plan property to contractual saving schemes, hydro lettuce farms to renewable energy bonds; there are endless investment opportunities in Dubai. However, do things really need to be over complicated to generate a positive yield? We see more and more people speculating, hoping to find the next best investment, but hope is not a strategy.
A strategy should be tried and tested … something which can withstand the test of time not just the latest market craze. While investment opportunities in Dubai remain plentiful, sometimes choice can be an overload for private clients. While advisors are empowering clients with the option of choice, you also need to cut out the noise when making good financial decisions.
Albert Einstein reportedly said it. “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it.” Compound interest is a key factor for consideration for any investment opportunity, and not just in Dubai.
Compound growth is repeatedly undervalued and can be vital when considering not just the annual rate a client is looking for, but ultimately the underlying asset exposure.
Another key metric that a private client should be considering is the level of risk they want to take. Many advisors mislead clients to believe that high risk only means high return and low risk only means low return, however that is a common hyperbole.
While high risk can mean high return, the two are not completely synonymous. For example, buying central London real estate in 2009, would have seen double digit capital growth not including rental yield income. Is central London real estate a high-risk investment with high probability of capital loss?
When looking at any investment opportunity, whether it be in Dubai, the GCC or further afield, the key considerations are, but not limited to:-
There are many more, but arguably the most important consideration is can you sleep at night knowing that you have made the correct choice.