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What is the best for savings or investments in the UAE?

I’m going to probably create some controversy with this answer, but hear me out. The “BEST” investment and savings method highly depends on your economic situation. If you are a High Net Worth Individual (HNWI), you have access to far more attractive and sophisticated products to invest in than the average Joe. Each situation is different, so let me start off by saying there is never a “best” investment - sure certain products in certain jurisdictions seem and may be more attractive than others. With that said, what seems to be a very attractive investment opportunity in the UAE currently?

At this point in time, I’d say it’s real estate. NOW HOLD UP - you might be saying “What the…real estate?! But the market is tanking in the UAE!…why would I want to invest in real estate?!”

The answer: to take advantages of the opportunities the masses don’t see. You may disagree with me, which is fair, but it’s hard to disagree or discredit one of the most successful investors of all time, warren buffet who has stated, “Be fearful when others are greedy and be greedy when others are fearful”.

If you haven’t heard, Berkshire Hathaway opened up a property investment arm recently in the capital - if that isn’t an indicator, I don’t know what is. Sure, a lot of people have seen the values of their properties halve over the last 4–5 years in Dubai (in particular) - however - realize that these losses are NOT REAL until an investor sells. Guess what - if your property went from 2m to 1m, and you chose not to sell, you haven’t lost 1m.

Right now is the BEST time to buy real estate in the UAE provided you can afford to set your investment aside and not touch it for a few years (and not get emotional with your investments). No one can say for sure if we’re at the “bottom”, but one thing’s for certain - we’re very very close. So what are the options available? Well there’s 3:

  1. Buy a property outright in cash, earn rental income, and sell at a higher price in a few years when the prices rise
  2. Put down a down payment for 25–35% of the property value and mortgage the rest (risky in these conditions). Same thing -offset the mortgage payments with rent and sell when the prices climb
  3. Invest nominal amounts using real estate crowdfunding and start earning rental income and sell at a higher price later (like option 1), but with a lot less capital.

In these market conditions, the easiest and perhaps lowest risk method is option 3 - you can invest whatever amount you want without putting yourself at risk of liquidity issues and still capitalize on current market conditions. The yields are pretty attractive too - anywhere between 6.5 - 8.5%. There will be a time when these property prices go up - and when they do, I assure you - you will be kicking yourself and asking why you didn’t invest especially when you had the option.

Happy investing!

Hassan

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