Managing your money during a financial crisis

Dear Tim, I have been trying to make sense of this financial crisis. I've got a little money put by that I have managed to save over the past few years I have been in the UAE. But times of crisis are times of opportunity, they say, so what should I be investing in at the moment? A friend of mine says hedge funds are good idea. Isn't that what got us into trouble in the first place? I don't really have a financial adviser at the moment but would appreciate some help on this front. – Sally


It sounds like you are a classic example of the many people unsure of what to do with their money.

So many fail to seek proper advice and rely on their mates for guidance. You would not tap your mates for legal or accounting advice would you? You see the experts. And this is my point with your money – see the experts, since we are likely to be the most important people you know. For example, if your spouse died you would not call your accountant – you would call your financial adviser to process your death claim. Likewise, if you contracted a serious illness, the event would not prompt you to call your lawyer. You would be thanking the time you met a financial adviser for the critical illness cover you have in place which provides financial support when you need it most.

What I'm trying to say is that you have no strategy for your money and taking free advice is not the best practice. It is important to build a strategy from the base up and ensure you consider all the issues to ensure the foundations of your financial plans stand the test of time.

Consider the results of a recent survey commissioned by Friends Provident International.

Respondents in the UAE view their most valuable financial asset as their property (39 per cent) followed by their income (33 per cent). The research shows a clear need for better understanding of insurance cover and how people can ensure they are financially secure if they were to develop a critical illness or worse. Seventy-one per cent of respondents thought it was likely or very likely that they were at risk of developing a critical illness, yet 49 per cent weren't covered. The survey demonstrated that some people are aware of the risks and 56 per cent knew at least one person who had developed a critical illness. Yet 42 per cent hadn't planned for their family's future if anything were to happen to prevent them earning an income, and had not considered the implications this may have on mortgage or other regular payments/liabilities. So, Sally, if you plan incorrectly or fail to protect what you hope to achieve, the ideas your friends provide could unravel fast. You need to have a full review and an appraisal of your financial profile so a concise plan can be put in place for you. If hedge funds and/or taking advantage of the market is for you, that review will bear this out.

- Tim Searle is CEO of Globaleye, a leader in financial services for the Middle East with more than 4,000 clients. Send your financial planning queries to: money@business24-7.ae

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