Want your money to grow? Think like UAE's rich

Wealth – everyone wants it, but few people actually know what to do to amass a fortune and stay there, guarding their money. There are a number of articles, tips, solicited and unsolicited advice on how to become rich and remain surrounded by all things that speak of money.

Of course one learns from his/her mistakes and life experiences but the easy way out is to watch, observe and learn from what the rich in the UAE have done to stay wealthy. The country has seen many people (entrepreneurs and businessmen) become very rich in a decade and there are many case stories that speak of how a young man ventured out in the country without a penny in his pocket and today owns a big chain of diversified businesses.

Becoming rich is definitely not an easy feat but what’s more difficult is to ensure you safeguard your money, invest it wisely and not let your net wealth dip despite the fluctuating market conditions.

To do so, the rich in the UAE consider three main investment considerations, which is very much at par with what the wealthy think across the world.

This has been revealed by a new global survey by a financial advisory organisation. The deVere Group survey polled more than 880 ultra-rich aged between 22 and 70 in the UAE, the UK, the US, Hong Kong, India, South Africa, Thailand and Indonesia.

Respondents were asked to rank the following in terms of importance when deciding on investments: risk level, tax considerations, the previous returns on the investment, the impact on the diversity of their portfolio, and the investment’s social responsibility credentials.

The survey findings reveal that those in their 50s to late 60s and those aged between 18 and 30 both ranked risk level, portfolio diversity and previous returns on the investment as the three most important factors when selecting investments.

In the middle – defined as those aged 30 to late 40s – prioritised portfolio diversity, risk level and tax considerations the important factors when putting their money to grow.

This age-group gave more weight to tax considerations than social responsibility of investments, the reverse of what the youngest lot believes in.

“Of course investors of all generations are seeking investment funds that offer the very best strategic growth potential for their wealth.  But as the survey highlights, they prioritise selection factors differently to try and achieve broadly the same outcome,” says Nigel Green, founder and chief executive of deVere Group.

Interestingly, it would appear that the investment mindset of so-called youngest rich (18 and 30 years) is more aligned with that of the oldest (50s to late 60s) than those in the middle age group (30 to late 40s).

Many will find this striking as traditionally risk levels between these two groups would be thought to be diametrically opposed as the younger generation has considerably more time to reach their financial goals and would therefore, it would be typically assumed, have a higher appetite for risk.

This phenomenon could perhaps be explained by the global economic crash of 2008 which has impacted on the investment psychology of young people, explained Green.

The poll also reveals that besides sharing priorities and values when considering investments, the rich in the youngest and the oldest age group had similar levels of “active engagement” regarding their investment portfolio.

Both generations expressed a keen sense of involvement and possessed a good level of knowledge surrounding some of the external factors that could present potential strategic growth or risks to their investments.

The young rich’s consideration of ethical investing reflects a youthful idealism that may survive into middle age, but more hard-headed considerations are likely to take over.

“The fact that all three generations identify the need for a diverse portfolio, with attention paid to risk as much as to return, is evidence of growing financial literacy amongst savers and is to be welcomed,” the survey report reads.

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