Start saving early and enjoy a relaxed retired life

It's never too late to save, but it is always better to start as early as possible, say analysts.

Research released by the Zurich Wealth Monitor revealed that while 45 per cent of middle-aged respondents in the UAE and 40 per cent in Bahrain have invested in retirement saving plans, the majority of people are still "over-optimistic" and "under-prepared" for their retirement.

The survey also revealed that more than half of the people interviewed do not foresee any change in their retirement plans due to the economic crisis.

However, analysts are optimistic that this will change as the current crisis will make more people realise the importance of better financial planning.

Nigel Watson, Sales and Marketing Director, Nexus, told Emirates Business: "For many UAE residents, this is their first experience with volatile markets.

"However, these conditions provide a strong stimulus to advocate advanced savings strategies and insurance policies."

KV Shamsudheen, Director, Barjeel Geojit Securities, said: "It's never too late to save, but it is always better to start early on in your life. The best time for you to save is when you are betweeen 25 and 35 years. However, if you have not done that, then start saving today if you want to be able to maintain your current lifestyle even after you retire.

"If you start saving late in life then you have to look for investment returns that will give you 15 per cent returns to meet your expenses for 15 to 20 years down the line, as you need to consider the inflation" he said.

He explained that the ideal investment portfolio should be divided into high-risk investments and low-risk investments, because of the risk-return characteristics of different assets.

Generally, the higher the potential returns, the more risk it represents. On the other hand, lower-risk investments provide lower returns but are generally more stable and dependable.

Shamsudheen said: "The younger you are, the more risk your portfolio can contain because you are able to ride out any downturns over time, but you should reduce your exposure to risky assets gradually as you grow older. Reducing your debt is always an important first step in beginning to save.

"It may be worth consolidating your debts into one source for which you may be able to get a lower rate of interest and/or even repayment over a longer period to enhance your immediate cash flow.

"If you really want to be able to tailor your lifestyle around the amount you want to save then it will be a good idea to put yourself on a budget and think about the expenses you have by breaking them down into three categories, ie. essential, wastage and optional. You will be surprised at what you discover." 

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