Investing in the stock market has long been a popular way to make money. But with the fall of share prices around the world it is not the profitable business it once was.
This week has seen all major markets take another hit – the Dow Jones closed down 2.4 per cent on Wednesday, oil prices dropped by $6 a barrel and the Bank of England was forced to make a statement after London traders spread rumours that one of Britain’s biggest banks HBOS is in trouble.
With the value of assets going down so suddenly, investors are losing money on an almost daily basis. But a new trend is emerging where people are thinking outside the traditional investment box in a bid to increase the size of their bank balance.
Firas Mallah, head of the Middle East office of Dexia Asset Management, which specialises in alternative funds, says playing on uncertainty can be particularly lucrative, but you have to be in it for the long haul. “Markets are volatile at the moment but alternative investment opportunities can be profitable in the long term. Just be aware that you have to be in it for around three to five years to see dividends,” he says.
From gold to hotel rooms and even renewable energy, there are a number of ways where, if you are prepared to invest, you could enjoy a prosperous retirement.
Precious metals were the best performing asset class in 2006 with returns of 28 per cent, according to a study by Clerical Medical Assetwatch and analysts predict the same will happen in 2008. The price of gold has also passed the $1,000 an ounce mark and even though this has had a negative effect on sales, it is good news for those who own it.
Other commodities, especially those in the agriculture industry, are also doing well.
Craig Holding from Accuma, a Dubai-based wealth management company, says: “I would probably invest in commodities now if I was going to put my money anywhere.”
Others believe it is important to think about how long you plan to retain the stocks. If you want to make a short-term gain they may not be the best option. But if you plan to ride it out, buying now could be profitable.
However, as with all stocks, Gundi Royle, the Managing Director, Investment Banking, The National Investor (TNI), says they can be unpredictable. “Investors need to ask themselves if they are not too late to invest. A good way to play the sector is through ETFs [exchange traded funds], which are cheap to purchase,” she says. Log on to www.dfm.ae for more information.
The prominence of the art scene in Dubai was sealed recently when Art Dubai, one of the largest collections of local and international works, went on show. But art is not just to be shown in galleries, it is also a good investment and with the opening of Christie’s and Bonham’s it is becoming easier to buy.
“It has been proven that over the past 50 years, good quality art has appreciated, but don’t buy something you don’t like,” says Alison Collins, the co-owner of the Majlis Gallery. One way to maximise returns on paintings and sculptures is to buy the work of up-and-coming artists.
Middle Eastern art has a long tradition with investors, according to Bijan Khezri, the CEO and President of the Artist Pension Fund. Khezri said art can appreciate by as much as 10 to 15 per cent a year.
Collins says work by Paul Wadsworth and calligraphy by Khalid Al Saai are good investments. “Long-term commitment to artwork and the artist is the best way of optimising returns over five to 10 years,” he says.
While the UAE’s green energy initiatives are still emerging, there are plenty of opportunities in other parts of the world. Ethical investments are growing as more people look for ways to do their bit to help the planet and reduce carbon emissions. One way to get involved in the practice is through Energy4All, which was formed in the United Kingdom in 2002 to expand the number of co-operative wind farms. It is planning another one in Scotland this summer for which investment opportunities will begin in the next few months on its website at www.energy4all.co.uk.
Spokesperson Helen Jackson says investments must be between £250 (Dh1,750) and £20,000 but they do come with favourable returns. “You have to wait five years before trading can actively commence.
“The first co-op has been running for 11 years and has proved a safe investment with returns of nine per cent this year,” said the spokesperson of Energy4All.
Buying collectables can take different forms; while some things you might want to keep yourself, other times you can buy investments that will be looked after for you. Bidding for licence plates has become a new pastime for UAE investors.
Although the single and double-digit plates have been sold for millions it could prove to be a good bet for the future. “Collectable funds are a very interesting idea, but are usually limited in terms of volume. However there is a bidding war for licence plates at the moment so buying them is interesting from an investor point of view,” explains Firas Mallah, head of the Middle East office of Dexia Asset Management. Other collectables include classic cars, which can be profitable particularly as models become more and more rare. But maintaining them with original parts does not come cheap. “Protecting these assets is a big issue and you need to be a specialist before you invest,” advises Mallah. The next licence plate auction is taking place in Abu Dhabi today, visit www.emiratesauction.ae.
Hotel rooms and timeshares
The next few months will see the emergence of timeshares in the UAE, which allow multiple parties to buy a share of a property they can use at select times of the year. They have been particularly popular in Europe for many decades and now the UAE Government has approved a plan, which will see Dubailand become a major player in the market. Industry executives foresee initial investments offering lucrative returns and getting in early should ensure maximum benefits.
However, if you want something more luxurious, which you use during specific weeks of the year, investing in a hotel room might be the ideal alternative. Barr Al Jissah Residences, within the grounds of the Shangri-La Hotel in Oman is one such development that has recently sold out. If you still want to get a foot on the property ladder through buy-to-let hotel rooms, the websites www.ownerhotel.com and www.guestinvest.com have deals to suit all budgets.