Limit your risk by investing in a savings plan

This week's patient, Virginia Cryle, is a 31-year-old Briton who works as a physiotherapist in Abu Dhabi. She earns a salary of Dh35,000 and her monthly outgoings are Dh20,000. With no dependents and savings of Dh150,000 in a UK bank account, she says: "I have a fair amount of money in my UK bank account. However, I don't want to transfer money here just now as the pound is so weak and it has been sitting losing interest in my current account for around a year. Could you give me a few options as to what I could do with it back in my home country? I am particularly interested in something that gives me a high return, but I can't perhaps touch for a year or two. The other option I have been recommended is to play the stock market, but I'm not sure how easy that is from here in the UAE. Can you also let me know about fees for these options?

Thank you for your question to the Money Doctor. You are obviously doing very well financially and have excess income of Dh15,000 per month.

The money you have in the UK is great testament to saving and some of it should be kept aside for emergencies. However, the bulk of the capital should be used to earn you a better return rather than kept dormant in your current account. You could invest in a fixed deposit for a number of years, generally the longer the term, the higher the interest paid. You must also complete HMRC form R105 to obtain your interest gross. Alternatively, you could invest in structured products that will give growth of the upside of the stock markets, but will limit your losses should the stock markets crash.

Playing the stock market can offer the potential for significant returns but also losses and it is especially volatile at the moment. Perhaps a better strategy may be to invest via mutual funds as you would benefit from the fund managers' expertise in each region and you can also have a wide spread of investments, which will limit your risk.

As you are young, depending on your goals, you could limit your risk by investing regularly in a savings plan. This way you would gain access to numerous funds and the expertise of fund managers for a relatively small amount of money and also benefit from the volatility in the markets by buying units at a low price when prices fall.

Fees are clearly greater than holding cash. The investment company does have set up charges and ongoing charges on a monthly basis of investing the money, but there is certainly the potential for greater growth over the long term rather than cash. A registered financial adviser could easily and quickly come up with the best plan for you.

n Independent Financial Advisor Gavin Smith analyses readers' portfolio for Emirates Business. He is Area Manager for consultants PIC, a member of the deVere Group of companies. Write to him at money@business24-7.ae

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