Inflation is a hot topic around the globe that has politicians, economists and investors worried.
Inflation can be driven when there’s too much money for the number of goods in a country (demand inflation) or when there are supply shortages of a good or service (supply-side drive) such as the increase in natural gas prices following the start of the Russia-Ukraine conflict in 2022.
If you’ve saved up money for a particular investment or retirement (if not, it’s high time you do), you must also be wary of inflation. Not even safer investments like bank savings are immune to these conditions.
How inflation affects your savings
Inflation dents the amount of money in your savings account. For example, if you have Dh1,000 ($272) in your regular savings account at a 1 per cent interest rate, you'll have Dh1,010 in your account the following year.
But in a 2 per cent inflationary environment, you'd need Dh1,020 to retain the same purchasing or “buying power”.
The global headline inflation is 6.8 per cent in 2023, according to the International Monetary Fund. In the Emirates, the UAE Central Bank has projected a fall in inflation to 3.2 per cent by the end of 2023, from 4.8 per cent last year. It expects a further drop to 2.8 per cent by the end of 2024.
So, even if your bank is paying interest, the inflation erodes that increase and makes you poorer. This is exactly why savings accounts are insufficient to tackle an inflationary environment.
Opt for high-interest savings accounts
The easiest way to beat the inflationary environment is to open a high-interest savings account.
Also known as high-yield savings accounts, these offer 10 to 20 times higher interest rates than regular accounts, such as your current account. This higher interest can help you beat inflation and will help you retain buying power.
The interest rate in UAE banks’ savings accounts ranges from 0.2 per cent per annum to 2.4 per cent per year at the maximum. You can earn as much as 4.6 per cent at some banks.
With the increase in UAE Central Bank interest rates, many local and international banks are now offering attractive short-term fixed deposits.
Add government bonds to your portfolio
Bonds are attractive investment options during inflationary periods. Moreover, you can profit from the interest or “coupon” the bonds pay annually or bi-annually.
But bear in mind that not all bonds protect against inflation, especially long-term ones.
Treasury Inflation-Protected Securities (Tips) are a good investment option during inflation. These are indexed to inflation and protect investors from losing purchasing power.
The annual return potential of US and European government bonds is more than it has been in decades.
For example, both US and UK government bonds with a maturity of one to two years are paying in more than 5 per cent per annum (higher than interest rates on a savings account) and European bonds are paying above 4 per cent.
These are excellent options for very low-risk assets in the current climate.
With the central bank interest rates continuing to rise, fixed-income securities remain a good investment option. This includes government bonds, high-yield bonds, Tips and asset-backed securities.
Diversify to stock markets
Diversification is crucial to succeeding with your portfolio. And no asset beats stocks in the long run when properly managed.
The safest way to get into stock investing is through indexes. There are many stock market indexes such as the S&P 500, Dow Jones Industrial Average and Nasdaq Composite, among others.
These indexes are created by top-performing companies. By investing in these indexes, you can participate in the performance of the companies within that index.
Companies provide both dividends to shareholders and the opportunity for price appreciation, all of which are reflected in the index value.
Top-performing companies are affected by inflationary pressures. But because of their strong market fundamentals, they keep generating profits.
For example, the S&P 500’s annual return rate was 28.7 per cent in 2021, while inflation was 4.7 per cent. In 2023 so far, it has returned 17.19 per cent.
Similarly, the Dow and Nasdaq have a rate of return rate of 6.54 per cent and 32.66 per cent, respectively, in 2023.
Explore alternative investments
Several asset classes prove to be inflation-friendly investment options. Commodities like gold and oil top the list.
Since commodity prices tend to rise during inflation, investors can benefit from essential commodities such as petroleum oil and edible oil.
Inflation around the world – in pictures
Real estate is also a good investment option during inflation. Consider investing in public and private real estate investment trusts in the UAE.
Currently, you have two public REITs in Dubai: Emirates REIT and Nasdaq Dubai. The former has a portfolio market value of $734 million and is continually growing.
Damian Hitchen is chief executive of Saxo Bank Mena
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
The Travel Diaries of Albert Einstein The Far East, Palestine, and Spain, 1922 – 1923
Editor Ze’ev Rosenkranz
Princeton
UAE currency: the story behind the money in your pockets
Cinco in numbers
Dh3.7 million
The estimated cost of Victoria Swarovski’s gem-encrusted Michael Cinco wedding gown
46
The number, in kilograms, that Swarovski’s wedding gown weighed.
1,000
The hours it took to create Cinco’s vermillion petal gown, as seen in his atelier [note, is the one he’s playing with in the corner of a room]
50
How many looks Cinco has created in a new collection to celebrate Ballet Philippines’ 50th birthday
3,000
The hours needed to create the butterfly gown worn by Aishwarya Rai to the 2018 Cannes Film Festival.
1.1 million
The number of followers that Michael Cinco’s Instagram account has garnered.
COMPANY%20PROFILE
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The line up
Friday: Giggs, Sho Madjozi and Masego
Saturday: Nas, Lion Bbae, Roxanne Shante and DaniLeigh
Sole DXB runs from December 6 to 8 at Dubai Design District. Weekend pass is Dh295 while a one day pass is Dh195. Tickets are available from www.soledxb.com
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Could%20We%20Be%20More
%3Cp%3EArtist%3A%20Kokoroko%3Cbr%3ELabel%3A%20Brownswood%20Recordings%3Cbr%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
HAJJAN
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heading
Iran has sent five planeloads of food to Qatar, which is suffering shortages amid a regional blockade.
A number of nations, including Iran's major rival Saudi Arabia, last week cut ties with Qatar, accusing it of funding terrorism, charges it denies.
The land border with Saudi Arabia, through which 40% of Qatar's food comes, has been closed.
Meanwhile, mediators Kuwait said that Qatar was ready to listen to the "qualms" of its neighbours.
Profile
Name: Carzaty
Founders: Marwan Chaar and Hassan Jaffar
Launched: 2017
Employees: 22
Based: Dubai and Muscat
Sector: Automobile retail
Funding to date: $5.5 million
UAE currency: the story behind the money in your pockets
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
What is Bitcoin?
Bitcoin is the most popular virtual currency in the world. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency. A Bitcoin itself is essentially a line of computer code. It's signed digitally when it goes from one owner to another. There are sustainability concerns around the cryptocurrency, which stem from the process of "mining" that is central to its existence.
The "miners" use computers to make complex calculations that verify transactions in Bitcoin. This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
WHY%20AAYAN%20IS%20'PERFECT%20EXAMPLE'
%3Cp%3EDavid%20White%20might%20be%20new%20to%20the%20country%2C%20but%20he%20has%20clearly%20already%20built%20up%20an%20affinity%20with%20the%20place.%3Cbr%3E%3Cbr%3EAfter%20the%20UAE%20shocked%20Pakistan%20in%20the%20semi-final%20of%20the%20Under%2019%20Asia%20Cup%20last%20month%2C%20White%20was%20hugged%20on%20the%20field%20by%20Aayan%20Khan%2C%20the%20team%E2%80%99s%20captain.%3Cbr%3E%3Cbr%3EWhite%20suggests%20that%20was%20more%20a%20sign%20of%20Aayan%E2%80%99s%20amiability%20than%20anything%20else.%20But%20he%20believes%20the%20young%20all-rounder%2C%20who%20was%20part%20of%20the%20winning%20Gulf%20Giants%20team%20last%20year%2C%20is%20just%20the%20sort%20of%20player%20the%20country%20should%20be%20seeking%20to%20produce%20via%20the%20ILT20.%3Cbr%3E%3Cbr%3E%E2%80%9CHe%20is%20a%20delightful%20young%20man%2C%E2%80%9D%20White%20said.%20%E2%80%9CHe%20played%20in%20the%20competition%20last%20year%20at%2017%2C%20and%20look%20at%20his%20development%20from%20there%20till%20now%2C%20and%20where%20he%20is%20representing%20the%20UAE.%3Cbr%3E%3Cbr%3E%E2%80%9CHe%20was%20influential%20in%20the%20U19%20team%20which%20beat%20Pakistan.%20He%20is%20the%20perfect%20example%20of%20what%20we%20are%20all%20trying%20to%20achieve%20here.%3Cbr%3E%3Cbr%3E%E2%80%9CIt%20is%20about%20the%20development%20of%20players%20who%20are%20going%20to%20represent%20the%20UAE%20and%20go%20on%20to%20help%20make%20UAE%20a%20force%20in%20world%20cricket.%E2%80%9D%C2%A0%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Brief scores:
Day 1
Toss: South Africa, field first
Pakistan (1st innings) 177: Sarfraz 56, Masood 44; Olivier 4-48
South Africa (1st innings) 123-2: Markram 78; Masood 1-4
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UAE currency: the story behind the money in your pockets
Shubh Mangal Saavdhan
Directed by: RS Prasanna
Starring: Ayushmann Khurrana, Bhumi Pednekar
T20 World Cup Qualifier
October 18 – November 2
Opening fixtures
Friday, October 18
ICC Academy: 10am, Scotland v Singapore, 2.10pm, Netherlands v Kenya
Zayed Cricket Stadium: 2.10pm, Hong Kong v Ireland, 7.30pm, Oman v UAE
UAE squad
Ahmed Raza (captain), Rohan Mustafa, Ashfaq Ahmed, Rameez Shahzad, Darius D’Silva, Mohammed Usman, Mohammed Boota, Zawar Farid, Ghulam Shabber, Junaid Siddique, Sultan Ahmed, Imran Haider, Waheed Ahmed, Chirag Suri, Zahoor Khan
Players out: Mohammed Naveed, Shaiman Anwar, Qadeer Ahmed
Players in: Junaid Siddique, Darius D’Silva, Waheed Ahmed
MATCH INFO
Qalandars 109-3 (10ovs)
Salt 30, Malan 24, Trego 23, Jayasuriya 2-14
Bangla Tigers (9.4ovs)
Fletcher 52, Rossouw 31
Bangla Tigers win by six wickets
