Investors looking to build up their wealth have five major options available to them today, one of which is now widely considered a Ponzi scheme in financial circles despite undoubtedly making some wealthy on the way up.
We are talking about stocks, bonds, real estate, precious metals and cryptocurrencies.
Interestingly, in a recent Gallup poll, 34 per cent of Americans considered real estate as the best wealth-creating vehicle; tellingly, in the home of Wall Street, stocks only scored 26 per cent.
Gold and bonds scored 17 and 16 per cent respectively; Bitcoin was not included in the survey, though anecdotal evidence suggests it is still very popular with the younger demographic.
My last column considered why the world's most successful investor, Warren Buffett, considers Bitcoin and the cryptocurrencies to be 'rat poison'.
I won’t dwell on this Ponzi scheme phenomenon again, except to point out that this bubble burst last December and since then has been an epic destroyer of capital.
It works on the ‘greater fool’ theory of investors. Thus it now has to attract another even larger number of fools to buy it than last December for its price to spike again. How likely is that?
But if Bitcoin shows investors anything, it is that being an early investor in the next major speculation can be highly profitable so long as your luck lasts.
Despite a massive crash Bitcoin is still up more than 300 per cent in the past 12 months, by comparison to around 5 per cent for gold, minus 2 per cent for bonds, nothing much on stocks and about 6 per cent for US residential real estate.
US property looks a safe, if not exciting performer. If you add on around 4 per cent in rental yield then that’s a total gain of 10 per cent, which is very comfortable with US inflation running at around two per cent.
Of course real estate does have its bad times too. Remember the great recession a decade ago? House price falls then were big enough to leave those with large mortgages in negative equity, with homes worth less than the debt entailed on them.
However, for many people it is precisely the ability to borrow against a house purchase that makes it such a great investment.
Usually with shares you only invest what you have earned. Indeed it is not generally advised to do otherwise. But with a house you can gear-up your investment so that, if all goes well, you are immediately earning a return on a much higher initial investment amount.
It’s not rocket science. You invest more when you buy real estate, so the return is also higher (and the losses if house prices drop).
Also in many countries residential property markets are well established. You have an infrastructure of estate agents, lawyers and bankers to help and guide you.
But maintaining an independent mind is always advisable as you pay fees for all this assistance, and keeping those fees down is a key to maximising the return.
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Read more:
Should UAE residents focus on retirement or paying down their mortgage?
What makes Dubai's real estate market of today so different from 2008
How to bulletproof your portfolio against the new bear market
Using the catch-up theory for investment in global property
________
That said expat investors face another set of choices. You do not automatically have to buy in the country of your birth. If you are a UAE resident you could buy here or, if you are more adventurous, in another country, say where you like to spend the summer perhaps.
It can be a complicated decision. But keep a clear eye on the total return-on-investment (rental yield plus house price inflation) and make a realistic forward projection.
For example, will the UK deliver the best total returns for investors over the next five years, or the UAE?
Many observers consider UK property to be over-valued and note its weak economy only grew by 0.1 per cent in the first quarter. They reckon the political chaos and uncertainty surrounding Brexit is so far not reflected in lower house price levels. Rental yields are also weak.
By comparison the UAE residential sector has prices down by say a quarter due to the recent oil price collapse. But oil prices are now in a recovery phase. The US abandoning the Iran nuclear deal is just the latest pointer to even higher oil prices in the near future.
As oil prices rise, so the amount of money in circulation in the UAE expands as trade and commerce will take off in this regional business hub. More expats will be needed. They have to live somewhere. So rents and house prices will rise because housing units cannot be built fast enough.
Changes to UAE residency rules for certain categories of expatriate announced on Sunday should also help stimulate demand for local real estate, though they still fall short of permanent residency.
Of course, you might do better elsewhere. In Eastern Europe property prices are low by comparison to Western Europe, and yet GDP and salary growth is very much higher.
Take Budapest. The Hungarian economy is growing by four per cent per annum, average salaries are up 15 per cent year-on-year, and Budapest house prices by 8 per cent. Rental prices have been slow to shift upwards. But hotel room rates are 30 to 40 per cent higher than two years ago. Rents should follow.
Expat property investors ought to also think carefully about potential currency gains, even if these are very hard to predict. For instance, the dollar-linked dirham looks to be in a long-term decline against the euro, so that could deliver an addition bonus to investors in euro-linked Budapest.
Even after the dollar’s bounce back this year, that’s added about 10 per cent to returns on real estate in Budapest for dirham investors over the past two years. That could be enough to make Budapest a better bet for global property investors than the UAE, if this trend continues.
But what of other major investment classes this summer? Stocks have turned bearish after a very long rally. Bonds face further interest rate rises that will automatically depress their value.
That leaves precious metals. Could it be that the further demise of the cryptocurrency bubble drives speculative money back into this asset class, and that it delivers the best overall performance in 2018?
Not much sign of it yet. But with commodity prices like oil on the up, this would not be such a surprise.
Peter Cooper has been writing about finance in the Gulf for more than 20 years
MATCH INFO
Europa League final
Who: Marseille v Atletico Madrid
Where: Parc OL, Lyon, France
When: Wednesday, 10.45pm kick off (UAE)
TV: BeIN Sports
Honeymoonish
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Sri Lanka squad for tri-nation series
Angelo Mathews (c), Upul Tharanga, Danushka Gunathilaka, Kusal Mendis, Dinesh Chandimal, Kusal Janith Perera, Thisara Perera, Asela Gunaratne, Niroshan Dickwella, Suranga Lakmal, Nuwan Pradeep, Dushmantha Chameera, Shehan Madushanka, Akila Dananjaya, Lakshan Sandakan and Wanidu Hasaranga
A%20QUIET%20PLACE
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RESULTS FOR STAGE 4
Stage 4 Dubai to Hatta, 197 km, Road race.
Overall leader Primoz Roglic SLO (Team Jumbo - Visma)
Stage winners: 1. Caleb Ewan AUS (Lotto - Soudal) 2. Matteo Moschetti ITA (Trek - Segafredo) 3. Primoz Roglic SLO (Team Jumbo - Visma)
Types of fraud
Phishing: Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
Smishing: The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
Vishing: The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
SIM swap: Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
Identity theft: Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
Prize scams: Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
* Nada El Sawy
TOURNAMENT INFO
Fixtures
Sunday January 5 - Oman v UAE
Monday January 6 - UAE v Namibia
Wednesday January 8 - Oman v Namibia
Thursday January 9 - Oman v UAE
Saturday January 11 - UAE v Namibia
Sunday January 12 – Oman v Namibia
UAE squad
Ahmed Raza (captain), Rohan Mustafa, Mohammed Usman, CP Rizwan, Waheed Ahmed, Zawar Farid, Darius D’Silva, Karthik Meiyappan, Jonathan Figy, Vriitya Aravind, Zahoor Khan, Junaid Siddique, Basil Hameed, Chirag Suri
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Juventus v Napoli, Sunday, 10.45pm (UAE)
Match on Bein Sports
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
About Proto21
Date started: May 2018
Founder: Pir Arkam
Based: Dubai
Sector: Additive manufacturing (aka, 3D printing)
Staff: 18
Funding: Invested, supported and partnered by Joseph Group
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
More from Neighbourhood Watch
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
THREE
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Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
