Investment Pot - James Swash
How Should an expat in the UAE invest their excess wealth?
A few weeks ago we wrote about how to structure yourself financially as an expat in the UAE and spoke of the ‘3 pots’ guide of your expenses pot, emergency pot and investment pot. Since then we wrote follow up articles specifically on the ‘Expenses Pot’ and how an expat in the UAE should manage their expenses, as well as on the ‘Emergency Pot’ and how an Expat should manage their Emergency Funds.
As described, there is no right of survivor-ship in the UAE meaning assets are not passed to the surviving spouse. Instead, assets of a deceased person will be distributed as per sharia law which favours male relatives.
Additionally, local accounts may be frozen if you are called to a court order or change employers.
As the final installment of this series, we will talk more about the “Investment Pot” specifically.
The Investment Pot
Invest everything above the 3 months expenses / 6 months expenses in the Emergency Pot
As we described in a previous Blog post, we recommend keeping a maximum amount of funds of 1.5 months of your expenses in your UAE current account due to the issues mentioned above. Additionally, as described in our last blog post, you should maintain an Emergency fund of either 3 month’s wages or 6 month’s expenses (whichever is higher). Anything over and above this should be invested to maximize your return on investment and ‘inflation proof’ your wealth.
Investment Options:
Expats may choose to invest their excess wealth in some of the below options:
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​Retirement Accounts/Savings Plans: If you’re eligible, consider contributing to retirement accounts that offer international options. Some countries have tax-advantaged retirement plans that can be beneficial
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Exchange-Traded Funds (ETFs): ETFs can provide exposure to global markets, including your home country and the country where you're working. They offer diversification and can be a good way to manage currency risk.
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Mutual Funds: Similar to ETFs, mutual funds can offer international diversification. Look for funds that invest globally or focus on emerging markets.
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Property Investment: Depending on where you’re living, investing in local and/or international real estate could be a lucrative option. Consider factors like property market trends and local and international regulations. The UK property market is particularly appealing for many investors at the moment. You can read my Blog on that topic.......
Do not save what is left after spending, but spend what is left after saving. - Warren Buffet
Things do be mindful of before investing........
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Consider Tax Implications: Be aware of the tax implications both in the country where you're working and your home country. Double taxation agreements between countries can impact your investment returns.
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Diversified Portfolios: To manage risk, consider a diversified investment strategy that spreads your investments across different asset classes and geographic regions.
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Regular Monitoring and Adjustment: Keep an eye on your investments and adjust as necessary based on market conditions and your personal financial situation.
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And most importantly, It’s always a good idea to do thorough research and seek professional advice tailored to your specific situation and goals.