While women have the know-how to make sensible and profitable investment decisions, they are hesitant about doing so. These are the findings made in The National's Money section this week.
According to a Fidelity Investments study carried out last year, 72 per cent of women don’t feel confident about selecting financial investments on their own. With this in mind, here Dubai-based Maleeha Bengali, a portfolio manager & wealth management consultant and founder of MB Commodity Corner, a trading and investment newsletter, reveals how novice women investors can get started:
How do I know how much to invest?
If you need cash in the next two months, don’t invest it. If you have about one year, that’s a great start. You first need to ask yourself ‘how much liquid wealth do I have today?’ Outside of your daily expenses, how much of that liquid wealth is spare? How much are you willing to invest?
Now you ask yourself ‘how old am I?’ ‘When do I think I will retire?’ Say to yourself ‘I want to have x amount of dollars every month when I retire’, and then start working your way backwards to determine how much you would need to invest today and what sort of return you would need to generate each year to reach that amount for the future. It’s important that you have an expectancy of when you will need that nest egg back. What are your obligations? Once you answer these questions, you can then decide what product matches your investment needs.
Should I opt for a financial adviser, or go it alone?
It depends on your appetite for risk, your knowledge of markets and if you have the time to keep an eye on your investments every day. If you do invest it yourself, read a lot of information. You can put your money in index trackers by opening an ETF account with any broker, it’s easy. If you are starting out, don’t get involved in complicated markets with high levels of uncertainty, despite the potentially higher rate of return they offer, as the risk is very high when you’re investing in Japan, China or emerging markets. Instead, buy something liquid and tangible. But if you want something with 10 or 12 per cent returns then give your money to a financial adviser or wealth manager who has training in making investment decisions. For that you pay a fee, but you can get back good returns. Advisers provide peace of mind for people who do not have the financial acumen, and charge fees for that – it’s the same as how I go to fancy restaurants because I can’t cook. If you do go with a financial adviser, read the fine print, ask them how long your money is tied up for and exactly how much you will be paying in fees. If you’re making 10 per cent but you’re paying 5 per cent in fees, it’s a worthless product. Put them on the spot, and make them work for those fees.
What common misconceptions do women have when it comes to investing?
One of the biggest is the fear of investing in equities. Women are scared they will lose all their money. But in the last ten years, equities have outperformed the most, we are talking 113 per cent over that time period. It is also a lot more volatile though, and this is the biggest hurdle I face when I talk to women about equities. But not all equities are the same. Some have very high growth and high return and some are very safe with slow growth. It’s a great way to diversify your wealth. It’s not about what the investment looks like next month, but over the next few years.
The markets are rocky right now. How do I know what’s a safe investment?
My opinion is that you should not have any investments tied up right now, because there is currently so much opportunity out there. Do not lock your money away for five or 10 years because in the current low interest rate environment you will not be making the most out of your money investing in a product that provides very low interest rates. If you tie up to a product for the long term, currently you will get 2 per cent or 3 per cent. This is the time to keep your wealth liquid and open to various options available.
What about gold?
If you think that there is going to be a recession in the next five years, buy gold. I do not take that view. In my opinion it is an expensive asset class. At the moment interest rates are very low but the moment they go up, one does not own gold. The market is currently experiencing wild swings as investors debate between a recovery and a potential recession in the global economies. But the view is pretty much that there is robust global economic growth. This sort of volatility presents great opportunities for active portfolio managers like us who are able to maximise the returns of their portfolio by optimising on displacements like this in this market.
pf@thenational.ae
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Ways to control drones
Countries have been coming up with ways to restrict and monitor the use of non-commercial drones to keep them from trespassing on controlled areas such as airports.
"Drones vary in size and some can be as big as a small city car - so imagine the impact of one hitting an airplane. It's a huge risk, especially when commercial airliners are not designed to make or take sudden evasive manoeuvres like drones can" says Saj Ahmed, chief analyst at London-based StrategicAero Research.
New measures have now been taken to monitor drone activity, Geo-fencing technology is one.
It's a method designed to prevent drones from drifting into banned areas. The technology uses GPS location signals to stop its machines flying close to airports and other restricted zones.
The European commission has recently announced a blueprint to make drone use in low-level airspace safe, secure and environmentally friendly. This process is called “U-Space” – it covers altitudes of up to 150 metres. It is also noteworthy that that UK Civil Aviation Authority recommends drones to be flown at no higher than 400ft. “U-Space” technology will be governed by a system similar to air traffic control management, which will be automated using tools like geo-fencing.
The UAE has drawn serious measures to ensure users register their devices under strict new laws. Authorities have urged that users must obtain approval in advance before flying the drones, non registered drone use in Dubai will result in a fine of up to twenty thousand dirhams under a new resolution approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai.
Mr Ahmad suggest that "Hefty fines running into hundreds of thousands of dollars need to compensate for the cost of airport disruption and flight diversions to lengthy jail spells, confiscation of travel rights and use of drones for a lengthy period" must be enforced in order to reduce airport intrusion.
How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
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A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
