9 Best Long-Term Investing Strategies That Work

9 best long-term investing strategies that work

Let’s face it – everyone would like to build an income sufficient enough to afford a comfortable lifestyle, not only for the present time but for retirement as well.  The UAE offers this possibility.  Besides being classed as one of the top “happiest” destinations in the world, the options for investment are vast and lucrative.  There is more value for money.  Now that residents are allowed to own property and invest in Dubai real estate, it has become one of the most popular investment strategies.  The new savings scheme for government employees, DEWS (DIFC Employees’ Workplace Savings) will help in accumulation of income.

However, before rushing into and availing of the first opportunity to invest in, research has to be conducted and the following should be carried out:

Investment Plan:  This is essential for both Emiratis and expats.  It should be formed taking into consideration the following:. 

  • Present situation:  An understanding of your financial situation matters.  Age (whether a younger person or someone nearing retirement) will define options and choices.   Create a list of existing assets such as land, property or shares as well as a debts list of mortgages payments, loans or credit cards.
  • Purpose of investing:  What is the aim of investing?  It could be financial independence, or to leave an inheritance to a family member or even looking ahead to start a business.
  • Create a goal once the purpose has been defined.  Quoting from an expert, “An objective can be a SMART goal – specific, measurable, achievable, relevant and time-bound.”
  • Budget:  Choose a suitable budget, based on income.  A fixed amount should be set aside every month for investments.  By doing this, you will decrease expenses which will result in more money saved.
  • Emergency Fund:   This is essential, to set aside money to provide for unforeseen and unexpected expenses.  These could be due to natural disasters, illness, unemployment or unplanned major maintenance repairs.   Without an emergency fund, possible liquidation of investments could occur.

Diversification of investments: 

Invest varying amounts in different types of investment options.  These however should be studied and then chosen.  This will assist in decreasing investment risk and increasing chances of a higher total yield.  Scattering investments will result in more liquidity.  Investment options are on the increase, so keep exploring possibilities for newer and better results.  While you should not avoid risks altogether, some stable investment should be made, ensuring a regular income.  

Risk factors are always there with investments.  The level of risk should be checked out to see if it is affordable.  Also you should consider, in advance, the feasibility of disposing of the investment.  High risk investments will probably result in higher returns.  However, risk assessment should be accurately carried out before investment.

Time frame:  Ascertain the length of time you have available and choose investment options within that timeline.  Look for the right time when lower interest rates on mortgages are offered or where property prices reduce due to oversupply.  For long term investments, decide and divide between higher risk and lower damage options.

Tax deductions:  This is an important strategy as many factors such as mortgage, interest payments on loans, insurance, repairs in the year and improvement expenses can be deducted from taxes payable.  Deductions are also permitted on credit card purchases of property.  This should be studied in detail.

Cash flow is necessary and should be ensured. Liquid cash should be available for down payments.  Also should ready cash to cover expenses for the following six months.

Market research is important to identify the areas which are increasing in popularity.  Buyers and rentals will flock to those areas, which will provide a great investment opportunity.  However, other facilities should also be checked out – the location, walk score, feasibility of essential commodities, crime rate, good schools, shopping and medical amenities.  

Network:  Building a network will enable interaction with experienced investors.  Property web portals and details on social media can be obtained.   Visits to property investment seminars could be useful.  Modern technology makes it so much easier to learn from experts in the industry.

Work with the right team:  Research should be conducted to obtain qualified professionals to ensure your investment works out satisfactorily.  The right property agents in Dubai, property inspector and appraiser, insurance agent and attorney will work together to see that rules and regulations are met.  It is imperative that certified professionals are obtained for these responsibilities.

Conclusion:  There are various methods of investment – REITs, stocks, bonds, mutual funds, gold, ETF (Exchange-traded funds) etc.  However, the real estate market is one of the most profitable for investments.  The income in the long term offers a favourable ROI (return on investment), whether it is to rent or re-sell.  Foreign nationals can purchase property on a freehold basis.  Usufruct (legal right to temporarily use property owned by someone else and to keep the profit made from it) rights up to 99 years can result in a good passive income investment.  The benefits of real estate investment in the UAE cannot be undermined.