What’s the Best Way to Invest & Grow £65K?
Here are the top 3 options:
1. Do Nothing with it – Keep the money in a Savings Account
2. Traditional Investments – Put into Shares, Pension, ISA, various Funds, or even Gold.
3. Property – Buy an investment Property in Dubai.
Here we look at these 3 options in detail
1.Do Nothing – Keep in Savings Account
This in fact is the what most people are currently doing. This is mainly due to the ‘fear’ factor of doing anything else. The problem with this option is as follows:-
a. Low savings interest rates (average less than 0.2% in Europe and America) mean that your money will not grow much at all.
b. High inflation (average 6%+ in Europe and America) means that the buying power of your money reduces – so effectively it becomes less. After 5 years it has 70% of its value now.
NOTE: In some countries local Savings Interest Rates are high because the local currencies are depreciating – This is false Interest Rates as your money is still worth less at the end of the Interest Period.
Thus by simply keeping your money in a savings account you are effectively losing money. It will be worth around 70% of the present value – in 5 years.
– Put into Shares, Pensions funds, Commodities (Gold) or various investment or mutual Funds.
In the past these have been the recommended forms of “safe” investments – particularly in Europe and America. However, the outlook for the next few years is really uncertain. It is possible for some of these investments to yield negative returns and the chances of this happening are now much high – so you could end up losing money.
3.Buy a Property
Following the property price crash over the last 3 years, many believe that property prices are at low levels generally.
The biggest concerns with Dubai property purchases has been the risks associated with off-plan build, rental demand, and price crashes. However now these risks are at their lowest as shown below and there are good reasons to buy an investment property in Dubai.
If you do have the funds spare, and are willing to invest for 4 to 5 years, then is the is best form of investment for the following reasons:-
a. Property Pricing is LOW
Prices in Dubai fell by about 60% and reached rock bottom at end of last year – particularly on the smaller Studio and 1-Bed Properties. Prices have gone up a little but it is still possible to get a good Ready Studio apartment with around £65,000 of own funds. Prices have started to increase again and this entry price point is gradually rising every month. We expect these Studios to double in price in next 3 years.
b. Ready Property – Not Off-plan
Buyers are only buying ‘ready’ property in developed freehold areas. No one is buying the higher risk “off-plan” property. Buying ‘Ready’ property eliminates all of the risks of buying off-plan or ‘under construction’ property.
c. Rental Demand is High
Rental demand in certain low cost areas is good due to shortages of ready property. 10% rental yields are typical. Net rental yields of 8% after all costs (inc service charges) are typical in these selected areas. If you can get written rental guarantees, this makes it even less risky. In line with the recent property prices, rents have now also started to go up.
d. Running Costs are Low
Service charges and management fees are low – especially in low cost areas away from the seaside.
e. Future Growth Forecast is High
Growth forecasts are high with expected growth on Studios and 1-bedroom of 10% to 15% per year for the next 5 years due to the forecast shortage in such ‘ready’ properties. In view of the recent increases, this is very realistic and is likely to be exceeded.
f. Buying Process is More Secure
Companies that are experienced and familiar with the Dubai process can make the purchase process relatively risk free and easy by using UK based client accounts for making payments and easy transfer of property deeds to customers.
g. Taxes Possibly – NIL
There are no taxes in Dubai. Depending on your tax and domicile/residency status (you will need to check with your accountant), you may not need to pay tax on foreign income kept in Dubai.