Indians living in UAE – diversifying your investment portfolio

09 Aug 2019

Will Indian expats in the UAE be able to maintain their current lifestyle when they retire or return home to India?

Pension regulations in India, allow for overseas citizens of India to open a NPS account and contribute towards a pension. This is good news for Indians working and living in  the UAE. The NPS pension also allows you to choose from 8 pension fund providers and decide on what to invest in.

These options are limited though. The funds available tend to be local funds, and you are only allowed to invest 50 % of your contributions into equities. If the Indian economy takes a dive, then so will your pension. 

Although this is a good first step in retirement planning, it is essential to have a private pension plan in place that will be enough to sustain your way of life when you retire. 

It is important to have a globally diversified portfolio that will spread your risk over multiple economic areas, so if one economy performs badly, then the unaffected economies can carry the loss. This is the best choice for a long term investment.

The ‘financial dictionary’ defines Global/International diversity as: The attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns. 

By spreading your investment over other global economic markets as well, you are decreasing your risk. For example, if you are invested in three markets and one doesn’t do so well, then you have 1/3 loss as opposed to investing in 7 markets where your loss is only1/7.

‘don’t carry all your eggs in one basket’

Benefits
•    Your risk is mitigated as it is spread out over more markets

•    More stability for your investment in the long term – Short term unstable economic events in certain markets are buffered by other unaffected markets in your portfolio

Other diversification options also include investing in property and cryptocurrencies. These alternative investment platforms should form part of a well-balanced and diversified portfolio.

deVere Acuma offers an international investment strategy that aims to provide clients with a comprehensive picture of the global economy and regular updates on current stock market and fixed income trends, in order to assist investors in making informed investment decisions.

Chat to your deVere Acuma adviser about creating a diversified financial portfolio that will sustain your lifestyle when you retire. [email protected]