Consider your financial priorities and set targets

If millennials have been getting it all wrong, then what should they be doing with their money?

The first thing, according to Julian Vydelingum, a chartered financial planner at AES International in Dubai, is to not lose sight of their longer-term goals.

If you are saving to buy property and you need the cash in the next two or three years, building up cash is the right thing to do he says. To invest in equity markets you need a five-year timeline to ride out any market upheaval.

“If you are prepared to ride out the volatility and your goal is to stay for five years, then the equity markets is a way to do that. Obviously dripping money into it, rather than piling money in one lump sum, you do smooth out some of those ups and downs,” Mr Vydelingum says.

The property market can also be volatile and the investment subject to service fees.

“There are additional costs that might eat into your yield and you don’t know who will be renting your apartment. You might have a good tenant or you might have a bad tenant. You might not be able to get a tenant so you might have an asset not earning you anything,” he adds.

Gold and other commodities also play a part in a diversified portfolio. “The difficulty with gold is it reacts to any bit of market news and you need to think about whether you are buying gold to store it somewhere. You need to factor in the purchase costs and the selling costs. It was more expensive in the 1970s than it is now. But it is a useful diversifier if you have a big enough portfolio,” adds Mr Vydelingum.

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