'We gave our finances a makeover during the Covid-19 lockdown'

Four UAE residents document how they used extra time at home to overhaul their savings and investment strategies

Abu Dhabi, United Arab Emirates, June 21, 2020.   
  Nikki Fernando.  Article on personal finance strategy during the pandemic.
Victor Besa  / The National
Section:  NA
Reporter:  David Dunn
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With the Covid-19 crisis bringing uncertainty to the global economy, many of us have been galvanised to ponder our financial well-being.

During the stay-at-home directives over the past couple of months in the UAE, some residents used the extra time to review their money outlook, priorities and strategy.

This is the perfect time to be even more active and buy.

From saving more frequently to feeding portfolios or downgrading risk, questions raised by the pandemic motivated families and individuals to review their financial frameworks to accommodate difficult futures or bridge potential shortfalls.

Here, four residents document how they overhauled their finances in the middle of the pandemic:

'I boosted my shares portfolio'

Abu Dhabi resident Nikki Fernando has been focusing on generating passive income since the Covid-19 crisis began. This included the Filipina leasing out her Manila property and earning commission from developer referrals.

But Ms Fernando’s biggest area of personal financial activity has been in the stock markets, which have been steadily recovering from their March meltdown when the scale of the health crisis spooked investors.

“I’ve never been more active in stock trading and investing, capitalising on the drop in stock prices,” says Ms Fernando, 31, who works in marketing in the leisure and travel industry.

“This is the perfect time to be even more active and buy. We should let money work for us, and not the other way around."

Ms Fernando, who lives with her sister, already held stocks, but during the pandemic-induced slump she increased her holdings by 350 per cent on the Philippines Stock Exchange through the Col Financial platform.

“I've never been as serious as I am now, since the pandemic, focusing more towards conglomerates, FMCG and real estate," she says. "I've always seen myself as a risk-taker that grabs opportunities when presented – creating multiple streams of income is the way for me to retire young and go home to enjoy more time with my family."

As well as looking after her own financial security, Ms Fernando has also been setting aside part of her salary for family members in need, especially those currently without pay.

Ammar Malhi of SmartCrowd says investor activity on the platform between March 1 and May 31 increased as those with funds demonstrated similar confidence. Courtesy SmartCrowd
Ammar Malhi of SmartCrowd says investor activity on the platform between March 1 and May 31 increased as those with funds demonstrated similar confidence. Courtesy SmartCrowd

'I invested in four properties'

Committing capital to property purchases during a health crisis may sound brave, but Egyptian Amr Ahmed decided to buy into Dubai real estate through the online property crowdfunding portal SmartCrowd.

The pharmacist, who lives in Mirdif with his wife and three daughters, aged one to 11, says he invested in real estate this way partly because it was easy.

“I wanted to invest in real estate while minimising potential risk and you don’t have to spend lots to start,” says Mr Ahmed, who felt reassured after reading testimonials and confirming SmartCrowd was regulated by the Dubai International Financial Centre.

The start-up identifies properties, mostly rented apartments on sale at a discount, and buys them once the required crowdfunding target is met. Minimum individual investment is usually about Dh5,000, plus arrangement costs.

“Opportunities and wealth are created during times of crisis and real estate is one of the established investment methods,” says Mr Ahmed.

The 39-year-old says he was attracted to the concept because he did not "need to invest a lot" and  it allowed him to generate passive income from rentals.

"Before the pandemic I was not thinking about investment the way I think about it now, I was not so serious," he says.

“Because of what happened I revisited the way I look at money and started applying some of the financial knowledge I have, particularly the concept of diversification and letting your money work for you.”

Mr Ahmed, a Dubai resident since 2007, has invested in four opportunities in the past three months, offered at less than market price.

“I believe once the rebound happens my invested capital will grow by gaining profit at the same percentage and more, in addition to passive income from property rental.”

Ammar Malhi, SmartCrowd’s head of client relations, says investor activity on the platform between March 1 and May 31 increased as those with funds demonstrated similar confidence.

SmartCrowd offered five properties during that period. Average investment by all new investors between then and May 31 was Dh9,094, anticipating net rental yields above 7 per cent, plus future property price lifts.

One apartment was funded in 24 hours, Mr Malhi says.

“When it comes to active investors, by the end of May SmartCrowd’s reinvestment rate – the number of investors with two or more investments – was at 63 per cent,” he adds. “Investment activity appeared to slow in April, but picked right back up in May, marking the best-month-to-date for the start-up in terms of raised capital.”

DUBAI, UNITED ARAB EMIRATES. 17 JUNE 2020. Valeri Browning with one of the murals that she has painted. (Photo: Antonie Robertson/The National) Journalist: David Dunn. Section: Business.
Valeri Browning says the pandemic was the kick she needed to finally draw up a will. Antonie Robertson/The National

'We finally sorted our wills'

Despite planning to arrange wills for some time, it took a pandemic to spur Valeri Browning and her husband Chris into action.

“We first began to arrange our mirror will on March 16,” says Ms Browning, 49, an architect turned artist.

“It was something we were aware we needed to do for a very long time, but just kept putting it off. Unfortunately it took a pandemic to wake us up and realise we needed to get our ‘house’ in order.”

Ms Browning, originally from Northern Ireland, and English architect Chris, 47, moved to Dubai seven years ago. Three years ago, the couple bought their Mira Community home where they live with their children aged 11 and 15.

Ms Browning, who owns Paint Pixie, a small business providing murals for residential and commercial properties and schools, says the wills process was “very simple and painless” and recommends expatriates start as soon as possible.

“With all the uncertainty and anxiety in the world at the moment that we have no control of, this at least is something we can control and has helped alleviate that terrible ‘what if’ feeling,” she adds.

Keren Bobker, an independent financial adviser at Holborn Assets, says within days of UAE movement restrictions commencing in March, she experienced an increase in enquiries regarding wills.

“These should be financial priorities for most anyway, but sometimes it takes a particular event for people to take action as it feels much more relevant,” says Ms Bobker.

“Some people found themselves with more time so decided to deal with some life planning they had been putting off.”

Costs vary depending on will type, but Ms Bobker says in most cases the fee for either a single will, or mirror wills for a husband and wife, is Dh3,150, including VAT.

“There is a perception that wills are all about assets but they are as much about guardianship for minor children and making matters easier for those you leave behind," says Ms Bobker.

“Unless you make a will, you have no say in how your assets are distributed and in many countries, including the UAE, a husband or wife is not an automatic beneficiary.”

'I opened an offshore savings account'

Some residents favour a risk-averse strategy, seeking to safely store cash while earning interest.

Laura Anne, a Briton who works in the hotel industry, fulfilled a new year resolution to open an offshore account – and was glad she did as Covid-19 landed.

“The pandemic definitely made me rethink my ‘Yolo’ approach to life and has reinforced the importance of having six months living expenses to fall back on should hard times like these arrive,” says the 33-year-old.

“I’ve always been quite carefree with money, but this situation has made me rethink my splurges in the Dubai Mall, as well as the frequency in which I eat and drink out.”

Based in the UAE since March 2018, Ms Anne lives in City Walk and says she wants to use the account to save for a house in the UK. She opened an offshore savings account just before the pandemic buckled world economies.

“My main motivation was trying to be more responsible and save for a second property back home,” she says, describing the account opening process as “incredibly simple".

She also wanted to be able to "access US dollars with ease, depending on where I end up next".