DUBAI: Seven years are enough for an ordinary expat in Dubai to become a millionaire, provided he or she follows right habits and a bit of a discipline in spending money.
“One of the many things that lead people to choose an expatriate lifestyle is the potential to enhance their financial status. Seven years is the average amount of time an international worker stays in the Middle East and is plenty of time to convert hard-earned savings into potential millions,” Emirates 24/7 quoted Hamzah Shalchi, regional manager of Guardian Wealth Management as saying.
Experts at the wealth management company reportedly say the key is compound interest.
Of course it isn’t a new or a novel idea – compound was described as the ‘eighth wonder of the world’ by none other than Albert Einstein, who had said, “Those who understand it, earn it; those who don’t, pay it.”
The experts at this financial firm advocate Einstein’s philosophy – save for less time but earn more due to the build-up of interest. This is what they see a ‘serious potential money-earner for UAE expats if used correctly,’ said the Dubai-based news portal.
“Far too many people leave at the end of their stay without taking advantage of the opportunities available to build a solid financial future. Compound interest is one of the biggest advantages of having a savings plan and is a smart way for expats to put money away whilst they are benefiting from a tax-free salary – then reaping the rewards later on in life,” Hamzah reportedly said.
The idea of allowing savings amounts to earn interest, which in turn earns interest, is the key to getting the most out of them, they reportedly recommend.
For instance, if a 40-year-old saver was to save Dh5,000 a month for 10 years at an interest rate of 5 percent, he or she would have saved Dhs630,000 by the time they were 50 years-old, the report pointed out.
However, if a 30-year-old saver was to save Dh5,000 a month for seven years at 5 percent interest, but left the amount to mature at 6 percent interest until the age of 50, he or she would have earned Dh1,000,000. Therefore, it is clear to see the benefits of saving earlier but for less time using the power of compound interest, reported Emirates 24/7.
Controlling the urge to spend is as important as putting your money to grow. Expats who are used to living a lavish life must curb the urge to splurge without giving a second thought, Hamzah advised.