Do investors and expats that save money in the UAE really know their risk tolerance?

Are investors or expats that are saving in the UAE ready to lose money?Warren Buffet once said, “If you don’t have the stomach to see 50% of your stocks going down, than you should not invest in the stock market”.

I believe that many investors/expats that are saving their money in the UAE are not aware of their own risk tolerance, maybe because advisers have not asked them properly about it or they have been given a nicer picture of reality. In my profession I come across many expats in the UAE that already have an investment portfolio and they are not happy with the performance. It is important to note that this is not always the markets fault. Sometimes they have been put in the wrong funds and have been advised the wrong things. When somebody says that something is going to happen for sure and that person has no doubt about the possibility that it will not go that way then this can mean two things. 1) This person has inside information and is sharing it with you (which is very unlikely and illegal). 2) This person is not informing you correctly, because nobody can predict the future.

What we can do is look at the past history, fundamentals, economic data and gather information from sources. Based on these factors and mass psychology you can understand which investment is more likely to give you a better return. Too many people have been talked in to investments without themselves understanding why they should invest in to a certain fund. At the end of the day it’s the investor’s money that is at stake. Therefore I strongly believe that everybody must understand at least to a certain level what they are investing in, why they are investing in it and which factors and fundamentals are making it a more attractive option than other options in the market.



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