When we picture retirement, many of us dream of enjoying our hard-earned freedom, traveling, or even just relaxing. Yet, there is a cloud of financial uncertainty that looms over this dream for many. With only a few decades of working life, preparing for several decades of retirement becomes a challenge.

When your retirement is not on track
If you find your retirement savings falling short, you’re not alone. According to CNBC Select, nearly half (45%) of baby boomers fear outliving their savings. Alarmingly, the bulk of individuals in this demographic has mustered just around $144K for their retirement years. Even more telling, only 40% have managed to amass a slightly more respectable sum of $250K or above. The prevailing numbers reveal a stark reality; many are underprepared for their golden years.

But it’s not just the baby boomers; younger generations are also at risk of facing similar challenges. The question that beckons: how can you, regardless of your current age, avoid this pitfall?

Your next step? Start investing, not just saving
Never underestimate the power of investing, Forbes highlights that three out of four millionaires credit their financial success to consistent, long-term investing. Surprisingly, only 31% of these millionaires had an average annual income of $100K throughout their careers. The message here? You don’t need a six-figure salary to build wealth; you need dedication and strategy.

While the idea of investing may seem vast and intimidating, focusing on proven asset classes can simplify your journey. Welcome to the world of real estate! A domain where tangible assets meet immense growth potential.

Unlocking a world of wealth: Dubai real estate
Real estate in global hubs is more than just bricks and mortar; it’s the key to unparalleled wealth. And among these hubs, Dubai sparkles with a unique allure. So, why should Dubai be on top of your investment list over conventional options like high-yield savings accounts?

  1. Stellar Capital Appreciation: While today’s savings accounts boast relatively high-interest rates, they don’t offer the same potential for growth through capital appreciation. Moreover, many experts anticipate these rates to dip in the short to medium term. Meanwhile, Dubai’s real estate not only offers stable annual returns via rental yields, often outpacing high-interest savings accounts but also capitalizes primarily on capital appreciation. As highlighted in our previous Stake newsletters, this combined strength of dependable yields and promising growth in the market makes Dubai real estate a compelling choice. When evaluating risk-adjusted returns, Dubai’s real estate clearly stands out as a superior alternative to mere interest-bearing accounts, making it an essential asset for any retirement investment portfolio.
  2. Tax Advantages: Tax implications play a crucial role in shaping an investment decision. According to Arrived, a USA-based company, even though both real estate and high-yield savings accounts bring returns, real estate takes the lead. In the U.S., appreciation from real estate investments typically faces a tax rate of about 15%. In sharp contrast, interest from high-yield savings accounts can be taxed at staggering rates of up to 45% for top-tier earners. However, here’s the silver lining for those in Dubai: you don’t have to fret about these tax nuances, as Dubai enjoys a tax-free status.

Feeling inspired but unsure where to begin? Start with these simple steps to set your investment strategy in motion:

  1. Open an investment account: Platforms like Stake offer you a good start in the Dubai real estate realm.
  2. Diversify your portfolio: Take fractional ownership for an example, and embrace the safety of diversification within the same asset class by owning fractions of various prime properties in Dubai. 
  3. Integrate investing into your daily life: A modest start of $500 (approx AED 1,800) monthly can set the ball rolling. 
  4. Patience is key: Remember, the key to building wealth is to hold on to your investment for the long haul in order to benefit from capital appreciation.

Benchmarking Your Strategy

 While the above steps can guide you to embark on your investment journey, it’s also essential to regularly benchmark the accumulation of your savings from investments. T.RowePrice, a renowned global investment management firm, has provided some age and annual salary-based benchmarks, so take the following as a rule of thumb:

More insights on your retirement planning strategy

According to Jacob Lund Fisker’s book “Early Retirement Extreme,” the essence of early retirement revolves around making your money work for you. By diligently utilizing a significant portion of your income toward wise investing, you aim to let the returns from these investments handle your annual post-retirement expenses.

Ending Note: Retirement is a phase of life where financial stability is paramount. But reaching this stability doesn’t necessarily require a top-tier income. Through consistent investing, effective planning, and diversifying into asset classes like real estate, a comfortable retirement is attainable. Remember, the key is not to delay and start today.

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