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The Fixed Income Dilemma

by Ammar Abulohom, CEO Dar Al Aqar|January 12, 2021

If you want to have a low-risk portfolio and keep your money at arm's length, then you're a safe investor, and you've done well by going with the safe option. But remember, you are living off those returns only, and there is no "fairy-tale story that goes on forever.

Today, as a fixed income conservative investor, you are faced with a dilemma: Accept hyper low-risk investments with restless low returns or stay-in cash. Neither your fixed deposits nor your good rated bonds are contributing to your expected minimal returns. Today, money is worth its weight minus inflation; whether you screen the interwebs for ideas or activate your bionic ear in gatherings, you will always question, "What's a safe bet with a reasonable return"?

You hear that being a property owner isn't as bad as you thought, and even with the current pressure on yields, it still pays off. Is Real Estate a low risk or high risk for us conservative investors? You wonder.

Well, it depends on the kind of person you are. If you're the fair-weather investor that buys to sell and the higher the profile, the bigger the premium, and when prices and rentals are dropping, the sky is falling for you. Then it is high risk.

But if you think that cycles are part of life and you're in it for the long run and on the long run, the property has always been in demand and paying off at various rates because the land is finite and will always be an asset, then it's a safe bet, and your grandfather was right, and so was his great grandfather before him.

Playing the market requires skill and patience; with experience, you can read and anticipate lifts and drops but, more importantly, know when to wait it out till it genuinely tops or bottoms out before buying or selling. Even the more experienced ones know when to keep those assets, grow one's portfolio of rentals for yields, and adjust rates accordingly to keep them in demand.

Then there are the Players. Now, these guys play in any weather. They know when to acquire quality, undervalued assets that already adjusted to their new rental yield; this requires skill and is not off the shelf for anyone nor your regular signs. Those are found off the market by sourcing motivated sellers.

Because of experience, extensive conditioning, ability to read opportunities, Real estate is less of an enigma for me. It is a tangible investment with good returns, better than the other options.


 
 

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