UAE interest rates hiked: 6 ways residents can save more during inflation

Financial gurus in the UAE believe inflation is on the rise due to several ongoing global crisis. Experts are urging residents to consider how they handle their finances in a bid to help them balance out rising prices

“One cannot simply ignore the corrosive impact of rising prices on investments. Therefore, we always must be on the lookout for investments whose returns are more than the prevailing inflation rate,” said Rupert J Connor, Partner, Abacus Financial Consultants.

Here's some advice from experts on how to beat inflation.

1. Investments

Investments have been a priority for individuals based on their income. But if you are investing currently, you should be careful. Overlook the accomplishments and returns of any company, product or services, advise experts.

“When looking at investments it is always important to focus on what is the real return or the return net of inflation,” explained Conor.

He also advised residents to invest in equities over the long-term. “It is one of the best ways to stay ahead of inflation. However, equity investments usually carry a time horizon of at least 5 years, sometimes even longer,” he said.

“The compounding impact of such investments over long periods will help you beat inflation by a comfortable margin. Asset allocation is critical, and a portfolio should be globally diversified. This will make a portfolio more stable and less vulnerable to domestic volatility and inflation, added Conor.

Vijay Valecha, Chief Investment Officer, Century Financial said that making investments in the financial markets will help individuals cope by with inflation. “Several asset classes perform well in inflationary environments. Often, Tangible assets, like real estate and commodities, have historically been seen as inflation hedges,”

He also pointed out that families can even consult a financial consultant for right investments, they will double-check the plan and stay focused.

2. Budgeting

Experts also believe that budgeting should be on priority list at this time. If you haven’t budgeted for a long time, then starting up now will save one from a financial impact of inflation.

An Associated Press report mentioned about getting rid of streaming service subscriptions during the pandemic, it also suggested dining out to be limited

3. Put a spending limit on your card

Interest rate hikes from central banks will result in consumers eventually paying more on any revolving debt. Now that rates have been hiked, changes to credit card interest rates typically follow, usually within a billing cycle or two.

“A great tip is to set a limit to how much you can spend on your credit cards. This stops you from overspending and encourages you to reassess your daily expenditures in advance and reduce the interests paid on your loans,” said Valecha.

4. Don’t put off big purchases

• Are you planning to invest in UAE? Follow these tips