Managing one's finances as an expat is hard work - the easy part is showing up to work and collecting a tax-free salary.
Counting my blessings in the UAE
It is my first Christmas in the UAE and we're celebrating with a modest little tree and a few gifts wrapped in newspaper.
It's far from a lavish affair as we continue on our self-imposed austerity plan, funnelling as much cash as possible into our savings without skipping any meals or living like hermits. In fact, despite all of my hand-wringing and teeth-gnashing about meeting our savings targets, we managed to accomplish our other lifestyle goal - to travel extensively - quite nicely. Between my wife and I, we visited eight different countries this year (Beirut and Cape Town were my favourite destinations, in case you are planning a trip of your own).
It's hard to believe it has been a year since my wife and I landed in Abu Dhabi on New Year's Eve to start our UAE adventure.
My recollection is that we were driven from the airport to the Tourist Club area in a non- metered cab by a driver who charged us close to Dh100 for the pleasure. Rookie mistake, obviously.
As it turned out, that would not be my last financial flub, but I still must classify my first year in the Emirates as an unqualified success. We managed to sock away what by my standards is a decent amount of money, even after incurring many of the start-up costs that are endemic to any newcomer - buying a car, a gym membership and the obligatory haul from Ikea, to name a few.
Despite the macro-economic gloom around the rest of the world, the UAE remains an enviable place to earn and save money. Housing costs have long been the biggest complaint among new residents. But rents in Dubai are rock-bottom at the moment, and there is every indication that Abu Dhabi's are falling sharply as well. When our lease comes up for renewal in February, we are hoping to get 25 per cent shaved off the annual rent. If we don't, we will be looking elsewhere.
Inflation is a concern, with the latest figures showing a 3 per cent rise for the first 11 months of the year, but the cost of most goods and services remain relatively affordable, provided you can stay out of the Mercedes dealerships and the luxury shops in the malls.
The local stock markets have been abysmal, and one of the big stories of the new year will be whether the three bourses merge into one to create a more attractive investment climate for international funds. But most local investors are diversified in western markets, which have actually performed quite well even as their broader economies sputter. The FTSE 100 index is ahead more than 14 per cent as we approach the final week of the year and the S&P 500 in the US is up more than 13 per cent.
Even the gold bugs, of which there is a fairly robust population in these parts, fared quite well, as gold prices reached a series of all-time highs.
Writing a personal finance column during this past year has forced me to pay closer attention to all of these things, and also own up to my mistakes. The fact is that managing one's finances as an expat is hard work. The easy part is showing up to work and collecting a tax-free salary. Figuring out how to spend it wisely and invest the rest is a much bigger challenge.
I would say the primary lesson I've learnt from my year in the personal-finance trenches is how much I still have to learn. Even after spending most of each working day absorbed in financial issues, I am impressed by how often I stumble upon something I do not fully understand.
There was one example just this week. As I was doing my end-of-year accounting, I decided to check in on the individual retirement account I created in the US before I moved to Abu Dhabi. That money is the savings from my previous job, which I rolled into a tax-advantaged account with every intention of keeping my hands off it and letting it grow for the next couple of decades.
When I logged on to my account online to see how the returns were this year, I found that the balance was broken up into the "total account balance" and a separate "cash available to trade".
This confused me. I did not want to have a chunk of money sitting in cash when it could be invested. I was fairly certain I did not set up the account that way, so I reached out to my financial adviser here in the UAE, who is American, to see if there was an easy explanation. He did not have one.
I called the mutual fund company that manages my account to find out what was going on, and after waiting on hold for 27 minutes, I was told that the account was actually set up that way from the outset.
I explained that it did not make any sense that I would allocate a percentage of my investments to cash. The representative told me it was "probably a misunderstanding when the application was filled out. It happens all the time."
Not exactly comforting, and a good reminder that while the advice to set up your long-term investments and then forget about them is sound, it should not be taken literally.The upshot is that I now have a few thousands dollars to play with. Anybody got a good stock tip? That would be a wonderful Christmas gift.