How to save money from inflation in a crisis: deposit or real estate in Dubai?

How to save money from inflation in a crisis: deposit or real estate in Dubai?

07.20.2022 (updated 01.20.2023)

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  • How to save money from inflation in a crisis: deposit or real estate in Dubai?

During the economic crisis, investors are looking for different ways to keep their funds from depreciating. Today, many countries are experiencing economic difficulties caused by the political situation in the world.

In the current conditions, investment analysts recommend various ways of where to invest money so as not to lose it later. Let’s see which of the options really make sense to consider, and which may cause problems.


What can happen to savings: what to invest money in so as not to lose?

Many are wondering how to save money during the financial crisis of 2022. Many currencies are weakening, therefore keeping your savings may not be a good strategy. Therefore, it is worth considering  investment options.

Investment Disadvantages

One of the ways of financial protection is considered to be investments in securities and playing on the stock exchange. Traders claim that by being able to anticipate ups and downs and navigate the market, one can profit from stock manipulations. For those who are new to the exchange business, professional brokers are always ready to help.

However, even the most experienced broker is not immune from failure. For instance, in 2022 after drastic changes in the political arena, the indices of all the world’s largest exchanges collapsed, including Nasdaq, FTSE, SNP, SSE, etc., and many companies went bankrupt.

China, a landmark for IPOs of large enterprises, has tightened the regulatory policy in recent years, forcing companies to cancel their listings. Back in 2020, due to political repression, the largest IPO in the history of fintech Ant Group, a subsidiary of Alibaba Group, did not take place. The total amount of applications amounted to $3 trillion. The reason for the cancellation was the tightening of control over the IT market of the Middle Kingdom, as well as critical statements about the Government of the country of the co-founder of Alibaba Group, business magnate Jack Ma. Since then, the company has lost about $620 billion of market value.

The main problem of investing in stocks and securities is the unpredictability of the result. Not a single enterprise, even the largest and most in demand, is immune from collapse. Thus, there is no guarantee that your money is relatively safe – it may turn out that it will be too difficult to make up for the losses. It is impossible not to expose yourself to risks when investing, so in order to avoid risks, it is worth avoiding investing in stocks.

Bank deposits: will savings accounts, deposits and the purchase of precious metals and jewelry help against inflation?

Some people find it safe to keep money in a bank account. This solution is reasonable since receiving interests interest from the deposit will help to avoid depreciation and increase savings. But this solution has some drawbacks.

For example, some lenders today offer clients to purchase gold and thus “freeze” their deposit. On the one hand, gold is an effective “defensive” asset that many analysts recommend during periods of instability. In the long run, it allows you not to lose money and even increase it, as the price of the precious metal is constantly growing. On the other hand, there is the question of marketing. Banks undertake to take back from you the coins or bars that you purchase from them. But, firstly, the bank may go bankrupt, and secondly, the buying rate is not equal to the selling rate. In other words, if you decide to return your money in a short time, you will lose on the difference in the indices. Investments in less obvious assets, such as jewelry, cannot be considered stable: they can be difficult to sell later, and the price is likely to be significantly lower than the purchase price.

New business in times of crisis

For some, an effective solution for solving financial problems is the opening of their own business. It seems to novice businesspeople that right now is the time for change and serious action, and the market needs something new that will definitely be successful. Analysts do not share this optimism. They say periods of crisis, with rare exceptions, do not contribute to the prosperity of companies. There are several reasons for that.

Firstly, there is a sterilization of the money supply, that is, the Central Bank withdraws part of the money from the economy. This is necessary to support credit institutions from which customers have withdrawn their savings. Thus, some social sectors receive less assistance.

Secondly, during a crisis, purchasing power decreases: the income of many families decreases and there are fewer free funds.

Thirdly, the demand for goods is also weakening – the uncertainty in the present and the vague prospects for the future keep people from additional spending. In this situation, it becomes difficult even for existing businesses to survive, and newly opened ones may not survive even thanks to the novelty effect.

Should you invest your savings in real estate in Dubai now?

Amid worries about how to protect themselves from inflation, some investors are turning to such an option as buying a home. When asked what is good about investing in real estate, experts answer: “Everything”.

Even during the most massive economic shocks, nothing will happen to housing. It may fall in price for a while due to market volatility, but then its value will grow. In addition, it is a reliable asset that can be used for its intended purpose, that is, as living space.

With a successful and reasonable choice of real estate, it will not only not lose in price, but will also rise in price. To buy investment property, you should work with professionals who will help you make the right choice.

Property can be resold at any time. Unlike gold, securities and other investment options, apartments and houses will retain their liquidity and will always be in demand.

This asset can also bring passive income as you can rent out your property. You can spend the funds received, pay a mortgage with them or invest in another similar project.

One of the most reliable ways to invest in residential properties is investment in property in Dubai. The emirate has shown a considerable rise, with 84,196 transactions worth almost AED 300 billion ($81.6 billion), which is 65% and 71% more than in 2021. Getting income from investing in real estate in Dubai is very simple – the property can be rented out both for short-term and long-term lease. In the first case, the profit will be 11‒13% per year, in the second – 5‒8%.

The advantages of buying real estate in Dubai are obvious: inflation, which is growing considerably in many countries, has not exceeded 3% in the emirate since 2016. In addition, the growth in real estate prices last year alone amounted to 43.2%.

Furthermore, the emirate adapts to new global trends and allows you to purchase housing even in these difficult times: for example, you can buy a property with cryptocurrency. Many local developers have already been working with bitcoin and other digital currencies, which makes it possible to purchase both ready-made and under-construction housing on convenient terms.

Another argument in favor of buying a home in Dubai is the rising cost of energy. The UAE, while maintaining political neutrality, remains an oil exporting country. In other words, a person who lives in the Emirates or has real estate here has every chance of getting rich, because this country will become even richer, which will affect the quality of life of all its citizens and residents.

AX CAPITAL real estate agency in Dubai will guide through the options that will help you save your money during inflation and bring profit. We will explain in detail how you can invest in property and help you choose the most suitable option. Get in touch with us today for more information.

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