"I won AED100,000 in a raffle draw. Can you please advise what is the best way to double this money?" 

Firstly, congratulations this must have been a very pleasant surprise!  The next question of course is what are you going to do with it? Most people will have a whole host of ideas that they would spend a windfall like this on, such as cars and holidays, but your question raises another interesting use for the money.

Unfortunately there is no simple answer to the question. If there was we would all be rich, and able to double our wealth whenever we wanted to! As with most questions that are raised in this column, there are number of factors to consider. The main two factors are the investors’ attitude to risk and the timescale that they wish to invest over.

The time scale is usually a relatively easy question to answer, in that most investors will know how long they wish to invest for, or they may have a goal for when the money will be needed, for example children’s education, or retirement planning.

The attitude to risk part is often much harder to quantify, and often evokes very different responses from clients.  You need to try and understand what you are looking to achieve with your investments before you can really answer this.  It is possible for one investor to have many different attitudes to risk, depending on their objectives.  In this case as you have won the money you may be prepared to go for higher risk investments, whereas you may have a more conservative attitude with your own money that you have worked hard for.
 
It is generally accepted that low risk equals safer but lower returns, and conversely higher risk is normally associated with higher potential returns. You therefore need to establish the correct balance of investments to suit your individual objectives.  Attitude to risk can be expressed on a scale of 1 to 10, to try and put a number on the level of risk that you are happy to take.  Number 1 represents very secure investments such as bank accounts and 10 representing higher risk investments such as direct equities, options and very exotic funds.

If you were a gambling man, and you were in a country where you could, then there is the potential to double your money very quickly, but what is probably more likely is that you could also lose all of it very easily. This is obviously a very high risk approach, and is not sound financial planning.

The example above highlights two key factors; how much risk do you want to take with the money and how quickly do you wish to achieve your goal? It is potentially possible to double your money very quickly, but also the chance to lose it equally as quickly.

Equally it is possible that you can achieve your requirements by taking very little risk, but over a much longer time period. At the moment some US dollar bank saving accounts are offering 5% interest rates, so the money would double in around 13 years without taking any risk with the capital. This could be speeded up if you moved the money into another currency – currently sterling accounts are offering up to 7% interest, which would double the money in 10 years.

If you look further afield at other countries, 8% is available in New Zealand, 9% in India, 15.5% in Iceland and even 16.75% in Turkey. However with the increased interest rate comes increased risk. The currency could well fluctuate and effectively remove any gains made when you convert the funds back to Dirhams. Also it may well be difficult to open an account in the first place, if you are not resident or the country has rules about foreign investment. Again these factors increase the risk that your money will be exposed to.

Moving on to higher risk products, there are a huge number of funds that can be selected. These can invest into almost anything you wish, but the more specialised the fund, generally the higher the risk. The timescale for doubling your money will not be fixed – it could happen within 3 years if the performance that some funds in areas such as China, India and the emerging markets in general, along with commodities have generated.

However the performance of all these funds is not guaranteed, and unfortunately they can fall in value as well as rise, so you need to be fully aware and accept this fact.

There are also many alternative investments that you could consider. For example fine wines have produced very good returns, as have classic cars, works of art and antiquities. But all of these are very specialised investments, and you need to know exactly what you are buying, or you can very quickly come unstuck. There can also be extra costs with these investments that need to be taken into account, or your returns maybe significantly reduced.

Property has arguably produced the best returns over the past few years, especially in this region. As with the alternative investments mentioned above, you have to do your research and need to chose the right development, and buy for the right price to make sure that you are able to double your money. There are also many extra costs that need to be considered before buying a property here, or indeed anywhere else in the world.

I hope that this has given you some ideas and explanations as to what options are available to you. As always we at Acuma welcome your questions and enquiries directly so please do not hesitate to contact us if you would like to discuss this or any other issue in more detail.