Managing Wealth Is Tough Enough, Uncertainty Makes It Harder

Managing wealth is a constant challenge. We work hard every day to build a safety net that lets us live comfortably; even when the unexpected happens. We save money to cover our needs and wants, whether it’s to explore the world, for our children’s education or our own retirement, so that when tough times come, our savings truly work for us.

‍

Cash Isn’t King

Holding cash might feel safe, but over time its value erodes. With most central banks aiming for around a 2% annual inflation rate, $100,000 kept in cash today would only have the buying power of about $66,760 in 20 years. In other words, keeping cash under your mattress (or in a bank) means you’re slowly losing value, and your wealth is certainly eroding.

‍

Exploring Better Alternatives

If cash isn’t the answer, what are your options? Here are three straightforward choices:

‍

1. Bonds and Sukuk
   Instead of holding onto cash, you can lend your money to governments or companies. In return, you’ll receive regular payouts. Whether you choose traditional bonds or Sukuk (Islamic financial certificates), these investments offer guaranteed returns that usually beat inflation by locking your money in for a set period.
   ‍
2. Commodities
   Gold has long been seen as a haven during unstable times. However, gold doesn’t produce extra income or help your wealth grow on its own. There's no guarantee that a certain quantity of gold today will sufficiently cover future medical expenses or help you achieve financial independence later. Experts generally suggest keeping gold to no more than about 5% of your total wealth, using it as a cushion rather than your main asset.
   ‍
3. Equities
   Owning equities means owning a stake in a company. It means you share in the company’s success; from the products it makes to the services it provides. When you invest in companies, your future returns aren't in USD, GBP, EUR or AED but in tangible goods and services. Owning a wheat farm provides income in wheat; owning real estate offers rental income; owning Google provides advertising revenue. Globally, wealth holders allocate most of their wealth to equities precisely because owning businesses is akin to owning the goods and services themselves. Why just own eggs when you can own the entire farm?
   ‍

Navigating Uncertain Times

Recent shifts like Trump’s tariffs and moves toward deglobalization have added extra uncertainty to the markets. These events remind us that market ups and downs are normal. When times are uncertain, it helps to remember that you’re planning for decades, not days. By staying calm, focusing on the fundamentals, and maintaining a diversified mix of investments, you’re better prepared to weather any storm.

‍

Final Thoughts

Building wealth isn’t about chasing the latest trend or reacting to every news headline. It’s about steady, thoughtful planning; making sure your money grows in value over time. Whether you choose bonds, a bit of gold, or a broad range of equities, the key is to invest for the long haul and let your savings work for you, even when uncertainty knocks at the door.

‍