How to become a millionaire in just 7 years

By Eudore R. Chand

DUBAI 15 November 2018: The average expat will spend just seven years in the UAE. While this might not seem very long, with financial discipline, committed saving plans and smart investment products it is enough time to realise their dreams of becoming a millionaire.

By investing a portion of their salary for 84 pay days – seven years – and then leaving the money to grow for a set period of time, expats can secure theirs and their family’s long-term financial future and make themselves a million, whether it be in dirhams, dollars or pounds.

“Seven years is plenty of time to convert hard-earned savings into potential millions,” said Hamzah Shalchi, Regional Director of financial planning firm Guardian Wealth Management.

Solid Savings

“Far too many people move to the UAE with the intention of making the most of their higher earnings and building up a solid savings but end up doing the opposite. It is therefore of the utmost importance that expats take full advantage of the opportunities that are available to them to build a solid financial future.”

The Key

The key to reaching a million in savings and hopefully achieving financial independence is compound interest – the concept of saving for less time but earning higher amounts thanks to a build-up of interest as a result of choosing products that understand the benefit of considered risk. As the great Albert Einstein once said, compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.

Hamzah Shalchi

The idea of allowing your savings pots to earn interest, which in turn earns interest, is key to getting the most out of your money and can be a serious savings-booster for UAE expats if used correctly.

An example of the benefits of saving earlier but for less time using compound interest can be seen below:

  • By saving for 5,000 for 7 years, and leaving the money to grow over 13 years with an average growth rate of 5% per annum, you can ultimately make a million.
  • A 40-year-old UAE expat who starts saving Dh5,000 a month for 20 years at an interest rate of 5% would have Dh2,000,000 in savings by the time they reach 60.

Alternatively:

  • A 30-year-old who saves Dh5,000 from their monthly salary for 10 years at 5% interest, but then leaves their savings to mature at 5% interest until the age of 60 would have earned Dh2,100,000.

“Compound interest is a smart way for expats to put money away before reaping the rewards later in life,” said Hamzah.