American personal finance guru Suze Orman: 'At 38, it's not too late to save for retirement'

American personal finance guru Suze Orman has helped millions of women around the world take charge of their financial health and thrive. And now, for the first time, The New York Times bestselling author is turning her gaze towards the Middle East, as she advises Khaleej Times’ readers exclusively on how to manage their money in the smartest way possible. From tackling debts to making sound investments to saving for retirement, Orman will address your pressing financial queries.

I’m a 38-year-old Indian expat woman working in the UAE and have only recently begun my investment journey through mutual funds back home. I want to know what I can do to catch up on all the lost years because I’ve started my investment journey so late.
— Sheila Sharma

‭ Let me start by telling you the truth‭: ‬you are not late‭. ‬The only time you are truly late is when you never begin‭. ‬At 38‭, ‬you have something incredibly powerful still on your side‭: ‬time‭. ‬Not the 20‭ ‬or 30‭ ‬years you might have had if you started in your 20s‭, ‬but enough to build real wealth‭ ‬—‭ ‬if you make smart‭, ‬disciplined moves starting today‭.‬

‭Here’s the first thing you must do‭: ‬stop regretting lost years‭. ‬Regret does not compound‭. ‬Action does‭. ‬If you waste even a few years‭ ‬in self-doubt‭, ‬you’ll really be late‭. ‬So from this day forward‭, ‬you need to make investing a non-negotiable bill you pay yourself‭ ‬—‭ ‬before you pay for anything else‭.‬

‬Since you’ve already started with mutual funds back home in India‭, ‬that’s great‭. ‬Stick with broad-based‭, ‬diversified equity funds‭, ‬especially index funds or ETFs that track the Nifty 50‭ ‬or Sensex‭. ‬Don’t get caught up in chasing hot stocks or complicated products‭. ‬Slow and steady wins this race‭, ‬but you must commit to consistency‭.‬

‬The key now is intensity plus consistency‭. ‬You must contribute more aggressively than someone who started at 25‭. ‬If you can invest 30‭ ‬per cent of your monthly income‭, ‬do it‭. ‬If you can stretch to 40‭ ‬per cent‭, ‬even better‭. ‬Remember‭: ‬the money you put in over the next 10‭ ‬to 12‭ ‬years is what will have the longest runway to grow‭.‬

‭Second‭, ‬you must keep your money invested for the long term‭. ‬That means no touching it for short-term goals‭. ‬For emergencies‭, ‬you should build a separate fund‭ ‬—‭ ‬six to eight months of expenses‭ ‬—‭ ‬in cash or a high-yield savings account in the UAE‭. ‬That way you won’t sabotage your investments when life throws a curveball‭.‬

‭ ‬Third‭, ‬use your unique position as an expat wisely‭. ‬Many UAE employers don’t provide pensions the way other countries do‭. ‬That means your retirement security depends 100‭ ‬per cent on you‭. ‬If you plan to eventually return to India‭, ‬continue investing there in rupee-based assets‭. ‬But also consider diversifying globally‭ ‬—‭ ‬through international mutual funds or ETFs‭ ‬—‭ ‬so you are not entirely tied to one country’s economic fortunes‭.‬

‭Fourth‭, ‬don’t overlook protection‭. ‬Make sure you have adequate health insurance and‭, ‬if you have dependents‭, ‬term life insurance‭. ‬All the investing in the world won’t matter if one unexpected event wipes it away‭.‬

‭And finally‭, ‬courage‭. ‬Catching up is not only about money‭ ‬—‭ ‬it’s about mindset‭. ‬Too many women tell themselves‭, ‬“It’s too late for me‭.‬”‭ ‬No‭. ‬It is not too late‭. ‬What matters is that every dirham you invest today is your ticket to freedom tomorrow‭.‬

So here’s your action plan‭:‬

1‭. ‬Invest 30-40‭ ‬per cent of your income in long-term equity mutual funds‭.‬

2‭. ‬Build an emergency fund‭, ‬separate from investments‭.‬

3‭. ‬Diversify globally‭, ‬not just in India‭.‬

4‭. ‬Protect yourself with health and life insurance‭. ‬

5‭. ‬Stay the course‭ ‬—‭ ‬through ups and downs‭.‬

Do that‭, ‬and at 48‭, ‬you will look back and thank yourself for having the courage to start now‭.‬

Compounding‭: ‬The key to financial freedom

Let’s get one thing straight‭: ‬there is no magic percentage or formula that makes everyone rich‭. ‬Your situation is unique‭. ‬But there‭ ‬is one universal truth‭: ‬the earlier you start saving and investing‭, ‬the more powerful your results‭. ‬That’s the unstoppable force of compounding‭.‬

‬Here’s how it plays out‭. ‬At 25‭, ‬if you commit to saving just Dh367‭ ($‬100‭) ‬a month into a retirement account‭ ‬—‭ ‬tax-advantaged in the US‭, ‬or into your company pension or gratuity plan in the UAE or India‭ ‬—‭ ‬with an average annual return of 12‭ ‬per cent‭, ‬by 65‭ ‬you could be sitting on about Dh3.67‭ ‬million‭ ($‬1‭ ‬million‭).‬

‬Wait until 35‭ ‬to begin‭? ‬Same Dh367‭ ($‬100‭) ‬a month‭, ‬same 12‭ ‬per cent growth‭. ‬But by 65‭, ‬you’ll only have around Dh1.1‭ ‬million‭ ($‬300,000‭). ‬Ten years of hesitation just cost you Dh2.57‭ ‬million‭ ($‬700,000‭). ‬

‭‬That’s the price of waiting‭. ‬That’s the reward of starting now‭.‬

Debt‭: ‬The enemy of freedom

But listen closely‭: ‬compounding won’t save you if you’re buried in credit card debt‭. ‬Paying 18‭ ‬or 20‭ ‬per cent in interest while dreaming of 12‭ ‬per cent returns is financial madness‭. ‬Debt is bondage‭. ‬You will never have financial freedom if you are chained to high-interest payments‭. ‬Your first and most important step is to get out of debt‭. ‬Period‭.‬

Build your foundation

If you’re employed‭, ‬max out your workplace benefits first‭. ‬That could be your end-of-service gratuity in the UAE‭, ‬the National Pension‭ ‬Scheme in India‭, ‬or a 401‭(‬k‭) ‬in the US‭. ‬That’s your base of security‭. ‬Then‭, ‬and only then‭, ‬layer on additional investments‭.‬

Ask yourself a simple but powerful question‭: ‬What amount of money would make me feel secure‭? ‬Your answer is your target‭. ‬Once you have that clarity‭, ‬every dirham‭, ‬dollar‭, ‬or rupee you save has a purpose‭.‬

Where should you invest‭?‬

The opportunities are everywhere‭. ‬Bitcoin has come of age‭. ‬Gold remains a solid store of value‭. ‬The S&P 500‭ ‬—‭ ‬one of the most reliable long-term indexes in the world‭ ‬—‭ ‬has rewarded patient investors with strong average returns‭. ‬You can buy it through a low-cost fund or ETF and use dollar-cost averaging‭: ‬invest the same amount every month‭, ‬no matter what the market does‭.‬

Want to take a step further‭? ‬Look at global leaders in semiconductors and artificial intelligence‭ ‬—‭ ‬companies like Nvidia and Palantir‭. ‬But if you’re not sure what to choose‭, ‬keep it simple‭: ‬just buy the S&P 500‭ ‬every month‭. ‬When markets fall‭, ‬don’t panic‭. ‬Buy more‭. ‬The winners are the ones who stay in for the long haul‭.‬

Real estate vs stocks

Many think real estate guarantees wealth‭. ‬But property brings headaches‭ ‬—‭ ‬maintenance‭, ‬taxes‭, ‬tenants‭, ‬even floods‭. ‬Stocks‭? ‬They don’t need repairs‭. ‬You can sell anytime‭. ‬And historically‭, ‬they’ve made more money‭. ‬I know‭ ‬—‭ ‬I’ve made far more in the stock market than in property‭.‬

The bottom line

Wherever you live‭ ‬—‭ ‬Dubai‭, ‬Mumbai‭, ‬London‭, ‬or New York‭ ‬—‭ ‬the rules don’t change‭. ‬Start early‭. ‬Stay consistent‭. ‬Crush your debt‭. ‬And let compounding at an average annual return of 12‭ ‬per cent work its‭ ‬magic‭.‬

‬Financial freedom comes from courage‭, ‬discipline‭, ‬and time‭.‬

Got a question for Suze Orman‭? ‬
Write to ktluxe@khaleejtimes.com