Weddings are big business, with the average here in the UAE costing AED100,000, rising to a whopping AED1 million-plus for the more lavish, extravagant celebrations.
While the million-dollar price tag may well be reserved for a few, weddings are still costly affairs for the majority, sitting at the number two spot on the list of top expenses for parents, following education at number one.
Yet, with sound financial planning and suitable asset allocation, it is possible to have the wedding that dreams are made of, without breaking the bank.
If you have planned well in advance and are 10-plus years away from your financial goal, you can afford to take a greater risk when it comes to equities. This allows greater flexibility and opportunity to grow your wealth. Regular interest from equities will gradually keep adding to your savings plan capital and come in handy while making your child’s special day memorable. Plus, any setbacks the portfolio suffers can be recovered with sufficient time in hand.
However, if you’re on a shorter timeframe, of say three years-plus, you might want to consider balancing your portfolio with investments in equity and debt instruments. It is important to de-risk your portfolio fully for anything less than three years.
Don’t forget about insurance. When chalking out any financial plans, it is important to include sufficient insurance cover; you don’t want any changes in the family’s income causing a setback to future goals.
Key points to keep in mind:
. Before preparing a financial plan, you must evaluate your children’s future needs, and then start working towards chasing those ‘need-based goals’
. Forecast expenses that may arise in the future, such as education
. Begin the process of saving and investing early
. The financial decisions which determine your asset allocation and portfolio mix should be backed by your risk tolerance level and risk appetite
. Plan your finances better, preferably with the help of a financial expert
. Maintain adequate insurance cover