The debt panel: “I invested for colleagues and I lost everything

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I am a long time resident of UAE with a high paying job in the market consulting industry. I learned to trade on my own and started investing in global stock markets in 2017. It initially gave me decent returns. This stimulated my colleagues, who also asked me to invest on their behalf.

I collected 50,000 Dh each from a few colleagues to invest in stocks and cryptocurrencies. Equities and other asset classes did well at the start. However, things took a turn for the worse last year and every stock I invested in fell apart. The volatility of cryptocurrency hasn’t helped me either. Now I am in debt and owe my colleagues a total of around Dh500,000 which includes the principal amount and the combined returns.

I don’t know how I can repay them. I still have my job, which earns me 20,000 Dh each month. However, I also have a dependent family and a son who goes to school in UAE. The only good thing is that I don’t have a personal loan, car loan, or credit card debt.

What do you suggest I do? My colleagues gave me a deadline of one year to reimburse them. I have some savings in term deposits in India and investment property as well.

However, I doubt that this is enough to pay off the entire debt. Do I have to liquidate these assets to pay off some of my debt, take out a personal loan, or access my credit card cash in the UAE? I desperately want to get out of this cycle of debt and pay them off. Please advise. CE, Dubai

Debt Panelist 1: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD

It’s a shame you found yourself in this situation. Trading in the stock markets requires specialist knowledge and an understanding of investment principles and it is best to hire qualified wealth specialists who can provide the right advice and guidance.

It is good that you have no other debt to pay off and have a stable, well-paying job.

You might consider taking out a personal loan, which can help you pay off part of your commitment.

It is important to assess whether or not your friends can absorb some of the losses, as their willingness to share the investment for potential returns would also mean that they share the downside risks.

Specific regulatory practices are put in place in the United Arab Emirates through regulations established by the Central Bank to avoid such situations and protect consumers.

Nathan McFarlane, Founder of AskHelpWith.com

It is best to avoid credit card cash advances in this case as they would be expensive and are only used in an emergency.

Consider liquidating any assets you may own here or at home, which can help cover some of the unpaid amount owed to your coworkers.

Good budgeting and a good spending plan will also help you build up additional disposable income over the next few months.

I wish you the best in coming up with a workable plan to resolve your problem so that you can soon regain a stable financial base.

Panelist on Debt 2: Nathan McFarlane, Founder of AskHelpWith.com

I’ve seen this happen to too many people and it’s inexplicable to me that it even happens. I have little or no patience for such practices.

Specific regulatory practices are put in place in the United Arab Emirates through regulations established by the central bank to avoid such situations and protect consumers.

If you did it through a licensed broker, the consumer will be protected in one way or another. However, if you haven’t, you may have unintentionally got yourself into a mess.

In theory, your coworkers have also taken a very high risk by giving you money, and they have to take some level of responsibility by investing in you.

However, it seems like you are treating it like you borrowed money and are ready to pay it back, which can be your saving grace.

I would avoid incurring new debts to repay them. Instead, start with your assets, liquidate them, and pay off as much as possible first.

Then, if you still have a good credit rating and a high paying job, then you will need to consider a loan. Avoid credit cards at all costs because even card loans have much higher interest rates than regular loans. For the sake of your colleagues, I wish you the best of luck.

Panelist 3: Felicity Glover, Personal Finance Writer at The National

It is a very expensive lesson to learn. One of the most important rules of investing is to invest only what you can afford to lose – and obviously you can’t afford to lose your money, let alone the money of your colleagues. .

Although this is a difficult financial situation for you, it is essential to reimburse your colleagues.

You do not specify the accumulated returns compared to the initial 50,000 Dh they invested. As you know, investing is a risk and maybe it is something that they should also keep in mind in terms of the amount you are paying them back.

I strongly advise against taking a cash advance on credit cards to help pay off debt. As my fellow panelists say, the interest rate is too high to consider this option.

I also hate to recommend liquidating assets unless it is an emergency, but I think in your case it might help you pay off debt faster and reduce the amount you could needing to borrow as a personal loan, which seems to be your only option. at this time to fill the shortfall.

I would also advise you to consider taking a side business that could be used to pay off debt faster – I’m sure you have some good skills that are in demand on sites like FlexJobs, We Work Remotely, and Fivrr.

It is also important that you reduce your daily expenses and stick to a strict budget. You might consider moving to cheaper accommodation, taking public transportation instead of taxis, reducing subscriptions, and eating less in restaurants. In a year, you could save thousands of dirhams by doing this.

It will take a lot of work to pay off that debt, but you also have a stable income and no formal debt with the banks, which as you say is a silver lining.

Finally, let this be a lesson for everyone: don’t entrust your hard-earned money to amateur investors. If you choose to invest your money through a financial advisor, check that they are licensed by the regulatory authorities of the United Arab Emirates.

On the other hand, there are a number of safe do-it-yourself robotics consulting options available in the UAE for amateur investors to invest their money in. These include Sarwa and Stashaway, both of which are regulated by the financial authorities in Abu Dhabi and Dubai, respectively.

The Debt Panel is a weekly column designed to help readers tackle their debts more effectively. If you have a question for the panel, write to [email protected]

Updated: November 24, 2021 5:00 a.m.


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