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It is the right time for fence sitters to hitch a ride on the stock market bandwagon

It’s party time folks, but the biggest party in town is neither happening at the hippest joint in town nor at a five star banquet hall. It is on at the Muscat Securities Market (MSM). Though everyone is invited and the right to admission is not reserved strangely the attendance is spartan. Lets do an actual head count – out of a population of 2.8mn the number of registered investors on MSM stands at 185,000 or a meagre 6.6 per cent.

Though the numbers have been thin it seems to be having no effect on the spirit of the revellers. MSM gave a return of 61.88 per cent in 2007 while its market capitalisation rose by 75.94 per cent to touch RO8,864bn. This made MSM the second-best performer amongst emerging markets after China. So while an enormous amount of wealth is being generated, most of this has been lining the pockets of a few. It is high time that thousands of others who are waiting on the sidelines join the party and partake their share of the returns.

Shifting Sands

Traditionally, the real estate market has been a preferred investment option for investors in the sultanate. A lack of knowledge about the mechanics of the stock market has seen a less than enthusiastic response towards the stock market. Things seem to have come full circle as the investment choices are finally starting to change.

The steep increase in real estate prices over the last few years has made the desire to own a property way beyond the means of an average income household. The speculation on the property market is also scaring many away from real estate investments.

Investors are on the lookout for alternative investment avenues and the stock market is emerging as an attractive option for a number of reasons. According to Fincorp's 'En route 15,000' report, "Improved corporate profitability, increasing daily volumes and a number of IPOs in the pipeline makes MSM an ideal foothold amongst emerging markets."

A look at the contemporary history of IPOs on MSM reflects the growing awareness about the stock market. The Omantel IPO in 2005 marked a watershed in the history of the capital market here as it attracted a record 163,000 investors. The good returns the scrip generated encouraged retails investors to stay invested. And there has been no looking back since. Bank Sohar's RO20mn IPO in 2007 was oversubscribed six times. The Galfar Engineering and Contracting IPO which followed in August 2007 broke all previous records. It was oversubscribed thirteen and a half times raising US$2.26bn (RO872.96mn).

With four new IPOs on the block in 2008, one can expect the momentum to continue. Apart from the IPO wave, the year ahead promises to be a good one for a number of reasons like improved corporate earnings, enhanced liquidity, sustained economic growth, a robust non–oil sector and increasing oil revenues.

"The banking and investment sector is expected to fare well with a healthy loan book growth. We remain positive on banking, leasing, cement, oil marketing, port services and select industrial companies," states a Gulf Baader Capital Markets report on the regional market.

The telltale signs of a promising year on the bourses are already there. Now it is up to investors to make the most of these emerging opportunities. In the pages ahead we have packed insights, investment tips, stock picks and investment strategies from some of the most respected stock market analysts and CEOs in the country. If we are able to help you reach your financial goals in 2008, the article will be worth its effort.

Enjoy the joyride
Nabeel Jawad Sultan
Deputy managing director
Jawad Sultan Enterprises

The Muscat Securities Market (MSM) will continue its ascent in 2008. Apart from the oil story, which has been well chronicled, the spurt in real estate prices is another factor which is creating wealth for middle-income households. This money will find its way into the stock markets in the year ahead helping its surge.

Despite the markets hitting 9000-plus levels, the index still holds a lot of promise. It is unlikely that investors will see a 60 per cent return as in 2007, but a 25 per cent return seems to be a fair bet for 2008. This will take the index to 11,000–11,500 levels. However, a few surprises cannot be ruled out.

Overall there will be stocks that will outperform the market and I think these will make the headlines in 2008. While most of these are likely to be blue chip stocks some mid-caps may also make the cut.

Portfolio diversification

There is a lot of talk about diversifying one's risk by investing in alternative options and across countries. Let's take a closer look at some of the available options. Since the Omani rial is pegged to the dollar its fortunes are linked to the greenback. With the dollar depreciating by 13 per cent in 2007, there has been commensurate erosion in the purchasing power of the rial. This makes trading in currencies a bad idea as one will be shelling out more for a lesser amount.

The US market has been facing the heat of the subprime crisis. With talks of an imminent recession, it is not advisable to invest on either the New York Stock Exchange or the NASDAQ for now.

The US is traditionally a high-risk market and investing on its bourses requires specialised skills. The GCC markets, on the other hand, look like a good bet and should be explored. However, investors should exercise caution as some of these markets can be extremely volatile.

Strategy

Mutual funds are a good option but given the nature of Oman's market and the available choices, they seem to be more suitable for large investors. Retail investors should split their money between short-term and long-term investments. For example there are blue chips, which are expected to give good returns, and these should be a part of one's portfolio over a period of time. Then there may be some promising mid-cap stocks in which one can do short-term trading based upon one's risk appetite.

If one stays invested for three years on MSM, one can be reasonably sure of making money. Investors should be wary of fighting the overall trend of the market. It is better to accept the direction in which the market is heading rather than taking a contrarian approach. One may succeed in taking a few such calls but over a period of time such a strategy is sure to backfire.

The awareness level of the stock market has gone up in the sultanate. Unlike 1997 when people took unnecessary risks, they seem to be more prudent now. With the real estate sector becoming more speculative, the stock market looks like a safer option. MSM, with its excellent regulatory framework, is one of the most stable and transparent markets in the Middle East.

Stock picks

BankMuscat
Anyone who has BankMuscat stocks should continue holding it. At RO1.200 it may be a bit overvalued, but it still has a lot of potential. The bank's regional expansion plans are working out well and augurs well for its future prospects.

Bank Dhofar
This is a fundamentally strong bank and has the capability of springing quite a few surprises. The bank has not been aggressive in the market but that is changing. It is a good sign.

Renaissance Services
The company is breaking all the traditions in the local market with its core competency approach. This is going to pay off for them in a big way. This is a stock that one should have in one’s portfolio both for the medium and long term.

Oman Cables
The demand for cables is set to go up in future and the company is well positioned to take advantage of this enhanced demand. The stock was one of the highest traded scripts on MSM in 2007.

Raysut Cement
The demand-supply mismatch and heightened construction activity augurs well for the company.

Apart from these, investors should look at investing in good IPOs.

Know your stocks
Ali Mohammed Juma
Chief executive
&
Mustafa Ahmed Jaffer
Executive director
Vision Investment Services

We are witnessing some fundamental shifts in the economic scenario. The government's role in the economy is being diluted as the private sector matures and takes a more prominent role. In the stock market we see a new set of discerning investors who are aware about the companies which are turning in a good performance compared to the ones which are not. This is a shift from 1997 when a lot of people invested in greenfield projects based on speculative expectations, leading to the stock market crash.

Macroeconomic outlook

The socio-economic indicators point to a society that is undergoing changes in demographics, literacy and lifestyle. A number of these are being fuelled by the increase in liquidity. The impact of high crude oil prices can hardly be overstated. Almost all the sectors have been reaping the benefits of economic growth that the sultanate is going through. Since most companies are expected to grow in 2008, the possibility of the MSM index coming down is remote.

There have been instances in the past when the increase in stock prices outstripped earnings growth by companies creating a valuation bubble. This scenario is unlikely to repeat itself as liquidity in the region is driving growth and this momentum is likely to continue. Though we may see some profit booking now, the possibility of a sustained bear run seems remote.

Strategy

Despite valuations being on the higher side, there is still a lot of room for the retail investor to enter the market though they need to be careful while choosing stocks. A number of investors have already burnt their fingers by speculating in penny stocks. The shares of several companies in the third market (where companies which are not financially sound are traded by institutions and high-net worth individuals) have risen by 600-700 per cent in the last one year. Lured by cheap prices a number of investors tend to pick up these stocks only to realise later that such companies have hardly any growth potential. At times it is the excitement of doing day trading that lures people to buy such stocks.

If we do a segmentation of investor profile we find that there are professionals, businessmen and pensioners. Professionals, being full-time employees, should invest in mutual funds as they do not have the time to track the markets on a day-to-day basis. Businessmen and pensioners can split their investments between investing in mutual funds and managing their own portfolio.

Risk profile

Investing should be based on one's risk appetite. The markets are today in a bull run and most companies have been giving good returns. Instead of becoming complacent, investors should look for stocks that will give steady returns over a period of time. The expected returns on a stock should be judged against its inherent risks. The Sharpe ratio (the return on a portfolio compared to the risk element) is a good way of doing this exercise.

Investors should also look at being invested on MSM for at least two years. Instead of making a tactical entry and exit, they should remain invested for the medium to long term. Going by estimates, the corporate sector is expected to grow anywhere between 20-25 per cent in 2008 which is likely to lead to a rise in the MSM index by a similar percentage.

Stock picks

Galfar and Omantel
Economic growth and enhanced liquidity will translate into higher demand for the services sector. The low levels of competition compared to other countries also augurs well for the sector.

Oman Cables
Though the failure of manufacturing companies precipitated the crash of 1997, things have changed drastically in the last ten years. A number of companies have restructured themselves and the skill level of nationals has improved significantly. The commissioning of various projects in Sohar will give a major impetus for the sector in 2008.

BankMuscat, NBO and Bank Dhofar
The banking sector has seen a growth in its loan book in 2007 and the benefits of this will be apparent in 2008. Apart from interest income, fee-based income is also expected to grow for most banks. On the retail side mortgage finance is a new and promising area. The need for project finance has been going up as new ventures take off and existing companies add capacity. All this will reflect positively on banking stocks.

No stops in sight
Mustafa Ahmed Salman
Managing director, United Securities

The budget for the year 2008 has earmarked RO1bn for pension funds. We expect half of this to find its way into the stock market directly or indirectly. Apart from funds from the local market a lot of liquidity will come in from the GCC countries. In November 2007 foreign participation on MSM went up by two per cent. This went up by another percentage in December.
The region is flushed with cash currently – bank deposits in Oman went up by 39 per cent in 2007, deposits in other GCC countries have increased by 45 per cent. Oil prices are expected to go higher, even if they remain at the same level (US$90-plus per barrel) we are already two years ahead of the budget projections.

Valuation bubble?

The P/E (price earnings) ratio of MSM for the first nine months of 2007 was around 15 which is higher than Kuwait's market P/E of 13). Though a shade higher, there is nothing to worry as most companies in the sultanate are expected to grow by 25-30 per cent in 2008 bringing down the P/E ratios to a more reasonable level. Though the market is unlikely to give a 61 per cent return as in 2007, a 25 per return can be expected.

Inflation is a cause for concern but higher oil prices will take care of any adverse impact. The market will continue to post a good showing till June 2008 as oil prices remain high during winter months. The following summer months may see a dip but things should pick up by the fourth quarter.

Portfolio mix

Retail investors should invest 50 per cent of their money in the banking sector. The rest should be split amongst the manufacturing and the services sector. The industrial sector is expected to give good returns in 2008-09. These investments may require some patience as industrial stocks usually give good returns over a period of time. The upcoming IPOs of Sohar Power Company and Voltamp Industries look promising and investors should keep an eye on these opportunities.

An asset manager or investor should work out the fair value of a stock based on the
company's quarter-to-quarter growth and not just its profitability. In the long-term, the growth curve of a company is more important than its bottomline. With the markets touching new highs investors should accept a three to four per cent correction in the market at times. This is in line with international norms and investors should not press the panic button as and when this happens.

Coming of age

We are seeing a new maturity in the market as the valuation of companies are in line with their fundamentals compared to mere sentiment, as in 1997. Family-owned companies are gradually becoming more open to the idea of getting listed. In 2007 we saw Galfar going public and some more companies may follow suit this year. These will add more depth to the market.

Technically the market is becoming more advanced. With online trading facilities people can not only trade on their own but can invest any amount of money. Though only two companies – United Securities and Al Amin Securities – are currently offering Internet trading facilities, the platform is already contributing ten per cent of the trade volumes on MSM.

Stock picks

Galfar Engineering and Contracting
The company is working on a number of projects and has a good order book. It has one of the largest setups in the construction industry with over 20,000 employees. It is venturing into the oil and gas sector and this promises to stand it in good stead. The stock is sure to touch RO2 levels in 2008

BankMuscat
The bank is expanding regionally, it has bought into a brokerage firm (Mangal Keshav Group) in India. These measures will start paying back in 2009 and are good reasons to hold on to or buy into this stock.

Raysut Cement
The company started installing new capacities from August 2007. In addition, it is looking at selling cement in Africa. The company seems to have no real competition and even at RO2.2 it is a good stock to pick up.

Omantel
The company is well positioned to take advantage of the ongoing growth of the telecom sector. Its acquisition of Worldcall Telecom of Pakistan in August 2007 gives Omantel a foothold in the world's third fastest growing telecom market.

Dhofar Insurance
The company has a very good book and with insurance premiums going up the company is sure to benefit.

Intelligent choices
Sankar Kailasam
Vice president – asset management
Gulf Baader Capital Markets

We are positive but cautious as the markets have seen P/E ratios rise from 12 to 15 in 2007. This is in line with the other markets in the region. The profitability of companies has gone up by 40 to 60 per cent in 2007. In 2008 we expect this to grow further by 16-18 per cent. Going by precedent the market should give a similar return. International interest in Oman’s corporate growth stories is going to continue in 2008.

Budget numbers

Going by the most conservative estimates the price of Oman crude oil will be at US$60 per barrel in 2008. The big news of this year’s budget is that oil output will increase from 730,000bpd to 790,000bpd – an eight per cent increase over the present output. This is a result of the enhanced oil recovery programme that the government and PDO have been pursuing over the last few years. Overall, a GDP growth of six per cent for 2008 is a reasonable expectation. Foreign investment on MSM has gone up from 19 per cent to 25 per cent in 2007. A lot more of regional money is coming into the market.

In 2008 the economy will benefit from the commissioning of downstream projects like OMIFCO, Oman Aromatics and Sohar Aluminium plants. These projects will in turn help the growth of ancillary industries. The capital requirement for more enterprises will help credit outflow from banks generating economic momentum.

Look before you leap

Though the macroeconomic scenario is positive, there are a few concern areas that one needs to watch out for. The government has indicated that the tendering process will be slowed down this year. So while the overall capital expenditure will not slow down, the frequency of spends will certainly be affected. According to the budget estimates, inflation stood at 5.9 per cent in 2007, which is a rather high figure. There are a number of illiquid stocks that have started trading in the market of late. This shows reckless trading and is something that small investors need to be particularly wary about.

Despite high P/E ratios, the market is definitely not overheated when it comes to value stocks. Retail investors should invest either through financial advisors or through mutual funds. Blue chips are still the best bet. With real estate prices increasing steadily, investors can leverage their gains on the property market to borrow and invest on the stock market.

People should invest in blue chips and then set a target for returns. Once their target has been met they should sell. An investor's portfolio should have four to five good stocks plus some investment in mutual funds.

If one’s corpus is large then one should look at investing across the region. I would recommend Saudi Arabia and Kuwait markets for different reasons. The Saudi market holds the prospect of good growth, while Kuwait's market with a P/E of 13 is a good bet. The latter has seen a corporate growth of 45 per cent in 2007 and this should continue in the year ahead. The UAE market should be avoided as it is experiencing a lot of volatility. Overall, investors should put in 50 per cent of their funds in Oman and the remaining half in overseas investments.

Stock picks

NBO
The bank has shown strong growth and promises to do the same in future. The share is sure to reflect this promise.

BankMuscat
Its expansion strategy is helping the bank get a foothold in the regional market. The bank has given consistent returns to shareholders and the same can be expected in 2008.

Raysut Cement
The heightened pace of construction activity is generating demand for cement. With no visible competition, Raysut Cement is sure to post good numbers for the next couple of years.

Al Anwar Ceramics
With more houses being built the demand for ceramic products are on the rise. Al Anwar Ceramics, with established brands like Al Shams, is well placed to tap into this demand growth.

Omantel
The telecom sector is on a high growth trajectory and the company's expansion strategy will help the stock.

One step at a time
Financial planning needs to take care of the changing needs of an investor at different stages of life, says Raphael Parambi, CEO, Muscat Finance

The earlier one starts planning one's finances, the better it is. The compounding effect helps investments grow over a period of time. The nature of financial instruments that one invests in should change over time as the risk profile of a person is a function of one's age. Actually age is a substitute for 'stage of professional life'. The closer one is to retirement the more the ‘conservatism.’

Stage 1: Age 25-35
When a person comes out of university and gets a job the last thing he wants to do is to save money. As a fresher one has various aspirations that one may have cherished while studying and the first job gives him the means to bridge this aspiration-income gap. I would suggest that one starts looking at investing after two or three years of getting a job. When you are young you can go in for riskier investment options as you are sure of assured cash flows in future. This is the perfect time to indulge in commodity trading, currency trading, margin trading and high-risk equity investments. The caveat is that one needs to have some sort of an understanding of these options before venturing into this territory. In most cases people tend to make mistakes but the risks are low and the learnings made during these years are sure to stand one in good stead in later years. Insurance is the other thing that one should invest in these early years as it protects one’s future income stream, in the event of the unforeseen occurring. I would advocate taking a number of policies like life insurance, health insurance and disability cover to take care of any unexpected calamity.

At this stage one can take on both income and lifestyle-enhancing debts. An income-enhancing debt is a loan that helps to increase one's income. Taking a loan for an excavator or a bus that can be used to supplement one's income is worth exploring. Lifestyle-enhancing loans are taken for personal capital expenditures like housing, car, or as is common, for marriage. This is a stage when one does not favour fixed-income instruments like bank deposits or debt funds as it is the right time to explore high-growth options. The other thing that is worth avoiding at this stage is investing in a house. This view may find few takers but I think as one grows older one's aspirations change and so the house that one may fancy at 25 may not be the same as what one may like to purchase when one is 45 or 50 years old. A real estate investment also locks up a lot of one's surplus, thus limiting other options. Also, the transaction cost of owning, maintaining and selling a house is very high. So instead of a house, one should look at other choices including, if one is keen on real estate, land.

Stage 2: Age 35-50
This is a stage in life when one needs to gradually start moving from speculative capital building to a more stable income protection mode. In the first stage one can have a negative fixed income but in the second stage one needs to build a certain corpus and work towards preserving it. This is important as a number of liabilities like children's education, marriage, buying a house, etc can come into play later. A graduate degree in a top US college could cost as much as US$200,000, all things considered, and a medical education US$500,000. As one moves to the second stage, the main income-earning phase of life, the ‘lumpy’ financial requirements like college education for children and eventual retirement home (if this is not inherited) become clear and the financial planning should aim towards providing for these, before it is too late. At this juncture one begins shifting from the risky to the somewhat less risky investments. Margin trading, stock picking and commodities speculation may give way to the more sedate mutual funds.

Further, at this juncture one would progressively become clearer about the currency in which major subsequent expenses are likely to arise. Primary home and major living expenses are likely to arise in the currency of one's chosen (migrant or original) country, whereas education costs could be in dollars or other currencies depending on one's aspirations for one's children. It makes sense to create matching assets in the expected currency of major liabilities to avoid any currency risk. An investor in the second stage of life could very easily obtain professional financial advice sitting right in Oman to enable him to appropriately distribute the assets across desired currencies. It is worth noting that 'surrogate currencies' could be used for, at least partially, to protect against currency risks. The investor may choose to invest in GCC currencies or the Chinese yuan to take care of US dollar liabilities. Such a strategy is worth considering if one has strong views about the economic prospects of a particular country. This is also the right age to start planning for one’s retirement by factoring inflation. The rule of thumb is that one needs five times one's income (of what one was earning at the age of 50) to sustain the same lifestyle at the age of 80. This is considering a five per cent-plus inflation every year, which doubles one's income needs every 12 years or so. Thus if one was spending RO500 at age 50 the person would require RO2,500 at 80 to sustain the same lifestyle. By now, lifestyle-enhancing loans should be brought down to not more than one-third of one's income. This is because with non-indexed (not factorising inflation) salaries and increasing commitments as one gets older, the amount of money spent on enhancing one's lifestyle should make way for savings.

Stage 3: Age 50 plus
At the third stage – which should be ideally about five years before planned retirement, one is more comfortable financially and one's aspirations (and spending) have come down – it is easy to acquire a house. As one is through with most of one's responsibilities, protection of future income is no longer important. This brings down the need for life insurance. So one can give up one's life coverage and disability insurance, though one should stay invested in a good medical insurance to take care of old-age sickness.

On the earnings front, one-third of one's income should go towards servicing the mortgage of one's house. The remaining two-third should be parked in mutual funds and fixed income schemes that give a return that is a couple of percentage points above the prevailing inflation rate. Such returns are sufficient to take care of one's financial needs for at least a decade. Any additional saving could be invested in stocks. At this stage in life, both income-enhancing and lifestyle-enhancing debts should stop and one should have created enough funds or income streams to pay off these liabilities within a reasonable period. With sensible financial planning, one’s twilight years may turn out to be the most enjoyable years of one’s life as one has the time and money to pursue one’s dreams and passions. Sensible financial planning helps one to get off the treadmills of life when one is still in a position to contribute something to society. Retirement should be seen as just another stage in one's life rather than an end. In all these stages people need to be aware of taxation needs. Living in Oman, it is easy to forget that in other countries the tax burden can be as high as one-third of one's income. So it is necessary to consult tax planners and invest in tax-free instruments.
As told to Mayank Singh

Money matters
Of the various investment options, stock market is where Ramy Zambarakji Managing director, BANK OF BEIRUT, Oman branch will invest his money this year

My investment philosophy and attitude remain the same for this year as it was in 2007, but I'll temper it with a bit of caution. Tracking the financial markets is part of my job and I'm always in the loop. And while I'm doing that I track my portfolio as well. I don't consciously think about it as everybody around me is talking the same language. I don't have any mantra or code that I swear by. No, wait. If I don't make money, my wife won't let me into the house. Seriously, all my investment decisions are financial hunches. Over the years I have more often than not come to rely on my instincts. I know when something is going to happen. My decisions are right 60-70 per cent of the time. Markets are not driven by any scientific rationale but by human sentiment.

With the sultanate's economy continuing to show strong growth, the stock market too is expected to maintain its momentum. This year I'll be investing a large portion of my money on the stock market. I'm also looking forward to the IPOs that are expected this year. Besides investing in the construction sector, as a banker, I see the banking industry doing really well. So some of my money will definitely go into bank stocks.
The construction sector is also expected to do very well and these stocks offer good investment option. I'm planning to invest 30 per cent of my money in bank stocks, 30 per cent in IT and telecommunication, and 40 per cent in construction company stocks. There is a reason for this.

The GCC markets are among the most stable, and Oman seems to be the least exposed to the global fallout that we witnessed in the last few days. There will be some impact here, but only marginally. The MSM's consistent track record on providing returns is unmatched when it comes to its regional counterparts. Besides, the market is well regulated and last year it was among the best-performing bourses in the region.
Art is definitely an investment option. But personally I do not see art as dollar bills on the wall. For me, it is a hobby, a joy, which I engage in for my personal satisfaction.

Gold is definitely a safe bet. As oil prices and markets fluctuate, gold will go up and continue to provide steady returns. I bought a little a few years ago. Personally, gold does not catch my fancy; I feel it's a very conservative form of investment.
I would rather buy something that's more interesting, stocks perhaps. However, with the current developments in the world markets, nothing is predictable. The US Federal Reserve's decision to cut interest rates by 75 basis points is not the solution to the deeper problems affecting the US economy. Of course, the lower interest rates will definitely spur investment and lead to the usual economic cycle. But that is not the solution, the markets need something more radical. My advice on managing debt is very simple. Don't spend. On a more practical level, split your money into two accounts: one for savings and another for your monthly expenditure. Make sure that you put the money into your savings account at the beginning of the month and not at the end. Plan your budget and stick to it. It works. As for myself, this year I've decided to plan my investment decisions carefully and be more realistic about the level of returns to expect from the market.
As told to Srinivasan Iyer

Make a commitment

Here are ten financial resolutions that will set you off on the road to being a millionaire

‘I will save regularly, invest diligently, become rich and probably retire by the age of 45.’ Almost all of us have thought on these lines at some point or the other. Some succeed in sticking to them for a few months but only a few manage to pursue financial discipline over an extended period of time. We leave you with a set of ten financial resolutions that every intelligent investor in Oman should make, and more importantly stick to.

Take a firm decision about becoming rich: So many people talk about wanting to make more money or get out of debt but they are not committed enough to make it happen as it is not a priority. So make the decision that you are going to learn how to invest and make your money work for you.

Write a financial blueprint: Sit down and write out exactly how much you need to earn and how you are going to invest. Write down everything you want to financially happen in the different stages of your life (like birth of a child, college education for kids or retirement). This will serve as your roadmap and force you to follow it.

Invest in a systematic investment plan:
Stop trying to use your willpower to save money every month. Have ten per cent of your net monthly income automatically taken out of your bank and invested in a mutual fund or any other financial instrument.

Think before spending money: Managing your cash every month is the key. There is no need for you to be a walking advertisement for designer clothes, mobile phones, shoes, sunglasses, or jewellery. Be prudent with your spending.

Prioritise your debts: Make a list of your debts and organise them according to their annual interest rates. Those with the highest rates (most likely your credit card bills) should be paid off immediately. It does no good to invest money while you are paying over 24 per cent interest every year.

Make your money work: It takes money to make money, but you don’t need thousands of rials to get started. Open an account with a mutual fund or a brokerage company and start with investing RO50-100 every month. In a few years you will be surprised by how much you have saved and earned.

Earn money doing what you like doing: Most people can name at least one thing they are truly passionate about. One of the ways to enjoy your work is to do the things that you enjoy. Find a way to turn your passions and hobbies into profit. The world is full of amazing jobs such as full-time ice cream tasters and video game testers. Entrepreneurs are four times more likely to be millionaires than those who are employees.

Get a mentor: You need to form a good working relationship with someone who has become a millionaire on his own. He or she can show you how to do it. You can learn from their mistakes and the strategies that they followed.

Collect your change: Whenever you make a purchase using cash, remember to collect the change. The first thing you should do when you get home is to throw the money into a large container. If you adhere to this policy and don’t spend any of the change, you are likely to save a hundred rials over time.

Invest in yourself: Take a bank loan to pursue a management course. If you are a working executive enrol in a part-time course that enhances your knowledge and skill sets. Every such investment will pay off in the long run by helping you to climb the job ladder and earn more.