Physiotherapist aims to start own business

Physiotherapist aims to start own business
14 June 2011

ONE Brazilian expat, who moved to Dubai three years ago, after spending two years in Bahrain, is looking for financial advice after the breakdown of her marriage.

The 27-year-old married a pilot – a move which took her to the Arab world, but she started divorce proceedings a year ago.

She has worked as a physiotherapist for the past seven years, and aims to open her own practice within the next five or six years.

Her financial concerns are compounded by the fact that she doesn’t have a fixed salary: she earns commission, so her income depends on how many patients she sees per day.

cashy asked Sarah Lord, wealth planning director for Killik & Co in the Middle East and Asia, to help her out with a money makeover. Here’s what happened:

The physiotherapist says…

I earn around AED 240,000 ($65,342) per year. On a monthly basis, I tend to spend AED 12,000 on living expenses ($3,267). This is roughly made up of AED 5,000 ($1,361) on rent, AED 500 ($136) on my mobile phone bill, AED 600 ($163) on petrol and Salik (Dubai’s electronic road toll collection system) and AED 1,600 ($436) on food. I also pay AED 2,169 ($591) every three months for health insurance, and I invest $1,000 per month.

I don’t have any pension plans, but hope to retire to either Brazil or the US. My attitude to investment risk is low to moderate, but I’d like to be a bit more high risk.

I have AED 30,000 ($8,168) saved for emergencies and would like to increase this every month.

I’ll receive $80,900 when my divorce goes through. My parents have two properties in Brazil, which my brother and I will jointly inherit – though hopefully not soon. We’ll each receive around $180,000.

Sarah says...

This cashy community member has taken a number of excellent steps to date to start putting in place a suitable financial architecture to meet with her financial goals. She appears to have short-, medium- and long-term objectives and each of these needs to be addressed to ensure that she meets her goals.

I’ve assumed that she has disposable income of around AED 100,000 (27,225) per year, which can be used to help her meet her financial planning objectives.

Build an emergency fund

Let’s look at her short-term goals first. She is concerned that she doesn’t have a fixed salary, which creates an element of uncertainty and, therefore, there is a priority to ensure that she has adequate savings. As a rule of thumb, it’s best practice to have between three and six months’ income held on deposit as an emergency fund.

Given that she doesn’t have a fixed salary, I’d suggest that the right level of savings for her would be six months worth of income, so AED 120,000 ($32,670). She has saved AED 30,000 and, therefore, should look to increase her cash savings.

I’d suggest she saves AED 2,500 ($681) per month into instant access cash deposit accounts to assist with building her emergency fund. It’s also important to ensure that she receives a good rate of interest on her savings, so she should review this to make sure it is competitive.

Set up in business

She would like to set up her own physiotherapy practice in the next few years. Some of the capital that she will receive from her divorce settlement should be earmarked to kick-start this planning objective.

Once the payment is received, she should also look to invest this in low- to medium-risk funds that will provide her with diversification. I’d suggest a mix between fixed income and equity funds.

She should also set aside monthly contributions into these funds to build up the capital available for her business in the future. I’d suggest she looks to save AED 2,000 ($544) a month.

Look to retirement

Her longer term objective is to retire at age 50 and she should, therefore, set aside savings on a monthly basis to meet this objective.

She should consider how much income she is likely to need in retirement: this is a difficult question as it is number of years away and there are a number of variables, but it is good practice to consider the lifestyle that you’re likely to desire in retirement and, therefore, the cost of retirement. From this ballpark figure it’s possible to determine a suitable fund size for retirement and, therefore, the ideal amount to be saved on a monthly basis.

The earlier you start saving for retirement the better. She is already investing regularly, albeit not in a pension wrapper. She should think about starting a pension and, as she has disposable income, the level of regular savings could be increased.

As retirement is a number of years away, she can afford to take a little more risk with the investment strategy of this pot. She should look to diversify into other funds, such as managed funds that provide exposure to global equities.

Budget, budget, budget

She has provided a broad overview of her current income versus expenditure, but it is good practice to draw up a specific budget to analyse exactly where your money is being spent. Categorise your expenditure into essentials, non-essentials but important and luxury items.

Often when a budget is drawn up and broken down into these categories, savings can be made; typically this can lead to savings of up to 10%. These savings can then be allocated to other financial planning objectives.

A budget should be reviewed on a frequent basis: I suggest she reviews it on a six monthly basis to ensure her finances remain on course.

Review protection requirements

This money makeover candidate has life cover through a policy with Future. As she has no financial dependents and no liabilities, life cover is less of a priority, unless she wanted to provide for her brother on her death.

However, it’s important that she considers critical illness cover. Such a policy would pay out a lump sum on diagnosis of a specified illness. This would provide her with peace of mind that if she was to be ill for a prolonged period of time and was unable to work, she would still have capital to meet expenditure.

I’d suggest she takes out a policy that runs until her intended retirement age of 50 and provides cover of $175,000 – roughly three times earnings. The cost of this cover could be met from her disposable income.

Make a will

Even though she does not have financial dependents, it’s always best practice to have a will in place, particularly when living in the UAE where Sharia law applies.

She should consider how she would like her assets to be distributed on her death then arrange to meet with a suitably-qualified will writer to assist her with drawing up an appropriate will.

Pic credit: healingdream/

Do you have any advice for our physiotherapist? Tell her by commenting below...


  • nadam

    The article is amazing i believe plenty of people need to have such a planning for their lifes. There are many young people who are already in debts and at least they need 5 - 8 years to cover their debts in order to start saving. big help is needed for this generation when it comes to spending and saving.


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