National Bonds, what are they and are they worth it?


In the first few months of a new year, we are often inspired to be a better version of ourselves. Whether it’s to achieve a new fitness goal, slim down by summer, or to set out to be in a better financial position by year end, there’s normally something. That means that, if you’re anything like me and my friends, coffee catch ups during January were typically filled with conversations such as, “Did you go to the Harvey Nicks sale? I wanted to buy everything but I’m determined to make more of an effort to save…” Last month, during a catch-up with a girlfriend, once DSF and whether or not we could or should give up chocolate in 2016 had been discussed in full, she asked me what I thought about National Bonds and whether I thought she should put money into them. It made me realise that this wonderful little addition to any savings plan might not be on the radar for most people, so here’s all you need to know.

What are national bonds and how do they work?

They are Sharia compliant and have been around since 2006. As well as giving you a place to invest your money, they also offer you a benefit in the shape of monthly cash prizes (if you’re lucky enough to win one, of course). You buy bonds in units of AED 10 – with a minimum amount of 10 units, or AED 100 – and then you earn profit on them. As an example of rates, back in 2014, National Bonds said its one-year-term bonds offered 2.5 per cent annual returns, while savings bonds provided 1.2 per cent. The longer you keep your bonds, the higher the annual returns are. For example, saving for five years gave you 13.82 per cent in annual returns, while nine years gave you total returns of 56.8 per cent. On top of the attractive rates, a perk you get with National Bonds that you don’t get with regular savings accounts is, as mentioned, the chance to pick up a cash prize. All bond owners are entered into a prize draw every single month, to win one of thousands of monetary prizes ranging from AED 50 up to AED 1 million.

Why invest?

National Bonds has managed so far to attract over 800,000 customers from 200 different nationalities in the UAE. Currently, after almost 10 years, it’s managing a well-diversified investment portfolio of AED 5.7 billion, which is primarily invested in the local economy. The structure of the prizes and rewards is designed to target various groups of bondholders. On top of the other prizes every month, which include 40,000 prizes of AED 50, two BMWs and 15 lots of AED 10,000 for regular savers, there’s also a cash prize of AED 1 million for an Emirati saver and another AED 1 million for an expatriate saver distributed every quarter, plus two women – one Emirati and one expatriate – are rewarded monthly with a cash prize each of AED 10,000. It’s also a good investment option for high-networth individuals, as Meriem Zahouani, a senior financial adviser at National Bonds, tells me: “We offer our customers wealth management and financial planning products. High-net-worth individuals are also given guidance through our wealth management unit to help them achieve maximum returns, while safeguarding their assets and legacy through Sharia-compliant measures.”

Who can buy them?

Anyone and everyone over the age of 21, including non-UAE residents. It’s a simple savings scheme that allows people to save regardless of how much they earn. With only Dh100, each and every person living and working in the UAE can start their journey towards saving for the future. However, remember; the general rule of thumb when it comes to savings is to set aside around 10 to 20 per cent of your salary every month. There’s also a savings plan for minors to help kick-start the process of saving as early in life as possible (but the bonds will need to be bought for them by a parent or guardian).

How can you buy them?

There are over 700 outlets across Dubai where you can buy bonds, including Emirates Post offices, leading exchange houses and banks. You can also buy online at the official site or over the phone. There’s also an option called myPlan, which offers the ease of affordable monthly deductions via a bank direct debit and has three different savings term options – 12, 24, or 36 monthly payments.

What about redeeming them?

If you buy bonds by cash or cheque, you can redeem them after an initial 30-day holding period, which goes up to 90 days if you buy them on a credit card. If you hold your bonds for less than a year, you can still earn profit, but it’ll be a prorated amount.

Before jumping in

If you are thinking of buying bonds, remember, National Bonds is not a lottery. It’s a way of life and a reliable path to financial health and a sustainable future. This way, you won’t be disappointed if you don’t win a monthly prize. Instead, you’ll be happy and satisfied you’ve got savings in the shape of bonds that are locked away earning you good interest.

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