Financial institutions offer more savings incentives

Dubai: Saving schemes such as the recently launched "I save I win" Sharia-compliant scheme by National Bonds are offering prize incentives to encourage a saving culture in the UAE.

"In order to effectively develop a culture of saving in the UAE, it is important to make saving money a rewarding experience. This new promotion increases our bondholders' chances of winning prizes and also helps them to upgrade their savings on an ongoing basis," said Mohammad Qasim Al Ali, Chief Executive Officer of National Bonds Corporation PJSC in a statement.

Bondholders with National Bonds have, until the end of July, the chance to win a range of prizes. Depending on the amount saved, they include the grand prize of one kilo of gold as well as BlackBerrys, iPhones, iPads, gold coins and gold bars. These prizes are in addition to the 5,135 weekly prizes and the monthly Dh1 million draw. Winning bondholders also have the opportunity to exchange their promotion prizes for National Bonds saving certificates for the same value.

In addition, purchasers of National Bonds also benefit from free life insurance and accidental death insurance up to age 70, though conditions apply and have the opportunity once a month to win Dh1 million.

As a result of these initiatives, over the last three years, NBC's cumulative profit rate has been 16.64 per cent which is among the highest payout rates for savings schemes of their kind in the UAE.

Currently, nearly 580,000 people have bought National Bonds.

Incentive powered saving schemes through government bonds are a great way to encourage saving for both seasoned savers and new clients according to industry experts.

"Government Bonds are always an interesting proposition for lower risk long term investors, and the ‘I save and I win' promotion will attract a lot of publicity and interest from the public.

"Being Sharia-compliant, the scheme meets ethical and social requirements of all investors, and for a short period, the National Bonds Corporation will add excitement in the form of prizes of value and interest to the majority of residents in the UAE," says Steve Gregory, a financial adviser and Managing Partner at Holborn Assets LLC.

Millionaire

Another saving scheme, Mashreq Millionaire, similarly offers a new millionaire each month, but with further cash prizes of Dh10,000 with each new draw. In June, there will be the opportunity to win Dh10 million. Mashreq investments are deposit based, and certificates are redeemed after 90 days.

"Schemes such as Mashreq Millionaire and ‘I save, I win' scheme with National Bonds offer a good place to park your money and a good option of earning more at the same time. With saving accounts the interest rate is lower and you have to maintain a certain balance," says Sandi Saksena, a financial adviser and member of the Million Dollar Round Table, a networking club of the world's top life insurance salespersons.

In additional to the cash incentives, schemes such as this are also more profitable than putting money into a saving account. National Bonds Corporation PJSC announced an annual profit of 3.54 per cent for 2009, which is higher than the market average of 3.25 per cent on savings and deposits.

Saksena believes encouraging systematic saving is important.

"Systematic savings is a good way of getting a good savings discipline. Most people think that they will start saving when they have some extra cash, but it's better to save regularly even if it is a small amount of money."

Gregory agrees that a local saving culture is beneficial to the country and its residents.

"Schemes like this are very important in encouraging a saving culture in the country since the money in the bonds is used locally, which is good for the country's economy."