Dubai: Ali Abdullah Janahi, Mahmoud Al Twissi, Bhawna Bist and Dimple Bhatia are among the recent converts to National Bonds, attracted by what they believe is a safe investment with better returns than banks.
While some see the UAE-based Sharia-compliant savings scheme as one more way to diversify their portfolio, others see it as a future fund for children and a stop-gap investment before opting for other avenues such as real estate.
In most cases, it's the word of mouth recommendations from friends and relatives about the scheme that persuaded them to invest in National Bonds.
Recommendation
One of Janahi's family members, who has been a regular National Bonds investor, suggested that he join it. It was the same for Bhatia who has been casual about savings until this year when on the recommendation of a couple of friends she started to save with the scheme.
All along a saver in bank deposits, Janahi decided to put in a lump sum of Dh50,000 in National Bonds six months ago.
But for Bist, it's dissatisfaction with Mashreq Millionaire, a savings scheme that does not offer any return except for a chance to win in the weekly and mega draw of lots, that led her to opt out of it and instead save in National Bonds.
"I never won even the smallest amount in the Mashreq Millionaire scheme and in National Bonds you at least get some return. And the current rate in National Bonds is better than banks," says Bist, 34, who worked as a real estate agent before she lost her job in the downturn last year. She knows of a few friends in the UAE who save in the scheme along with fixed deposits back home in India.
Scheme attraction
The prizes offered each month are no doubt one of the reasons that make the scheme attractive to Janahi, a 26-year old who works as an IT manager in a government organisation in Abu Dhabi.
"One time I won Dh5,000, the other time I won Dh100," says Janahi, whose savings are now divided between national Bonds and investing in his part-time business in IT business.
Bhatia also won Dh100 in the past six months.
Most of these investors plan to save for the long term. Also, the savings could serve different purposes in the future.
"It's been five to six months since I put in money and it's time to put in some more," Janahi says.
Al Twissi, who has also won Dh100 in the monthly draw of lots, invested a lump sum of Dh50,000 when opening his account, plans to be a regular investor every two months.
The father of two daughters and a son, Al Twissi plans to open an account in his wife's name. "The savings in the bonds could very well serve as future educational funds for my children," says the 40-year old editing specialist at the Executive Council of Abu Dhabi.
Bist and her family, who have been living in Dubai for the past 10 years, intends to buy a property in due course.
They look at the National Bonds, where they have put in about Dh150,000, as more of an interim investment.
They plan to be invested for a year or two during which property prices could see a further decline with more supply coming on to the market.
Good rates
Aware that the profit rate dropped last year to 3.5 per cent compared to the previous years' rates of six per cent and seven per cent they think that it was still better than what the banks offered in term deposits. Banks had offered good rates for their term deposits last year, but that was limited to a few months.
"If you compare it with the banks, National Bonds have a better annual rate of profit," Al Twissi says.
"It is safe and reassuring," adds Janahi, who thinks that last year's dip was expected given the financial crisis and its impact on property sector in which National Bonds had invested.
Hassan Mohammad, who has been investing for more than a year, says he is not sure whether it is for the long term. "It depends on the profit rate, but as of now, the rate is good and I will keep money parked there," says the 23-year-old real estate professional in Dubai.
The fact that there is no lock-in time period and members can take out money anytime is an important reason why he opted for the scheme.
chief executive officer of National Bonds Corporation Mohammad Qasim Al Ali's recent remarks that the company is investing in a more balanced portfolio signalled investors that returns would be better again this year.
No worries
"To be honest, I am not that worried," Janahi says. "New ideas about diversifying into educational initiatives such as Taaleem and retail initiatives such as SouqExtra should make the company realise better returns on their investments."
Fast way to save money
Opening a account: Minimum purchase amount Dh100 (in multiples of Dh10). Investor must be 16 years old, although parents can buy on their minor children's behalf; UAE, GCC nationals, expats and even tourists can open an account; and you can purchase in different outlets, including Emirates Post office, exchange houses and banks. Bonds purchase could also be done through website and SWIFT.
Redemption: You can apply for partial redemption of your bonds after the holding period of 30 days.
There are no limits on redemption through cheques or bank transfers. For all redemptions Dh10,000 and above, customers will have to call 600 522 279 and not visit the distribution outlets for redemptions.
For instant redemptions of Dh10,000 and less, you can get instant redemption by visiting AL Ansari Exchange, Emirates Islamic Bank , Dubai Bank for the same.
No fee is charged for bank processing. A courier charge of Dh11 will be deducted from the bonds value on cheques redemption, except if you pick up the cheques from National Bonds Corporation head office at Emaar Business Park, Building 1, 7th Floor.
International customers have to call 600522279, no emails or faxes will be acceptable.
Source: www.nationalbonds.ae
