National Bonds' Mohammed Qasim Al Ali believes the current need is to get even more innovative with the savings and investment schemes. Image Credit: Ahmed Ramzan/Gulf News

Dubai: These days, UAE residents need to do more than just set aside regularly towards their savings. More than ever before, they must hold back from breaking into their savings to meet short-term commitments or other reasons brought on by inflation spirals and all that.

This is also the challenge facing National Bonds – get its investor base to remain committed to their savings. At the same time, the UAE fund manager realises these investors need options, because their need for short-to-medium-term cash at hand is persistent.

National Bonds’ CEO Mohammed Qasim Al Ali believes firmly that just telling investors not to dip into their savings serves only a limited purpose. A far better way would be to make those savings work for them, now and in the future. And he’s got plans.

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Do you think you need to rework your product portfolio to ensure investors remain committed with what National Bonds has to offer?

People need guidance, somebody they can trust to give them good advice. Access to financial planning here is almost negligible, unlike in Europe.

So, besides the Golden Pension Plan, we are concentrating on two products we are launching for individuals. First is the ‘Second Salary’ where the individual would deduct a certain amount from income each month for a certain number of years. Together with the profits and prizes that you get being a National Bonds’ investor, this will contribute to almost a percentage of the salary as you start exiting the plan.

We are different from insurance companies and their investment schemes. People have been bitten by insurance companies because they are so rigid. If you bail out, you lose everything, and they have lots of rules and conditions.

That’s why we came with a simple solution which is flexible and does not penalize you when you need to bail out (ahead of the term).

The ability to set aside savings consistently is being challenged as inflationary pressures keep biting.

So, the Second Salary scheme returns all of the capital whatever be the market situation at the time?

With the profit and prizes, you would retire with 100 per cent of your capital plus a percentage of the compound profit, which gives you the additional ‘salary’.

Aren’t high interest rates and payment obligations forcing your investors to dip into savings?

Every individual that invests in National Bonds has a different profit rate. Like a bank, we have the savings account, and we also have the equivalent of term deposit. Initially, we concentrated only on the savings. Then we found that the customers are demanding higher returns, so they want to lock their money in for a longer period.

That’s when we introduced the term equivalent.

Are the current rates you offer on par with the banks?

We are slightly better than banks. For example, on one-year term, it goes higher as per the amount and we can give up to 5 per cent. Of course, when the amounts get lower or the duration gets less, then we offer 4.5-, 4-, and 3.75 per cent.

We are very flexible because the customers want flexibility.

You mentioned a second savings product in the works for this year. What’s that?

The other product we are launching is the ‘Millionaire’, where if you want to make a million, we show you how and we guide you.

We have the millionaire reward, which is the prize. I’m talking about earning a million so that if you are 25 or 30 years and by the age of x, you want to have a million in your National Bonds account, you need to do mandatory deductions of certain amounts.

So that, with the profit and the prizes, you get to almost a million dirhams when you finish the plan.

Do you feel the young in the UAE are saving less because they’re worried about inflation, interest rates, and a future recession?
Let me give the example of Japan. They have the highest per household saving ratio, because the culture of saving is embedded from a young age.

What we need to do here is convince people they can do the same. I challenge anyone who says he cannot invest at least Dh100 by just relooking at their budgets. They don’t do financial literacy. We will guide you through the financial literacy programs that we have.

We’ll introduce you to the tools that we have and make it affordable.

But with all these products, isn’t one competing with the other?

No, it depends on what you want. You invest in the most attractive one. Your end-of-services is automatically being invested by your employer.

Now, you have the opportunity to invest the surplus that you have. Let’s say somebody is able to contribute Dh200 regularly. With this amount, you cannot contribute to the Millionaire scheme.

To have a million in your National Bonds account by year X, you need to deduct a certain sum regularly, say, Dh5,000 or Dh7,000. So this targets mid- to-high income earning employees. For the lower salaried employee, we offer the global saver campaign.

"Our preference is always to invest inside the country, we support our local economy," says Qasim Al Ali

But as you target higher returns on your investments, isn’t the risk escalating as well?

We are a global investor, because you have to de-risk everything – geographically, volatility, economy, asset classes, etc. But our preference is always to invest inside the country. We support our local economy. We have National Properties, for example, which is the real estate arm of National Bonds, which is doing really well because the real estate market is booming.

We have three sections under real estate – first is development, where we develop our own projects. For example, we did the Skycourts Dubailand, we have developed villas in Motor City, and others. Now we are developing two towers in Dubai Hills, which will be launched soon.

Are you are you an investor who builds a property, owns it for three-five years and then sells?

Our objective is to sell off-plan so that we sell as much as we can, and whatever remains, we take it as an income generating portfolio, and then sell it later on. But usually, you sell about 70-90 per cent and you keep 10 per cent for income generation. Then, we have our income generating portfolio, where we have buildings, residential and commercial, as well as houses and villas, that give us annual rent.

We also invest in global real estate funds, in US, Europe, etc. because they have a track record and provide a decent dividend return every quarter.