National Bonds is aiming to get UAE residents to save even more and is starting with a campaign to target local schools, reports Shane McGinley
What would you do if you won a million dirhams? Lebanese bus-inessman Mohammed Hytham Bitar said he plans to invest in his company, while Filipino air hostess Charela Bambilla Tigno said she wants to buy a food chain business and donate more money to charity.
Tigno and Bitar were both winners recently in the National Bonds 'Weekly Millionaire' prize draw and luckily for them they will be able to make their millionaire dreams a reality.
Such sensible approaches are common, as according to National Bonds roughly 85 per cent of winners decide to invest their winnings, rather than entertain their consumer desires.
"I would create a trust fund for my kids, Louis Bruno Rochecouste, chief comm-ercial officer at National Bonds said when asked the same question recently. "I like the fine things in life but I am able to motivate myself," he added and currently his main motivation is to get the UAE's residents to save more.
"National Bond is driving a culture of saving," said Rochecouste.
While most western nations have a savings culture, the UAE does not and National Bonds is aiming to turn that around, said Rochescouste.
He said the company has tried to do this in a number of ways. It launched a campaign among their existing members to encourage them to save even more, a testimonial campaign, where members advocated the merits of saving, was carried out and it has decided to target schools in order to grow the next generation of savers.
The School Achievement programme was recently launched "with the aim of educating students about the benefits of adopting good savings habits".
Children who achieve high academic achievements are given National Bonds Gift Vouchers and therefore have the potential to become millionaires, while also saving some money for their future.
While Rochescouste reported that the average expat living in the UAE only saves around 15 per cent of their salary, a recent global report by HSBC Bank International found that UAE expats were a lot better at saving than their counterparts in other countries.
Of the 26 countries surveyed by HSBC, expats in the UAE came fifth behind Russia, Qatar, Saudi Arabia and Hong Kong in terms of how many of them choose to save for a rainy day.
HSBC also reported that 82 per cent of UAE expats now save on a regular basis, while only 68 per cent did so when they lived back home.
Managed investments was the method of choice for 49 per cent, while 69 per cent opted for basic savings accounts.
So how does National Bonds differ from a standard bank savings account?
While it is best known for its prize draws, the National Bonds is essentially the national saving schemes of the UAE and is owned by the federal government.
Savers, or clients as the company prefers to call them, can buy bonds starting from dhs10, with a minimum purchase of dhs100.
Rochescouste said the main difference is that the National Bonds are free to access and free to exit.
Banks, he believes, are "used predom-inantly for short term and emergency savings, not long-term savings" and National Bonds have zero fees.
The company uses the bonds to invest in various sectors across the UAE and at the end of the year the profit is distri-buted to bondholders.
In 2007, the return was around six per cent and last year it was just over seven per cent.
The prize draw is the element that generates the most headlines and for a certain percentage of clients it is the main attraction.
The frequency of draws was recently increased from monthly to weekly, however only those who have invested dhs10,000 or more can qualify for the million dirham top prize.
While there were complaints from bond-holders who had invested less than dhs10,000, Rochescouste said that this has encouraged bondholders to increase their savings.
It appears to have had the desired result as he said 30 per cent of bondholders had increased their savings above dhs10,000 as a result of the changes and the company has also seen new business increase by 40 per cent.
While UAE expats are better than most, Rochescouste believes they need to be saving more, especially in the current economic climate.
"You need to save, not with National Bonds necessarily but somewhere.
Some people think they are saving but they [have] put it into the wrong investment vehicles. We try to educate clients. Don't put all your savings in one basket," Rochescouste added.
© 7Days 2009
