Everything to know about National Bonds in Dubai

By Sakshi Srivastava - 26 Feb 2022 Last Updated: 20 May 2022
Everything to know about National Bonds in Dubai

National Bonds is a company that is led by the Dubai Bonds Company. The Government of Dubai, which owns a 50% stake in the organization, issued National Bonds. The company provides a Sharia-compliant scheme for investing money, with the goal of providing people in the UAE with a low-risk savings option. It enables people to shop for bonds and generate positive investment returns. The interest rates on National Bonds are typically comparable to those offered by various banks in the UAE. By writing this blog Dhanguard will provide you the information about the National Bond in UAE.

Eligibility for National Bonds

The national bonds scheme is open to all residents, including UAE nationals (Emiratis) and resident expatriates. A national bond can be purchased by anyone over the age of 21. Minors must have their parents or legal guardians purchase the savings bond on their behalf.

There is no minimum income requirement for these bonds because they are intended to be used to save money for the future.

Where Can I Get National Bonds?

National Bonds are most commonly purchased at the country's post offices. Aside from post offices, there are over 700 locations in the UAE where you can purchase these bonds. To make purchasing National Bonds even easier, the UAE Government has made them available online as well. These bonds are frequently purchased on www.nationalbonds.ae, where prospective buyers can purchase as many bonds as they want.

There is a minimum investment requirement of 100 AED, which will get you ten bonds worth AED 10 each and one bond worth AED 100. However, there is no upper limit, and you can buy a bond for any amount greater than 100 AED.

Profit Rates of National Bond

The investment in NBC will be used by the company to generate profits, which will then be distributed to the investors. The interest rates in the UAE that will be offered to investors will change year after year. Profit rates are higher than those of banks, which averaged 2.09 percent in 2019 returns. Profit rates continue to rise as you extend the tenure of your bonds by the end of a year, implying that "the longer you save, the more you gain." There is a minimum time requirement for an investor to hold a bond; this is set at three months, after which the investor receives 40% of the annual interest if he or she withdraws by the end of the third month.

According to 2019 returns, bonds worth more than AED 1 million earned 3.89 percent profit, bonds worth between AED 350K and 1 Million earned 3.08 percent profit, and regular savings bonds earned 2.09 percent profit. Minors who held 5K+ earned 2.5 percent profit, Ladies who held 5K+ earned 2.56 percent profit, and UAE Nationals who held 5K+ earned 2.83 percent profit. Furthermore, bondholders may receive 20% of the profits generated by national bonds each year.

National Bonds Profit Rates Growth

So far, national bonds have yielded enormous profits. It has yielded higher profits than any bank savings account. The provided profit rates are determined by the bond value.

Here are the estimated profit rates of growth on National bonds.

  • On regular savings bonds in 2014, a 1.2 percent profit rate was provided. In 2015, a profit of 1.76 percent is provided on bonds worth more than AED 50,000.
  • Profit rates in 2016 remained the same as in 2015, at 1.76 percent.
  • In 2017, there was a 2.82 percent increase on regular savings bonds.
  • In 2019, the regular savings bond profit rate was 2.09 percent.

In 2018, National Bonds invested in a real estate project on Reem Island and another on Satwa near Citywalk. As a result, the government anticipates a 4% increase in profits.

Gift Vouchers and Rewards for National Bonds

Aside from the profit rates, another interesting aspect is the rewards. Under this scheme, a customer can claim his/her reward based on the amount invested and win a prize ranging from AED 50 to AED 1,000,000(1 Million) through a lucky draw. Each bond would be subject to 2-4 draws per year. The number of chances per year per draw is determined by investment and tenure. Gift vouchers ranging from AED 100 to AED 25000 can be purchased and given to others.

Is it Worthwhile to Invest in National Bonds?

Investment is very important in everyone's life because it can help with higher education, medical expenses, and post-retirement funds, among other things. It is preferable to invest in government-run schemes because they are more reliable and, for the most part, risk-free. National Bonds are a type of investment in which you invest a reasonable sum and earn a high return on your investment. As of 2017, it was 4%; this demonstrates that National Bonds are definitely worth investing in if you want to invest in the UAE. Aside from the reasonable profit margins, they offer enticing rewards and gifts.

Conclusion

National Bonds are an excellent investment option in the UAE. Bond fund managers typically do not hold bonds until maturity; instead, they trade them to make money for their investors. Contact Dhanguard today to learn more about National Bonds and other tools for investing money in the UAE.

By Sakshi Srivastava

26-Feb, 2022

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