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29 March 2024

Revealed: UAE's most prudent savers

Mohammad Qasim Al Ali, CEO of National Bonds (Supplied)

Published
By Parag Deulgaonkar

Residents earning less than Dh3,500 per month are the most prudent  savers in the UAE, according to National Bonds Corporation (NBC) study.

The 2013 savings index, released on Monday, revealed that nearly 22 per cent of the respondents in the low-income category in the UAE managed to save at least 10 to 20 per cent of their monthly income with 31 per cent of these participants either saving on a monthly basis or every three months, relatively higher by two per cent than their financially well off counterparts.

The index further revealed that four per cent of low-income participants save more than they had planned for, while 49 per cent are committed to their saving plans and 48 per cent indicate no commitment to saving plans.

“Most of them (low income earners) have a defined objective… they come here to fulfill their objective by saving and they tend to spend less since their families are back home,” Mohammad Qasim Al-Ali, CEO of National Bonds, said.

The index tracked 1,707 UAE and Gulf Cooperation Council (GCC) residents which for the first time included over 200 workers with a monthly income of less than Dh3,500.

Positive saving sentiment

The UAE recorded the most positive saving environment in the region at 26 per cent. However, the study found 14 per cent of respondents in the UAE indicating that 2013 was not a good time to save, while 38 per cent remained neutral. Six per cent said it was a good time to save.

Fifty seven per cent of the UAE respondents indicated that house rents were major expenses impacted by inflation, followed by educational expenses at 51 per cent and medical expenses at 46 per cent.

National Bonds index found that 89 per cent of the respondents in the GCC states expected financial stability throughout the next six months. Twenty per cent of the GCC respondents currently save 11 to 20 per cent of their overall monthly income, while four per cent of them save 51 to 60 per cent of their overall monthly income, the study revealed.

Provident fund

Al Ali disclosed that the company was in talks with local companies to introduce a provident fund scheme that will benefit employees and help retention of staff.

“We are working on a plan that will allow companies to contribute an equivalent sum as the employees contribution, which will be given to the employee after the fixed term is over. If they aren’t there, it will revert back to the employer,” he said.

The total number of bondholders rose to 730,000 in December 2013 compared to 690,000 same period last year. The fund size remained at over Dh5 billion with NBC distributing over Dh46 million in prizes to bondholders.