Jump-start your SAVINGS

Is this the right time to bank on fixed deposits? Read on to find out

When it comes to saving, a majority of us think: “It’s okay; I’ll start tomorrow”. But before you know it, time has flown by and you still haven’t got a savings plan.

Living in a city like Dubai, it’s easy to spend what you earn. There is always a brunch or new fitness class you can’t miss, and combine that with rent and grocery shopping, it’s easy to splurge your entire salary.

If you have a substantial amount of money in your current account that you don’t need immediately, then you should consider investing in a fixed deposit. A fixed deposit allows you to earn a higher rate of interest when you agree to invest your savings with the bank for a pre-determined period of time.

Fixed deposits have once again gained a lot of traction as an attractive investment avenue for investors due to the high volatility in the stock market.

Fixed deposits schemes offer guaranteed returns to investors at the time of maturity and are considered to be one of the safest investment avenues.

But before you settle on a particular fixed deposit scheme, check out the interest rate it is offering. You should also decide on the tenure of the scheme as it may vary across different banks.

In the UAE, customers can choose from conventional and Shariah-compliant accounts. Both local and international banks in the UAE offer different types of interest-earning deposit accounts in their product portfolio, while Islamic banks offer a variety of Shariah-compliant deposit products to customers. These accounts earn profit rates that are mostly declared every quarter.

The different types of fixed deposits available in the UAE are:

Standard fixed deposit –

These have fixed tenures that range from few days to 10 years.

Special fixed deposit –

These are fixed deposits with unique tenures and earn a higher interest.

Corporate fixed deposit –

It is an investment option offered by companies where individuals have an option to deposit for a set period, with the company offering attractive interests on the investment.

According to reports, interest/profit rates for savings accounts vary from 0.5 per cent up to 4 per cent, while a fixedrate deposit account could see you gain from 0.55 to 2.5 per cent on an invest- ment, depending on the bank and the term. The most important step when opting for this option is to figure out what you want from a fixed deposit, and determine your actions accordingly.

As with any financial investment, look to invest in a savings account after ensuring and comparing all of the options available and select the one that will allow you to reach your goal most efficiently. Union National Bank (UNB), for instance, offers a chance to multiply your saved amount and win monthly prizes with Al Awwal Savings Certificate.

So do proper research and make the smart choice. Every penny saved is important and will add up over time. Whether the funds from fixed deposits are used to purchase your dream home or pay tuition fees for your child, savings make life a bit easier.