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How much do you save every month? If you are unable to answer this confidently, it is time to look at forced options and automate your financial plan. Make use of saving and investment products to put your house in order.
Instant Cash gives your family more money back home.
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» By Suneeti Ahuja-Kohli
T
here was a time when Amit Shah, a 32-yearold senior bank executive, had to seek his mother’s help to bail him out of burgeoning credit card interest payments. Right out of college, Shah had bagged a good paying job and signed up for a couple of credit cards offering discounts and reward points on every purchase. Initially, it was a smooth ride;
We are available through all Emirates Post office branches and leading money exchanges.
cards were swiped at every possible opportunity and bills were paid on time. But eventually, lack of financial discipline took a toll and debt ballooned. Shah had maxed out one of his credit cards and could barely keep up with payments for the second card. For a debt of Dh20,000, he paid the minimum balance of 5 per cent (around Dh1,000) for months. At this rate, it would have taken him almost 20 years to repay this amount without any extra expenditure. Fortunately, he had access to free credit through his parents. But that’s a rare privilege. As of June this year, residents in the UAE have borrowed more money than in the previous year, totalling to Dh1.2 trillion — which takes personal debt to about Dh350,000. While some of it might be good debt in the form of mortgages, the rising access of credit and credit lines highlight the need for promoting discipline and astuteness in money matters.
Why should you start saving? Simply put, because there is merit in saving now. The bottom line to financial happiness is to spend less than what you earn and save.
Why should you start saving? Simply put, because there is merit in saving now. The bottom line to financial happiness is to spend less than what you earn and save. With a flurry of products in the UAE, especially for non-resident Indians (NRIs), you can automate your savings plan and pave way towards a financially relaxed future. This can be done either in the UAE or by remitting money to India, while making the most of high interest-paying instruments and the falling rupee. Here’s what we suggest: Remit every month: The transient nature of work life in the UAE offers an opportunity to expatriates to save for retirement in their home country or wherever they wish to retire. Once you make monthly remittance a commitment, you can channel funds into various instruments on a monthly basis and build up significant wealth over a long time. For NRIs, the present environment of high interest rates in India and low value of rupee offer a perfect opportunity to start now. There are a number of money transferrers in the UAE you can rely on. Instant Cash is a quick and reliable money transfer service that is available through Emirates Post and leading exchange houses including the Wall Street Exchange. These allow remittances of as low as Dh15 and offer convenient and » Continued on next page
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• Competitive AED to INR rate* quivalent of INR 1.7cr • Personal Finance available up to the equivalent • Instalment payment in Dirhams • Enables you to settle your existing liabilities in India • Free job loss protection Finance proceeds enable you to pay for new purchase at all stages of construction or to renovate your existing home. Call now
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* Applied at the prevailing foreign exchange rate on the conversion date. * Terms & conditions apply. Offered under finance for individuals program subject to UAE Central Bank guidelines and subject to salary transfer.
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in a mutual fund will help you make the most of dollar-cost average, which in simpler terms mean getting the best out of the highs and lows of investment cycles. NRIs, who are looking to invest in Indian mutual funds, may refer to websites, such as www.valueresearchonline.com and www.morningstar.in, to know about various schemes. These websites offer details such as the historical returns, risk factors, portfolio manager, and other pertinent details, and do not promote any particular fund house or scheme.
» Continued from previous page fast ways to send money to India. Open a recurring deposit: A recurring deposit account will force you to set aside your contribution every month and build up a kitty. It is, in a way, telling you to pay yourself first. In India, interest rates on a recurring deposit of as low as Rs500 for a minimum of six months can fetch you interest earnings of 6.5 per cent to 7.25 per cent (as on September 9). Illustratively, a recurring deposit of Rs50,000 (Dh2,800) per month would yield Rs306,810 at the end of six months. Invest monthly in mutual funds: Mutual funds are among the best instruments for wealth creation and offer choices in equity and debt products. Equities have historically given good returns and helped millions in wealth creation. On the other hand, debt instruments have offered recourse from
Fixed Deposits can be your best friends in preserving wealth, especially windfalls. Whether you receive unexpected cash or resist splurging on an accumulated sum, you can count on your good old friend — FD. For a fixed deposit of one year, banks in India pay interest in the range of 7.50 to 8.25 per cent. extreme vagaries and safety of capital to a certain extent. The key is to identify your risk appetite and then divide your investments in different funds. Investing monthly
Fixed deposits (FD): These could be your best friends in preserving wealth, especially windfalls. Whether you receive unexpected cash or resist splurging on an accumulated sum, you can count on your good old friend — fixed deposit. Indian banks are offering high rates of return on FDs with the shortest tenure being a few days. For a fixed deposit of one year, you can earn an interest of 7.50 to 8.25 per cent. If you are looking to invest in real estate, Abu Dhabi Islamic Bank (ADIB) offers convenient choice of finance. With profit rates starting from as low as 6.25 per cent (in India home loans are in the range of 9 to 11.5 per cent), ADIB’s NRI finance can help you invest in any property in India. Whatever means you choose for building up a nest egg, do not put all your eggs in one basket. It is not so much the rising cost of living, but financial mismanagement and indiscipline that push people to a quagmire of sorts. Make saving a habit and investing a ritual; it’ll change your life for good. — suneeti@khaleejtimes.com
Make your dreams of owning Indian realty a reality ADIB home finance allows NRIs to buy new homes in India in dirhams at competitive rates For Indians working in the UAE buying a property in their home country is an aspiration that is becoming ever more attractive. This is due to the dirham’s appreciation against the rupee in recent years and a growing optimism over the Indian economy. Many Indians in the UAE are looking to preserve wealth for the future. Some are looking to invest in India, while others are planning to buy a future home for themselves. However, these goals are often difficult to achieve as securing home finance in India is difficult from the UAE, and often offered at unattractive rates.
This is why Abu Dhabi Islamic Bank (ADIB) is offering non-resident Indians (NRIs) an easier solution with its new dedicated financing facility. The bank is financing at profit rates of as low as 6.25 per cent, compared to the typical 11 to 13 per cent range offered in India. Unlike many banks in India, ADIB does not limit the home buyer to particular housing developments or developers. NRIs can also finance their new homes in India in dirhams at ADIB’s best rate in the market, which eliminates the exchange risk when transferring money to India. This gives homebuyers the flexibility to hold funds in the UAE and make transfers to India only as and when required. With ADIB, buying a home in India has never been easier. For further advice on how to make longterm investment in India, call ADIB on 8002882, or visit www.adib.ae.