The National Bonds has revised profit calculation methodology for bond holders with effect from 1st January 2011. The revised calculation will be based on a weightage on term of investment. With the new methodology, the longer your savings & investment period, the higher will be your share of profit. As per the present method, no weightage was given for the period of holding and the bond holder was entitled to the profit at the same annual rate.
With revised system, the bonds will be categorised into four tiers based on the length of their investment.
Tier 1: Bonds invested for less than 3 months – entitled to 40% of annual rate of profit. If the annual rate is 6%, Tier 1 Bonds will get only at annual rate of 2.4%
Tier 2: Bonds invested for 3 months and less than 6 months – entitled to 60% of annual rate of profit. If the annual rate is 6%, Tier 2 bonds will get only at annual rate of 3.6%
Tier 3: Bonds invested for 6 months and less than 1 year – entitled to 80% of annual rate of profit. If the annual rate is 6%, Tier 3 bonds will get only at annual rate of 4.8%
Tier 4: Bonds invested for 1 year or more – entitled to 100% of annual rate of profit. If the annual rate is 6%, Tier 4 bonds will get the full 6%
If you invest in the middle of the year and stay till the next profit announcement, then you will automatically be paid the profit for the interim period based on the Tier 4 weightage. However if you leave before completing 1 year after the announcing of the profit (1 year from the date of investment), your profit will be recalculated based on the actual Tier and any excess distribution of profit will be deducted from your bonds.
The National Bonds is a national savings scheme of UAE. It gives the flexibility and liquidity of a savings account and a return that mostly match with that of a fixed deposit of banks. You can deposit as low as Dhs. 100 and can withdraw any time and any portion of investment after one month. Profit is distributed at the end of the year only. The weekly prize draw is its main attraction. It distributes cash prizes ranging from Dhs. 100 to 10,000 to 5,135 winners and a monthly prize of Dhs. 1 million to one winner. The bond holder is also automatically entitled for an Islamic life insurance cover (Takaful).
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