Savings special

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If you're lucky enough to have saved up money during your time in Dubai then you may now be wondering what to do with it.

If that's the case then thousands of dirhams could be sitting in your bank account right now going nowhere because you simply don't know about the options on offer.

And your lack of knowledge means you are wasting the opportunity to make your money work for you.

Because the fact is that no matter how much money you have in savings - there is always the opportunity to make your money grow, whether through putting it into a high interest account, investing in property or dabbling on the stock market.

In this savings special we give you a menu of options for your savings - concentrating on three main courses of action: depositing it in a high interest savings account; investing it in funds, stocks and shares; or buying property.

Saving accounts

For those who have savings but don't know how to spend them - or haven't saved enough for an investment plan or to buy property - the best option is a savings account where your money is kept secure and accumulates interest.

Experts also advise that ideally everybody should have a proportion of their annual salary saved in a separate bank account as an emergency fund.

Sandi Saksena of Nexus insurance brokers says: "Experts recommend putting aside ideally three to six months worth of your salary in a bank account.

That can be used for unexpected expenses such as sudden medical costs."

There are three types of savings accounts to choose from: A basic instant access savings account; a fixed term deposit account; or an offshore account.

An instant access savings account gives you quick access to your money, but usually requires a minimum balance, charging a fee if this is not maintained or adjusting the interest accordingly.

HSBC Middle East for instance offers a savings account with a minimum balance of AED5,000 and charges AED100 if the balance falls below this amount, while RAKBANK charges AED75 if the customer's balance falls below AED5000.

Lloyds Bank however offers different tiers of interest depending on the balance a customer has in their bank account.

Kirsty MacPherson, head of marketing at Lloyds TSB Middle East, explains: "As an example anyone with a balance of under AED50,000 gets an interest rate of 1% per annum. Then the next tier goes up to 1.5% interest and that's for a balance of up to AED99,999. For a balance from AED100,000 to AED149,000 you get 2% interest. And the top tier is 3.5% per annuu for balances over AED 250,000."

She goes on to say that instant access savings accounts are most suitable for those who want to save and add to the account regularly.

"Instant access savings accounts are best if you want to add to the money quite regularly so for instance you could set up a standing order from your current account to the instant access savings account. You can also put lump sums into it so it's quite a flexible way of saving for people who want to add to their savings but also access it at any point in time. This account is suitable for someone who is not saving up for anything in particular."

Fixed term deposit accounts offer higher rates of interest on savings but less access to your money.

They usually require a minimum balance and you are only allowed to access the money after a fixed period of time, as Saksena explains: "The rule with savings accounts is that the harder it is for you to get access to your money, the more interest you will earn. Whereas you could earn around 2% interest per annum from money you keep in a savings account, with a fixed deposit account you could earn between 4 and 6%. With a fixed deposit account, you could put the money in then lock it up for a full year, or you could arrange for it to be renewed every three months, adding money if you can at the time of renewal."

Saksena goes on to say that such an account is most suitable for those who have upcoming expenses within the next year.

"This is ideal for anybody who is going to be using that sum of money in the coming year - it could be for their child's school fees or for putting a down payment on a house for instance. Or let's say you suddenly have a windfall. You could put that into the fixed deposit account that's renewable every three months, then you could earn interest while you're deciding what to do with it."

MacPherson adds: "Fixed deposit accounts are ideal for somebody who has a lump sum initially to put away - rather than someone who wants to add to their savings on a regular basis.

"Also because you have a time frame it's ideal for if you have a clearly idea of what you are actually saving for such as a deposit for a house."

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