Text size:

  • Small
  • Normal
  • Large

Bonds and offshore plans could ensure child's future

I have a two-year-old daughter and would like to start saving for her future. When should I start doing this, and how much should I be setting aside?

Q) I have a two-year-old daughter and would like to start saving for her future. When should I start doing this, and how much should I be setting aside? Are there specific plans I should be looking at? A) When it comes to investing, the saying "the earlier the better" definitely applies. The earlier you start the less you will need to contribute on a regular basis to reach your goals, as compound growth and/or interest over time can make a significant difference to the ultimate sum.

The amount you should set aside will mainly depend on budget and how much you can afford each month or year. What you should invest in depends on your priorities and the state of your finances. Some parents like to invest for important milestones in their children's lives such as 18th or 21st birthday, marriage or a contribution towards a first home. But I would also suggest that parents save towards the cost of education, as tertiary education in particular can be very expensive. The gift of a good education may prove to be the best investment in the long term.

While keeping monies on deposit is a popular option, this should not be the only home for savings. Currently, the interest rates in most deposit accounts are lower than the rate of inflation, so in real terms the capital value is eroded. National Bonds are a popular alternative in the UAE. If investing for the long term, anything over five years, then you can consider a structured investment plan which invests in a range of managed funds.

Most plans will offer access to cash, bond, equity and property funds and a good independent adviser will assist with the right choice of underlying funds based on the required time scale, attitude to risk and economic climate. A plan that offers flexibility in terms of increasing premiums is useful as you may wish to set aside more if there is more disposable income, or you want to use the plan to provide for other children that come along.

If times get tough, it is good to have a plan that will allow you to reduce or suspend premiums without penalties, although this is often not an option in the first couple of years due to the impact of initial charges. The ability to continue making contributions no matter where you are living is important, particularly for expatriates who tend to move from country to country. This is particularly relevant if you happen to move before the end of the 15 years plan you have set up as generally you need to maintain premiums until the end of the term to obtain maximum value for money.

For this reason plans run by offshore insurance companies are best for most people. As these tend to be run out of the Isle of Man (UK), investment protection schemes also apply which is another benefit. If the investment is to cover school fees, for example, you must ensure that it is possible to make withdrawals at future dates without penalty.

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National