Bonds vs. Saving Accounts


An understanding of the difference between bonds and a savings account can help an investor determine the best investment plans for their funds. Although they both offer security for money, they come with different features and potential returns.

A savings account will typically pay variable interest rates, whereasthe bestbank bonds are generally fixed for a set term. In terms of accessibility, a savings account provides quick access to the funds saved.

On the contrary, bonds in UAE are better for long-term investments as their fixed terms are longer.

Banks in the UAE offer a variety of savings account with varying interest rates paid on the funds deposited. They also offer flexible saving plans in UAE coupled with minimum maintenance fees and unlimited withdrawals. However, since investors can withdraw funds at any period, interest rates earned on savings account are generally lower. A savings account offers security for investors looking for a short-term investment with a low-risk factor.

On the other hand, investing in bonds is regarded as long-term investments. They come with a face value that investors must pay to purchase and usually offer higher yields paid out annually. Some bonds can be sold in a secondary market. They allow investors to sell them for a higher value than at the time of purchase.

Most bonds in the UAE are issued by the government or by private corporations.

Banks offer savings accounts that usually pay interest on your deposits. Investors can easily withdraw money from savings accounts at any time. Essentially, bonds are loans to the government and corporations (usually). You will earn interest on the bonds, but they may have rules regarding when you can redeem them. Generally, savings accounts are ideal for low-risk, short-term savings, and bonds are ideal for low-risk, long-term savings.

Each of the two options has specific terms and conditions. Their redemption policies may also vary. Gold bonds are a variation of bonds that offer rates of return up to 10% per annum.  When choosing to purchase bonds in Dubai and the UAE, an investor should evaluate the corporation and its credibility since bond issuers are subject to bankruptcy. Some private firms like Bank of Bullion offer a corporate guarantee on their bonds that helps protect investors in the event of insolvency.

Nonetheless, both savings account and bond investments are relatively secured investment options that could help balance an investor’s portfolio. For more information on gold bonds in the UAE, get in touch with our team at Bank of Bullion. Our team of experienced consultants is here to guide you through thebest investment plan and support you with investing through our regulated trustee.

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