One has to wonder how in the world the UAE has such an ability to purchase new vehicles (and expensive, luxurious ones at that!) while on the other side of the world people can barely put food on the table. Part of the rapid market growth of the automobile industry in the UAE can be attributed to the free trade zone, to the location and concentrated wealth in the area thanks to the impressive amount of hydrocarbon in the form of oil reserves and natural gas or simply to the idea that “it takes money to make money.”
Whatever it may be, the banks are surely doing their part to make sure that this industry continues to grow in coming years. Growth is accentuated by wealth management programs such as that of the Abu Dhabi Islamic Bank (ADIB) that are geared toward lucrative investment opportunities that provide quick returns. In one such program, the bank offers a one-year note with 100% capital protection at maturity, giving an expected return of somewhere around 8%. Basically, the note is designed to protect investors of their initial investment if the overall turnout is not as good as is expected. This is quite impressive; you invest $100,000, in one year you have made $800. For the majority of people, this type of investment is simply out of the question, but for the privileged, it is of substantial financial benefit. Imagine investing $1 million. As is the case with all investments, the more you can put in, the more you can get out.
This is just one of the many wealth management programs that banks are offering at this time. Investors are happy with their stocks, but seek to increase their investments dramatically since last year Dubai’s benchmark index more than doubled and Abu Dhabi’s grew 63%. This particular bank also offers oil and gold notes, which have become increasingly popular as well. Three of the gold notes that the bank held matured last year, and although they came along with varied degrees of risk, they produced returns at 4%, 6% and 15%. Two of the banks oil notes also matured last year, offering 1.21% and 17.9%. These returns on such short-term investments border on record-breaking considering that usual stock returns are almost pennies on the dollar in comparison.
As the auto industry continues to grow, one can only expect that the ADIB and other UAE banks continue offering these programs, at least until the base interest rates start to rise. It would be a good idea for other countries, such as the U.S., to take notes in spite of the different variables in their economies.
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