Related UAE salary guide 2022: how much should you be earning?
Companies in the UAE are increasingly paying out bonuses to employees in the first quarter of this year as the job market and economy improve on the back of Expo 2020 Dubai and the government’s positive handling of the Covid-19 pandemic.
About 74 per cent of UAE businesses surveyed by recruitment agency Cooper Fitch in December last year said they plan to pay bonuses in 2022, with 46 per cent of those paying one to two months of gross salary and 21 per cent paying three to five months' worth. Only 26 per cent of businesses said they were not going to pay bonuses next year.
“While bonuses are not industry specific, we are seeing the correlation between sectors challenged by hard-to-fill roles and retention issues, such as technology-based organisations and start-ups, currently leading the way in paying more generous bonuses,” says Deepa Sud, chief executive of Plum Jobs, an executive search consultancy in Dubai.
Sectors challenged by hard-to-fill roles and retention issues such as technology-based organisations and start-ups are currently leading the way in paying more generous bonuses
Deepa Sud,
chief executive, Plum Jobs
“Many SMEs and SMBs who have performed well financially have rewarded their employees who helped them weather the pandemic and rebuild their business.”
Historically, the banking and financial services industries and professional services companies have always awarded lucrative bonuses based on outstanding business performance, she says.
“As management consultancy companies continue to generate healthy revenue across many sectors, we expect their bonuses to be high,” Ms Sud says.
Although bonuses were not commonplace in 2021 because most organisations were strapped for cash and endured unforeseen expenses such as gratuity payments, the healthcare sector by far was dominant in paying bonuses in 2021 in recognition of the contribution public hospital frontline, emergency and allied teams made during the pandemic, she says.
We asked personal finance experts to suggest their top tips on how employees can save and invest their bonus money.
Take a balanced approach to investing your bonus
Investing, rather than simply saving, is one of the best and most rewarding ways to grow your bonus, says Ramzi Khleif, general manager of digital wealth manager StashAway Mena. Although there is no one-size-fits-all approach to investing your bonus, he says.
“Putting a lump sum such as a bonus into a savings account is sensible, but the savvier approach is for individuals to invest this money and ultimately benefit from a clear return on that investment,” he says.
First, people must have an understanding of what they want to achieve with their money: are they saving to build wealth or is there a specific goal? They must also know what timeline they are working with. For example, is this investment driven by a short or long-term aim, Mr Khleif says.
It is also important to understand your risk preferences before choosing where to invest your bonus.
“A high-risk investment is likely to see swings in the market, which will work themselves out over time, so is better fitted to a long-term investment. If your goal is short-term financial reward, it makes more sense to stick with a conservative investment, where your money is less likely to be subject to market fluctuations,” Mr Khleif says.
Putting a lump sum such as a bonus into a savings account is sensible, but the savvier approach is for individuals to invest this money and ultimately benefit from a clear return on that investment
Ramzi Khleif,
general manager, StashAway Mena
Pay down debt
The looming spectre of high-interest debt is not pleasant and one that can have a serious effect on overall wealth, says Rupert Connor, partner at Abacus Financial Consultants. Bonus money can be a good way to make a serious dent in the balance of high-interest debt or pay it off completely, he says.
“If credit-card interest is about 20 per cent, then it doesn’t really make any sense to invest money into the stock market and hope to outpace the 20 per cent. Get the debt paid off and then try not to fall into the same trap again,” Mr Connor says.
Invest in ETFs and dividend stocks
Exchange-traded funds (ETFs) are similar to mutual funds in that they include several securities, says Vijay Valecha, chief investment officer, Century Financial. But they trade on exchanges like stocks do, so the price can change throughout the day, while mutual funds are priced at the end of the trading day.
“Some ETFs mimic market indexes, which make them a good choice for investors who want to make market returns while safeguarding their initial investments,” Mr Valecha says. “Investors can buy an ETF that includes, essentially, all the stocks included in the S&P 500 index, for example, or in the Russel 2000 index.”
Meanwhile, with a dividend stock, not only can investors gain on their investment through long-term market appreciation, they can also earn cash in the short term because dividends are usually paid out to shareholders on a quarterly basis, Mr Valecha says.
Save for an emergency fund
It is imperative, as a minimum, to keep three to six months’ worth of expenses in an emergency fund, Mr Connor says.
“This can provide peace of mind and a back-up plan for anything unexpected that may come our way throughout the year.”
Use part of your bonus to add to this fund and ensure you are ready for rainy days, says Sophia Bhatti, a partner at financial advisers Hoxton Capital Management.
Cryptocurrency and bonds
Cryptocurrencies are good for risk-seeking investors in exchange for the potential of much higher returns, financial experts say.
However, is essential that investors do their homework and invest only a small proportion of their bonus in this asset class, Mr Valecha says.
“While they can buy cryptocurrencies on an exchange, the better bet may be to invest in a diversified crypto ETF,” he suggests.
People can also invest their bonus in bonds. With future interest rate increases being discussed, bonds might become more attractive in 2022, Mr Valecha says.
“Bonds provide a capital guarantee and a fixed level of guaranteed income,” Ms Bhatti says. “You can invest in a bond for anything between one to five years, in some cases longer depending on the bond provider and terms. On average, a bond can earn a minimum of 5 per cent returns per annum.”
Save towards retirement or children’s education
Not only should one be saving a significant proportion of monthly income for a formal pension structure, people should also top it up with bonus money and surplus cash throughout the year, Mr Connor says.
“If one wants a level of comfort in retirement, the commitment has to be there to save. Contributing a proportion of the bonus towards retirement can only be described as being responsible,” he says.
Review your future goals, such as supporting your children for school or university, and add bonus money to this corpus, Ms Bhatti says.
Use part of your bonus to add to the emergency fund and ensure you are ready for rainy days
Sophia Bhatti,
partner, Hoxton Capital Management.
Invest in commodities
Commodities are a broad category of investments that include agricultural products, precious metals, oil and natural gas, and raw materials such as lumber and iron, among others, Mr Valecha says.
“The price of a commodity is usually dependent on supply and demand. As a result, they’re typically more profitable during a supply chain crunch, such as now,” he says.
“But they’re still risky – a slight change in geopolitical situations, natural disasters and droughts can all drastically impact your profits.”
Alternatively, investors could consider investing in commodity-focused ETFs and mutual funds over commodities contracts, Mr Valecha says.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
2.0
Director: S Shankar
Producer: Lyca Productions; presented by Dharma Films
Cast: Rajnikanth, Akshay Kumar, Amy Jackson, Sudhanshu Pandey
Rating: 3.5/5 stars
Know your cyber adversaries
Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.
Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.
Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.
Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.
Phishing: Aims to secure personal information, such as passwords and credit card numbers.
Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.
Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.
Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.
Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.
Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.
Zero-day exploit: Exploits a vulnerability in software before a fix is found.
Salah in numbers
€39 million: Liverpool agreed a fee, including add-ons, in the region of €39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.
13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.
57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.
7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.
3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.
40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.
30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.
8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.
Credits
Produced by: Colour Yellow Productions and Eros Now
Director: Mudassar Aziz
Cast: Sonakshi Sinha, Jimmy Sheirgill, Jassi Gill, Piyush Mishra, Diana Penty, Aparshakti Khurrana
Star rating: 2.5/5
Monster
Directed by: Anthony Mandler
Starring: Kelvin Harrison Jr., John David Washington
3/5
World Cup warm-up fixtures
Friday, May 24:
- Pakistan v Afghanistan (Bristol)
- Sri Lanka v South Africa (Cardiff)
Saturday, May 25
- England v Australia (Southampton)
- India v New Zealand (The Oval, London)
Sunday, May 26
- South Africa v West Indies (Bristol)
- Pakistan v Bangladesh (Cardiff)
Monday, May 27
- Australia v Sri Lanka (Southampton)
- England v Afghanistan (The Oval, London)
Tuesday, May 28
- West Indies v New Zealand (Bristol)
- Bangladesh v India (Cardiff)
UAE central contracts
Full time contracts
Rohan Mustafa, Ahmed Raza, Mohammed Usman, Chirag Suri, Mohammed Boota, Sultan Ahmed, Zahoor Khan, Junaid Siddique, Waheed Ahmed, Zawar Farid
Part time contracts
Aryan Lakra, Ansh Tandon, Karthik Meiyappan, Rahul Bhatia, Alishan Sharafu, CP Rizwaan, Basil Hameed, Matiullah, Fahad Nawaz, Sanchit Sharma
South and West: From a Notebook
Joan Didion
Fourth Estate
The Outsider
Stephen King, Penguin
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
