Pakistan holds great potential not only for local investors but for Pakistanis living abroad as well. A lot of people are unaware that there are many investment avenues in Pakistan apart from the commonly known avenues like Stock Exchange, Property and Mutual Funds. Today, we will take a look at the major investment avenues that hold amazing potential for people to invest in.
Real Estate
While most people are aware of this investment option and its potential, we would still like to mention it because of how lucrative it is. Investing in real estate is a wise option but it is not a feasible option for every investor due to the fact that real estate purchasing requires a large amount, which is why it is not suitable for students or people with lower investment amounts.
National saving schemes
National saving schemes or Special Savings Certificates come with a maturity of three years period. These schemes were introduced on Feb 4th, 1990 and offer a unique investment option for small to medium savers, allowing them to meet their financial requirements. These certificates come in various denominations and the profit is payable semi-annually.
Bank Deposits
Bank deposits are one of the most common savings options; however, not a lot of people know what type of account they need in order to be able to not just save but get a profit as well. If you have a bank account that you opened to receive your salary, receive education funds from your family or something similar, there’s a high probability that you have a current account. If you want to make profit out of your savings in the bank account, you need to open a savings account.
Stock Market
(Ready Market, Futures, Tradable Bonds, ETF’s, Options)
The stock market is a place where companies list themselves to make their shares available to a broad range of investors to purchase these shares. You, as an investor, have the option to choose from multiple stocks of different companies to buy in order to build your investment portfolio. The share prices of the shares listed on the Stock Exchange fluctuate according to the buy & sell transactions taking place.
Foreign Exchange
If you have decided to invest in the Stock Market, then it is a decision well worth taking. Consider this that Pakistan Stock Exchange has performed better over the last several years, above and beyond other investment vehicles available in the country. Returns earned from the Stock Exchange were higher as compared to other asset classes over the ten year period, Jan 2009 to Dec 2018.
Govt. Securities & Bonds
The foreign exchange market is the largest and most liquid market. Investing in foreign currency is also a great option to diversify your portfolio. Investing in foreign currency, aka forex, is trickier than trading stocks, mutual funds, bonds or other investment avenues in the local market.
Pakistan Investment Bonds (PIBs) are debt securities issued by the State Bank of Pakistan. These bonds are issued in denominations of multiples of Rs 100,000/- and available in tenors of 3, 5, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually. The coupon rate or semi-annual return on these bonds are paid until maturity.
PIBs are a good way to earn competitive returns while keeping the investment secure. These bonds are guaranteed by the Government of Pakistan and therefore the chances of a default or any discrepancy in the payouts from these bonds is very low.
There are two ways to invest in PIBs. Either through Primary Dealers/ Scheduled Banks or through the Secondary Market/ Stock Market. An Investor Portfolio Securities (IPS) Account is opened with the Primary Dealer/ Scheduled Bank which allows an investor to invest in the PIBs. Any person or entity which has an account with a Primary Dealer or a Scheduled Bank offering this facility, can open an IPS account. Click here to learn more about Pakistan Investment Bonds
Mutual Funds
Investing in mutual funds is easier than most of the other types of investments. The process of investing in mutual funds is simple; you open an investor’s account with an Asset Management Company (AMC) and deposit the desired money by having your advisor fill up a simple deposit form. Once the money is deposited, you can sit back and relax while your investment money increases. The AMC does all the work on your behalf and you can withdraw your profits or entire amount whenever you want. The best part is that you are promised a fixed profit so you are in a win-win situation. However, it is to be kept in mind that the profits may be lesser than some of the other investment avenues.
Currencies
Investing in currencies is very common. It works in a simple manner. You buy a currency, let’s say US Dollars and keep them with you till the currency’s value goes up to such a point where you can sell the same at a profit. All you have to do is trade the foreign currency with your own and voila, you have made a profit on your saving!
Commodities
Commodities work similar to investing in Stock Market. However, offered by PMEX, Commodities deal in raw materials, basic resources, agricultural, or mining products such as iron ore, sugar, or grains like rice and wheat. A lot of Brokerage firms that deal in Stocks also deal in Commodities.
Here’s an article on How and Where Should You Invest to help you choose your investment avenue and also learn how to make an investment portfolio.