We Asians’ especially the residents of the subcontinent and specifically Pakistan, We have been hearing from our parents, grandparents that a “penny saved is a penny earned”. Save today for tomorrow rainy season and many other benefits of saving.
We believe there were few trustworthy avenues for saving. Now the banking and investment industry has matured over time and people have gotten more confidence to invest I banks and other funds that help an individual save money.
At various life stages, one needs funds for multiple things at one point it will be children education or marriage or creation of sound financial cushion for the future. An individual needs to build the amount/wealth for a secure future. When one starts looking up for various ways to build assets, an individual tends to look for investment plans where your money grows and multiplies while you sit back. Because of the number of investment avenues, there is no simple solution to it. However, the effortlessness and simplicity of the investment plans offered by most life insurance companies are one of the finest options available to save and multiply wealth.
What is an Investment Plan?
The investment plan is the simplest and easiest way to build wealth over time. Life insurance providers offer various investment plan options. These are the wealth creation of financial products for the future when you will need and require it. It requires planning and proper understanding of different options available.
Types of Investment Plans
Investment Avenues in Pakistan
Pakistan holds great potential not only for native investors but for Pakistanis living overseas as well. A lot of people are unacquainted that there are many investment avenues in Pakistan apart from the commonly known opportunities like Stock Exchange, Property and Mutual Funds. Today, now we will take a look at the major investment avenues and possibilities that hold incredible potential for people to invest in.
While most people are aware of this real estate investment option and its prospect, we would still like to indicate it because of how lucrative it is. Investing in real estate is an intelligent option but it is not a feasible or viable option for every investor because real estate acquiring it requires a large amount of cash, which is why it is not suitable and possible for students or people with lower investment funds.
This is one of the most prominent and extensively practised and used investment ideas in Pakistan. People purchase property, especially land, and leave it for some time. Over time, the worth of real estate always appreciates. Keep a track of the market prices of the property and sell the property when the prices are at their peak and you are making good profits. There are some really good real estate blogs or real estate advisers out there that update you about real estate trends and property market, construction cost, tips and tricks (the hacks), plot size conversion and much, much more that needs to be known. The best thing about real estate as an investment scheme in Pakistan is that it is a safe investment option. You get total ownership of the property and most significantly, the land is an asset whose price always increases and gives you monetary benefits. Moreover, the market for real estate is improving at a fast pace. That means you can expect greater returns and wider scope in the real estate investment.
National saving schemes
National saving schemes or Special Savings Certificates come with a maturity of three years period. These schemes were introduced for public saving on Feb 4th, 1990 and offer a unique investment option for small to medium investors, allowing them to meet their financial requirements and needs. These certificates come in various quantities and the profit is payable semi-annually.
Bank deposits are one of the most common and easy to do saving options; however, not a lot of people are aware to know what type of account they need to be able to not just save but get a profit as well on the money deposited. If you have a bank account that you opened to receive your salary, receive education funds from your family or something along the lines, there’s a high probability that you have a current account ( the amount you deposit remains the same nothing is deducted nothing is added). If you want to make a profit out of your savings in the bank account you are putting your money in, you need to open a savings account.
This is one of the cheapest business opportunities in Pakistan with low investment. Open a bank account and deposit a small amount in it. Start investing in the account every month. Banks usually offer 10% to 12% annual returns. Do a little research and select the bank that suits you the best. There are many investment companies in Pakistan as well that are giving high returns e.g. Lakson investments, PMIC, and vice versa.
Stock Market (Ready Market, Futures, Tradable Bonds, ETF’s, Options)
A stock market is a place where companies list themselves to make their shares available to a broad range of investors and the public to purchase these shares. You, as an investor and shareholder, have the option to choose from multiple stocks of different companies to buy to build up your investment portfolio. The share prices of each share listed on the Stock Exchange fluctuate according to the buy & sell transactions that are taking place.
If you have decided and are prepared to invest in the Stock Market, then it is a decision well worth taking. Points to consider are that Pakistan Stock Exchange has performed better over the last several years, above and beyond all other investment vehicles available in the country. Returns earned from the Stock Exchange have been higher as compared to other asset classes over the ten year period, Since Jan 2009 to Dec 2019.
On average stock, the return is usually 10% in Pakistan. That means if you invest Rs. 1000 in stock, it will give you Rs. 1100 after some time, and sometimes within hours.
However, again, like peer to peer lending, stocks are risky as well. You have to be well aware and educated and have a strategic approach to your choice of stocks. Try building a portfolio of stocks to reduce the overall risk from your side. Usually, the pricy stocks yield high ROI (return of investment), but they also have a high risk attached to them. So, choose and invest wisely! We do not want you to face a loss on your money. If you are confused between investment in stocks and real estate, we suggest you to properly evaluate both the options and give it a thought and then make the desired decision.
Investment in mutual funds is easier than most of the other types of investments. The whole process of investing in mutual funds is really very simple; you open an investor’s account with an Asset Management Company (AMC) and deposit the desired money by having your mutual fund advisor fill up a simple deposit form for your money. Once the money is deposited, you can sit back and relax while your investment money increases and you are in the due process of creating wealth. The AMC does all the work on your behalf to increase your wealth and the plus point is that you can withdraw your profits or entire amount whenever you desire. The best and the most at part is that you are promised a fixed profit so you are in a win-win situation where your funds are concerned. However, it is to be kept in mind that the profits may be lower than some of the other investment avenues.
Investing in currencies is very common in Pakistan. It works simply. You buy the currency, let’s say for instance US Dollars and keep them with you till the currency’s value and exchange rate goes up to such a point where you can sell the same at a profit. Study the ongoing trends in currencies, and try to keep yourself updated with the latest currency rates and financial state of affairs, and invest accordingly in foreign Exchange. It is the largest and most liquid market, for your security in investment plans. The investment in foreign currency is also a great option to diversify your financial portfolio. Investing in foreign currency, aka forex, is trickier and intricate than trading stocks, mutual funds, bonds or other investment avenues available in the local market.
For example, let us consider the example of the American dollar and Kuwaiti dinars. In 2018, the average price of one dollar was Rs. 140, and the price of a Kuwaiti dinar was Rs. 400. Today, the prices are Rs. 156 to 160 and Rs. 512, respectively. So just like gold, currencies are an excellent investment option.
Its very simple! All you have to do is trade your currency with the foreign currency and voila, you have made a profit on your saving!
Commodities work similarly to investing in the Stock Market. However, offered by PMEX, Commodities are actually the deals 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 in Pakistan that deal in Stocks also deal in Commodities.
Get to know property tax in Pakistan
If you cannot afford to invest in real estate on your own, try buying the property on instalments, through loans or a partnership with trustable people. One drawback of this investment is that the returns might take time and if you are looking for short-term investment and gains, then this option may not be feasible or viable for you.
But, an important thing that must be kept in mind at all times is that a real estate is a safe option that gives higher returns, making it an excellent option for small scale investors and investments.
If you are looking for investment opportunities and avenues in real estate, consider investing in houses, flats, plots, or shops. All these assets will provide great profits in the form of resale value and rents. If you are confused between investing in a house or apartment or a commercial property, speak to your trustworthy real estate adviser and make a sound and an informed decision regarding where to invest.
There many construction and real estate companies developing real estate projects in which you can invest in. Some of the real estate projects where you can invest are Bahria Town, Emaar and Imarat Builders Mall that are starting from as low as 17 Lac. If you are looking for secure investments with guaranteed returns, you should check out these projects, but we would always advise you to also understand the dynamic and do your maths before deep-diving into any such thing.
Peer to Peer Lending
One of the widespread investment ideas in Pakistan is a peer to peer lending. According to Investopedia, peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals, cutting out the financial institution as an intermediary ( sometimes to avoid the interest on the money borrowed). If you are someone who has some cash stacked inside the bank, let’s say 1 lac or even Rs. 50,000, you can multiply that cash. Yes, you heard me right.
Give your money to people with an interest rate ( people you trust). Set the time duration for the lending, and you are good to go. However, this idea is risky but with high ROI. Always give money to people you know and trust and never forget to document the lending process.
We have witnessed the prices of gold are increasing day by day. The recent price of one tola gold is over and well above Rs 110,000. Last year, its price was around Rs 75,000 beginning of 2020. You can clearly see the difference between the prices and the ratio of returns you can expect. So, try to invest in gold. Buy gold biscuits because they generate maximum returns. Similarly, you can also invest in diamonds and silver (Chandi) depending on your pocket and the money that you want to invest.
Forex trading means trading of different currencies. This is also a great investment opportunity because of its convenience and ease.
This is an investment idea that is highly dependent on your luck. The Government of Pakistan issues treasury bonds starting from merely Rs. 100. Get those and regularly check them for prizes. If you are lucky, you may win cash prizes of thousands of rupees. For example, the first cash prize for a bond of Rs. 750 is around Rs. 15 million. See the amount of effort you are putting, and imagine the rewards you are getting. And the best thing? You can always use bonds as a substitute for cash. Student bonds are one of the safest and easiest investment ideas for students in Pakistan.
Another way to invest your money is to get a 3D printer. You can start your own 3D printing business from Rs.150,000. It is a new field but it has a lot of scope in the market. The 3D printer is excellent for customization. You can make jewellery, decoration pieces, mugs, prototypes, etc. Every sector uses 3D technology including education, fashion, retail, medical, games, entertainment, and vice versa. In short, there is a bright future of 3D printing in Pakistan.
Govt. Securities & Bonds
Pakistan Investment Bonds (PIBs) are debt securities issued by the State Bank of Pakistan. These bonds are issued in the number 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 returns 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 are very low.
There are two ways to invest in PIBs. Either through Primary Dealers/ Scheduled Banks or 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.
What is a savings account?
A savings account is a basic type of bank account that allows you to deposit money, keep it safe, and withdraw funds, all while earning interest. Savings accounts offered by most banks, credit unions, and other financial institutions are FDIC insured and typically pay interest on your deposits.
A savings account is an excellent option for people who do not have huge upfront capital. It is a perfect money-saving opportunity for people such as students, elderly people, housewives, and children. You can start your savings account with a mere investment of Rs.500. The bank saving account interest rate Pakistan varies from 4.15% to 11%. This means that if you deposit Rs.500 in your account, you are going to get Rs.556 with 11% interest.
Simply, open your account, deposit small amounts of cash every month and earn returns on your savings. Some of the best savings accounts in Pakistan include the HBL savings account, Standard Chartered savings account, national savings, etc.
The biggest advantage of a savings account includes minimum financial risk or loss. So, if you are a risk-averse person, you should definitely take into account this investment idea. The return on investment that you get maybe less but at least your money will be secure and you will not have to incur financial losses.
Usually, companies offer employer-sponsored retirement plans to their employees. If you are a salaried person and your company is offering such opportunities, avail them today. It is one of the most convenient and easiest ways to invest a small amount of money every month. The best thing about this investment is that not only are you adding money in the account, the company is also contributing to your account. At the end of every month, the company does a payroll deduction and allocates a percentage of your paycheck to go to the retirement plan.
You can avail comprehensive Investment options at Smartchoice with multiple coverage options varying in plans and coverage for different desires and needs as per your future planning. There are many providers available at www.smartchoice.pk that would offer some customized investment plans as per your needs and requirements and would help you accumulate wealth for the future for means like children marriage, education and post-retirement tension free life.
It is okay if your employer does not offer such retirement plans. You can still start your own retirement plan. One of the main reasons why people opt for retirement plans is because of all the tax benefits attached to it. The income earned on your investments will not be subject to income tax until you retire and begin withdrawing money.
Invest in your Skills
We bet you didn’t think about your skills as an investment opportunity. If you have any skill, make use of it. Polish your skill sets and earn handsome returns in no time.
For example, if you are good at math, start tutoring online. There are sites that will pay you per hour for your services. If you know how to cook and bake, start your food business today. If you consider yourself a wordsmith, start earning from freelancing sites. The options are unlimited. All you need to do is identify your skillset and the things you love doing and earn through them.
Certificate of Deposit
A certificate issued by a bank to a person depositing money for a specified length of time at a specified rate of interest. CD is a financial instrument that is usually offered by almost every bank in Pakistan. You deposit your money in the bank for a specific duration and earn a premium in return. If you are looking for a low-risk investment in Pakistan that also yields good returns, a certificate of deposits might work perfectly for you. However, one downside of this investment is that you may not be able to withdraw money from the bank for a fixed amount of time. But if you are interested in long term investment, a certificate of deposit can be your best friend. Investing in restaurants can also work, but It’s not as easy as pie. In reality, the restaurant or hotel industry is characterized by small profit margins. Similarly, you can invest in a gym as this business is growing. There are many benefits and rewards attached to investing in a shopping mall. Get to know restaurants in Bahria town Rawalpindi and Karachi.
So, this was a compiled list of investment ideas in Pakistan. It will give a roadmap and an idea to you about where to invest a small amount of money in Pakistan. All these ideas are really simple and easy to start. Some of them may be a little risky, such as stocks, but they are a perfect source of a high return on investment in Pakistan. This is the era of science and technology. Read up the data and experts insight to get all the updates about this multi-million mega-industry. Get to know 1 billion equals how many crores.
Get all the information for the process of driving license online verification in Pakistan. Get to know the best way to secure your home. All of these above mention investment ideas you may open your gym to get a smart monthly income because people are more concern about their healthy lifestyle nowadays. To get an idea about gyms to read more on gyms in Islamabad.
• Endowment Plan
• Money Back Plan
• Fixed Deposit
• Public Provident Fund
• National Saving Certificate
• National Pension Scheme
• Mutual Funds
• Tax Saving Mutual Funds