Investment Opportunities In Pakistan: Where To Invest Your Savings

Pakistan offers a range of investment opportunities for individuals looking to grow their wealth and secure their financial future. From traditional savings accounts to riskier options like stocks and real estate, there are several avenues to explore. While savings accounts provide a safe and accessible option, they may not keep up with inflation. Therefore, investing in securities, mutual funds, and other similar investments can be more lucrative but also carry more risk. Pakistan's stock exchange, real estate market, gold, and various savings schemes and certificates are among the most popular investment options in the country.

Savings accounts

National Savings Centre (NSC) Accounts

The National Savings Centre in Pakistan offers a range of savings accounts with different features and benefits. The Savings Account (SA) is their oldest offering, designed to encourage small savers to invest and meet their daily financial needs. This account can be opened by Pakistani nationals and Overseas Pakistanis, either as a single or joint account. It offers the convenience of withdrawing funds three times a week, with no maximum investment limit. The minimum deposit to open the account is PKR 100, and there is no minimum balance requirement. The profit rate for this account is currently 18.00% per annum.

Standard Chartered High Yield Savings Account

This savings account is ideal for those seeking higher returns and flexibility in withdrawing funds. It offers an attractive interest rate of 12.25% APR and calculates profit based on the daily balance, paid out monthly. To open this account, an initial deposit of PKR 5 lacs is required, along with a minimum average monthly balance of PKR 5 lacs. Account-holders must be Pakistani nationals aged 18 or above, with proof of employment and residence.

Meezan Bachat Account

The Meezan Bachat Account is an Islamic savings account that offers high monthly returns and flexible withdrawals. It operates on a profit-sharing model, where the bank and customer each receive 50% of the gross income. This account requires a minimum deposit of PKR 50,000 to open and calculates profit on a daily basis. The profit rate is 6.50% per annum for a minimum monthly balance of PKR 1 to 4.9 lacs, and 6.84% for a monthly minimum balance of PKR 5 lacs and above.

UBL Mahana Aamdani Savings Account

The United Bank Limited (UBL) offers a competitive profit rate and transactional flexibility with its UBL Mahana Aamdani Savings Account. This account allows for unlimited withdrawals and deposits each month, with no minimum balance requirement. It is suitable for individuals seeking a higher rate of return. The eligibility criteria include an age limit of 21 to 60 years for salaried individuals and 21 to 65 years for self-employed individuals, along with the required documents such as a copy of CNIC and proof of employment or business.

Alfalah Kifayat Monthly Savings Account

The Bank Alfalah offers a monthly savings account with a profit rate of 12.35% for deposits of PKR 100 to 4.99 million and 12.75% for deposits of PKR 5 million and above. This account provides the convenience of unlimited withdrawals and deposits, along with free monthly e-statements. The eligibility criteria include an age limit of 21 to 60 years for salaried individuals and 21 to 65 years for self-employed individuals, along with the required documents such as a copy of CNIC, proof of employment or business, and a utility bill.

It is important to note that interest rates and account features may change over time, so be sure to review the latest information from the respective banks before making any investment decisions.

National Saving Schemes

The Central Directorate of National Savings (CDNS) offers a range of savings schemes for Pakistani nationals and overseas Pakistanis. These schemes are designed to promote and inculcate the habit of thrift for the mobilisation of savings. Here is an overview of some of the National Saving Schemes:

Behbood Savings Certificates (BSCs)

BSCs are 10-year maturity period savings certificates with a profit rate of 15.36%. The government raised the profit rate on these certificates to 12.72% per annum in March 2022.

Defence Saving Certificates

Defence Saving Certificates offer long-term investment opportunities. The profit rate for these certificates is currently 13.57%. The government increased the rate to 10.92% in March 2022.

Regular Income Certificates (RICs)

RICs have a maturity period of five years and are designed to meet the monthly requirements of the general public. The profit rate for RICs is 14.52% as of November 2024. In March 2022, the government increased the rate to 11.04% per annum.

Special Savings Certificates (SSCs)

SSCs offer a unique investment opportunity with a maturity period of three years. The profit rate for the first five profits is 15.20%, and the 6th profit is 16.20%.

Short Term Savings Certificates (STSCs)

The Government of Pakistan launched the STSCs scheme in July 2012. These certificates offer short-term investment options with maturity periods of 3 months, 6 months, and 1 year. The profit rates for the 3-month, 6-month, and 1-year certificates are 18.52%, 18.22%, and 17.22%, respectively.

Savings Account

The Savings Account is the oldest offering of the National Savings, designed to encourage small savers to invest and meet their day-to-day financial needs. This account offers the facility to withdraw the deposited amount three times a week. The profit rate for the Savings Account is currently 18.00%.

Special Savings Account

The Special Savings Account has similar features to the regular Savings Account but offers different profit rates. The first five profits have a rate of 15.5%, and the 6th profit is 16.5%.

Pensioner Benefit Account

This account is designed for pensioners and offers a profit rate of 15.36%. The government increased the profit rate to 12.72% per annum in March 2022.

Shuhada Family Welfare Account

The Shuhada Family Welfare Account is tailored for widows and senior citizens, providing them with a profit rate of 15.36%. The profit rate was increased to 12.72% per annum in March 2022.

Sarwa Islamic Savings Account (SISA)

The SISA is an Islamic savings account option with a profit rate of 18.00%.

Sarwa Islamic Term Account (SITA)

The SITA is another Islamic savings account with different maturity periods and profit rates. The 1-year maturity period has a profit rate of 16.36%, the 3-year maturity period has a rate of 14.86%, and the 5-year maturity period has a rate of 14.28%.

Stocks

The Pakistani stock market offers a range of investment opportunities, from well-known blue-chip companies to smaller, riskier ventures. Here are some key considerations and steps to take when investing in stocks in Pakistan:

Understanding the Risks and Rewards:

Investing in stocks comes with a certain level of risk. The stock market can be volatile, and economic or political events can cause sudden fluctuations in stock prices. Additionally, individual companies may face unique challenges, such as operational setbacks or changes in consumer preferences, which can negatively impact their stock performance. It is crucial to exercise caution and practice proper risk management when investing in stocks.

On the other hand, stocks have historically outperformed other asset classes, such as bonds or real estate, in terms of long-term capital appreciation. Investing in stocks offers the potential for substantial returns over time, making it an attractive option for those seeking to grow their capital.

Choosing a Brokerage Firm:

To invest in stocks in Pakistan, you will need to open an investor account with a brokerage firm registered with the Pakistan Stock Exchange (PSX). Popular brokerage firms in Pakistan include AKD Securities, Topline Securities, and others. When selecting a brokerage firm, it is essential to consider their reputation, fees, and the services they offer.

Researching and Selecting Stocks:

Once your brokerage account is set up, it's time to choose the companies you wish to invest in. It is crucial to research and analyze the companies you're interested in by considering factors such as their financial performance, future prospects, and overall market conditions. Look into their financial health by examining metrics such as net income, earnings per share, and price-to-earnings ratio.

Additionally, consider the dividend yield, especially if you're seeking regular income from your investments. Some Pakistani companies, such as fertilizer companies, banks, power companies, and oil and gas companies, are known for offering regular dividends.

Diversifying Your Portfolio:

To mitigate risk, it is generally advisable to diversify your investments by building a wider portfolio of stocks across different sectors and industries. This way, if one stock or industry underperforms, your overall portfolio may still perform well.

Monitoring Your Investments:

Stay informed about the performance of your holdings by regularly monitoring your investments. The stock market can be volatile, and it's important to keep track of any price movements and make timely decisions. Many brokerage platforms offer price alerts and market news updates to help you stay informed.

Understanding Charges and Fees:

Be mindful of the charges and fees associated with buying and selling stocks in Pakistan, including brokerage fees, taxes, and transaction costs. These fees can impact your overall returns, so it's essential to factor them into your investment decisions.

Regulatory Protections:

When investing in stocks in Pakistan, you are protected by the Securities & Exchange Commission of Pakistan (SECP). This regulatory body ensures that your broker keeps your invested funds safe and provides transparent information about the risks involved.

International Stocks:

Online brokerage platforms in Pakistan typically offer access to international stocks, allowing you to invest in leading global companies. You can explore stocks from the US markets, such as the New York Stock Exchange (NYSE) and NASDAQ, as well as other international options.

Robo-Advisors and Other Investment Options:

If you prefer a more hands-off approach, consider using a robo-advisor, an automated investment platform that buys and sells stocks for you based on your goals and risk tolerance. Additionally, you may explore other investment options in Pakistan, such as mutual funds, real estate, or gold, each offering its own set of risks and rewards.

In conclusion, investing in stocks in Pakistan offers both opportunities and challenges. By conducting thorough research, diversifying your portfolio, and staying informed about market conditions, you can make more strategic investment decisions and potentially achieve substantial returns over time.

Mutual funds

There are several types of mutual funds available in Pakistan, including:

Equity Funds

These funds seek to maximize returns and provide capital growth by primarily investing in the stock market. They carry a higher level of risk due to the volatile nature of stocks but can be a good option for those with a long-term perspective and the ability to stay invested for at least three years.

Income Funds

Income funds generate competitive returns by investing in TFCs, TDRs, government bonds, and other income instruments. They aim to provide a regular stream of income for investors.

Asset Allocation Funds

These hybrid funds offer diversification by investing in a mix of equity and fixed-income securities. They are suitable for investors who want to switch between asset classes based on market outlook.

Limited Subscription Plans

These plans are limited-time offerings that provide high returns through equity schemes and protect capital through income or money market schemes. They usually have a backend load on early redemption and are suitable for those seeking improved returns over money market or debt funds.

Money Market Funds

Money market funds aim to preserve the original investment and provide target returns with high certainty and a low-risk factor. They invest in low-risk, highly-rated government securities and are suitable for investors who want to limit risk or have short-term investment goals.

Islamic Funds

These funds are different from conventional funds as they only invest in avenues that comply with Shariah Principles. They are monitored by a Shariah Board or advisor to ensure adherence to Islamic guidelines.

When investing in mutual funds, it is important to evaluate your financial goals, risk tolerance, and time horizon. Mutual funds are typically better suited for long-term investors as they may not provide significant returns in the short term due to the cost of fees. Additionally, the performance of mutual funds is subject to price fluctuations, liquidity, and credit risks. However, they minimize these risks through diversification and professional management.

Real estate

Market Trends

Understanding the market trends is crucial. Pakistan's real estate sector has undergone significant changes, including government efforts to regularise it. Conduct extensive research on demand and supply dynamics, property types in demand, and comparable property prices. Look for areas with high growth potential, such as up-and-coming neighbourhoods or locations with upcoming infrastructure projects. Easy access to essential facilities like schools, hospitals, shopping centres, and transport links is also desirable.

Engage Professionals

Working with reputable real estate agents and dealers can save you time and money. They can provide local knowledge, help identify suitable properties, negotiate prices, and guide you through the legal process. It is recommended to hire professionals with experience in the area who can provide references.

Due Diligence

Conducting thorough due diligence is essential. Check for any encumbrances or legal disputes related to the property. Inspect the property for structural issues or necessary repairs. Remember that real estate investment is a long-term strategy, so be patient and disciplined to maximise returns over time.

Diversification

Diversifying your portfolio across different property types, locations, and price ranges can reduce risk and maximise returns. Consider investing in both the residential and commercial sectors, depending on your budget.

Financing Options

Explore financing options like mortgage loans to leverage your investments and potentially increase returns. Work with reputable financial institutions and carefully review the terms and conditions of any financing arrangements.

Rental Income

Investing in Pakistani real estate can provide rapid returns on investment, often in the form of rental income. This strategy allows you to generate a continuous income stream and accumulate substantial returns over time.

High-Value Tangible Asset

Controlled Investment

Investing in Pakistani real estate provides more control over your investments. There is less risk of sudden property value decreases or overnight investment losses.

Frequently asked questions