In the era of rising inflation and shrinking pay cheques, savings can help you in your hard times, but how about multiplying them for substantial profit?
Samaa Money’s Farooq Baloch discussed various investment options on Samaa TV morning show Naya Din.
The biggest fear while investing your money is the risk of losing it. One way to minimize this risk is to invest in fixed income or interest-based instruments as they offer highest rate of return in almost a decade with little or no risk.
The National Savings scheme of the government is one such option. Of the many saving certificates it offers, Defense Savings Certificates give a fixed 2.4 times (240%) profit in 10 years.
If you have one million rupees and you can wait for ten years, then you can easily make them Rs2.4 million through Defense Savings Certificates. But wait! This will not allow you to take your profit on monthly basis. You can only withdraw your principal amount and the profit after the completion of 10 years.
The scheme also offers other saving certificates with different durations and profit rates. You can check it at their official website savings.gov.pk and choose a saving plan as per your own ease.
Stock market is another good option but with high risk, especially in the short term. For example, in the last two decades stock market has given 300% profit, but in the last one year it has posted a loss of approximately 30%. Simply put, stock market is risky but in the long term it can be a good option for people with lower income, who save as low as Rs5,000 a month.
Since direct investment requires sound knowledge of the market, people with low savings can invest in the market through mutual funds. Just open an account with an asset management company to start with.
Term deposit or savings account in conventional or Islamic banks is also an attractive investment option at the moment because interest rates are at a nine-year high. You can get an annual profit of 13% to 14% percent, which means you can earn Rs14000 per year or Rs1166 per month on every Rs100,000 you invest now.
If you are really thinking of investing in term deposit, give priority to smaller banks as they give higher interest rates compared to bigger ones.
Gold and dollars gave good profit last year. However, forecasts for this year suggest that dollar won’t be an attractive investment, while gold still has some juice left in it.
The dollar may remain stable around Rs160 (slightly above its current value of Rs157) but gold may rise another 10% to 15% over the next year, according to experts.