Intro on Investment Opportunities in Pakistan
Everyone is looking for investment opportunities with handsome returns. This is even more true in Pakistan than in most countries, as holding cash is no longer a viable option due to the continual devaluation of the Pakistani Rupee.
As world-renowned entrepreneur and investor Grant Cardone said, “Investment puts money to work. The only way to save money is to invest it.”
Investment brings the possibility of positive returns, but before embarking on any investment, it is important to ask yourself a few questions:
- Is the investment opportunity legal?
- Is it safe?
- Will it bring a good return?
- How much time will it take to generate a return?
Pakistan is an emerging country and, therefore, offers many investment opportunities. The key is to identify one that matches your vision, available capital, risk tolerance, and liquidity. Let's discuss the viable investment opportunities in Pakistan and their pros and cons.
Real Estate Investment
Pros
- High returns
- A tangible asset
- Rental income
Cons
- Low liquidity
- High capital requirements
- Maintenance costs
Real estate can promise a lucrative return compare to many Pakistani investment opportunities. This is an investment that never becomes outdated. Due to the continual increase in the Pakistani population, the need for real estate is always growing and usually welcoming for investors.
Investment in real estate requires substantial capital. Also, the market is not free from scammers. So, always go with registered dealers and remember to check legal formalities.
There are many legal housing societies where you can book your plot with easy installments. Within a few years, it could double or triple in value.
You can buy modern-built houses or shops or rent one, which can give you an attractive passive income monthly.
Stock Market Investment
Pros
- High returns
- Growth potential
- Liquidity
Cons
- Highly volatile
Stock market investment involves buying the stocks of high-performing companies.
Stock market investment can provide two major benefits. Firstly, you can be paid dividends from corporate earnings. Secondly, the capital value of shares usually increases over time.
At the same time, the stock market is quite volatile and is highly affected by global events, political situations, etc., causing fluctuation in share prices.
Before investing in the stock market, it is advisable to study and observe the market to choose potentially high-performing companies.
Forex Market Investment
Pros
- High returns
- Accessibility
- Flexibility
Cons
- Highly volatile
- High risk
- Requires a good understanding of foreign exchange
Forex market investment is a high-risk, high-return investment. You ought to have a good knowledge of financial markets' fundamental and analytical aspects to reduce the risk.
In Pakistan, you may open a futures trading account with the Pakistan Mercantile Exchange (PMEX), which is quite secure and meets all regulatory requirements.
Alternatively you may trade with a Pakistani forex broker or hire the services of professional Forex managers/traders to put your money into forex trades in return for a small profit percentage.
Remember, the risk of losing money is always there, depending on market conditions. Therefore, you need to have an optimum risk tolerance if you want to try it.
Gold Investment
Pros
- Safe
- Liquid
- Value potential
Cons
- Security concerns
An investment in Gold is one of Pakistan's safest and most traditional methods of preserving wealth. Investing in Gold bullion, bars, or coins is an advisable, as gold jewellery comes with hidden costs.
You may also trade gold via Forex or invest in gold funds offered by various banks in Pakistan, such as the Meezan Gold Fund.
Prize Bonds Investment
Pros
- Risk-free return
- Government-issued
- Low capital requirement
Cons
- Low return
- Uncertainty (luck matters)
Investing in Prize Bonds is one of the most hassle-free and flexible options. Available in various denominations ranging from Rs. 100 to Rs. 40,000, you can invest as little as Rs. 100.
You can easily buy prize bonds from the State Bank, commercial banks, and national savings centers. The good thing is that you can claim a refund whenever you want.
Based on the serial number of bonds, prizes are announced every three months via draw.
Mutual Fund Investment
Pros
- Halal
- Liquid
- Accessible
Cons
- Fees
- Tax implications
- Lack of control
Of all the investment opportunities offered by banks, mutual funds are most favored by investors as they are declared "Halal" by Muslim scholars compared with other interest-based investment options.
In mutual funds, the bank or financial institution collects funds and invests in projects. The risks/rewards are distributed equally among investors.
Renewable Energy Investment
Pros
- Handsome revenue potential
- Government support
- Job creation
Cons
- High capital requirement
- Regulatory risks
Investment in the renewable energy sector could be very promising in the near term, owing to the increasing demand for power consumption. With its subtropical environment, Pakistan is a strong location for solar power plants, hydropower projects, or biomass energy generation setups. Not only does it have the potential to bring handsome returns, but it could also generate various jobs and contribute to lowering the unemployment rate.
However, it will involve a great deal of documentation and legal formalities.
