Mutual funds? Bonds or Stocks? Learn more about different investment options.
Never invest your money in something you don’t understand. When it comes to investments, research is the first thing you need to do. Without getting into too many details, we have listed a few investment options down with some tips for you :
1. Mutual Fund:
It is a pool of money gathered and then invested into multiple stocks, bonds, commodities etc for a commission. They are run by investment experts.
Where to buy: Investment banks, Mutual fund companies.
Tip: Invest in ‘Capital Protected’ category of mutual funds for low risk.
2. Savings account:
It's like a current account but it gives you a return on the money deposited because the bank further invests that money.
Where to buy: Available at all banks (Islamic and commercial).
Tip: Keeping your money in a savings account allows it to grow as the annual return on a savings account is between 4-8%.
When you buy a bond, you are basically loaning money to either a company or the government for a period of time. They will pay you a return over the life of the bond.
Where to buy: Banks, National Savings Centre, Brokers and some mutual fund companies also invest in bonds.
Tip: Bonds are mostly a long term investment.
Commodities are items that are traded and you can earn by buying and selling. Examples are agricultural products (wheat, corn, etc) , metals (gold, silver, etc), oil, gas and more.
Where to buy: Buy physically or trade online as 'Futures exchange' on PMEX( Pakistan Mercantile Exchange).
Tip: Hire a broker to manage commodity trading for you.
Buying stocks means buying a small share of a company. When the company profits, you get a share of the profit based on your investment, known as 'dividend'. When the company does well over time, the price of the share also increases in value.
Where to buy: Stock market like Karachi Stock Exchange. You can also hire a broker.
Tip: When you buy stocks, do your research on the company and hold the stock for the long term. Do not panic when you hear of the stock market going down.
6. National Savings Schemes:
You buy a time fixed government scheme with a return rate for a certain amount. You will get a receipt in the form of a government certificate.
Where to buy: These schemes are available at all National Savings Centre that are all over Pakistan.
Tip: There are multiple options available with annual returns from 10-14 %.
This simply means buying and owning land and/or property.
Where to buy: Either you buy directly from seller or hire a property dealer.
Tip: This will always be a long term investment and will require a large amount of savings or taking out a loan.
To learn more details about the above-mentioned investment options, get in touch with us!