Profitable Investment In Pakistan

Profitable Investment In Pakistan – To beat inflation and truly build wealth, we need to invest in assets that can provide more income than the ongoing inflation. Rapid rate hikes can have a destabilizing effect on the economy and put your hard-earned savings at risk. The problem is especially important for families on fixed incomes and for retirees living on a tight budget. Over time, inflationary pressures can reduce the purchasing power of your income, leaving you with less flexibility to cover housing costs, food prices, energy bills and medical expenses. The results can worsen your personal financial situation.

Today we will discuss some of the best investment options in Pakistan to protect against high inflation. When inflation is high, we need to find those asset classes that have a direct correlation with inflation and can lead to a real return on your investment.

Profitable Investment In Pakistan

The worst thing you can do right now is hold on to your cash, because in these economic times cash is trash.

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So let’s go through the list of some options for investors in Pakistan in the current scenario that can help them against rising inflation.

The first and best investment option in Pakistan is rental production property. This asset class has intrinsic value and provides constant income through monthly rentals. It acts as a good inflation hedge because there will always be a demand for housing regardless of the economic climate, and as inflation rises, so do property values, and therefore landlords can Pay for rent.

Argentina is a classic case study where rental income offers returns of 7 to 8%, despite economic crises and frequent defaults. The study shows that as Argentina’s economy collapsed, banks were unable to offer new mortgages, so demand for rental properties increased.

Although our housing sector in Pakistan is not really dependent on mortgage tax. However, in a struggling economy where people are not making enough money to buy a new home, reliance on rental properties will increase.

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Real estate is one of the oldest inflation hedges. It is a tangible asset, and unlike paper assets, it retains its value when inflation prevails. In particular, as prices rise, so do property values, and so does the amount a landlord can charge for rent so that the property can generate higher rental income over time.

A good rental property in Pakistan will give you a return of 14 to 20% per annum combined with capital gains and rental income. Rental income can be used to maintain your lifestyle and capital gains will beat inflation in the long run. All these elements make property a very valuable hedge in times of inflation.

Mutual funds are described as pooled investments. When an investor buys units in a mutual fund, the money is pooled with other investors who have similar goals. A professional fund manager uses this money to buy stocks, bonds or money market instruments that make up the fund’s investment portfolio.

In Pakistan, various mutual funds are available and managed by professional investment managers. This is especially a good option for investors who do not have the funds to invest in the rental property market. You can easily open a mutual fund account with a bank and start investing without having to invest a large amount beforehand.

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Although mutual funds are subject to market risk, they have shown strong and consistent growth in recent years. Some mutual funds have shown steady gains of 12 to 14% over the years. This means that if all goes well, they will successfully beat inflation and preserve your wealth.

Another advantage of mutual funds is that some of them are Shariah compliant and if charging fixed interest is something you want to avoid, mutual funds can solve that for you.

Mutual funds can easily be the first step where you grow your money before entering the big game of rental property.

Investing in non-rental property is still a good investment in times of inflation. Real estate in Pakistan typically yields capital gains of 10 to 12% per annum, which should beat today’s high inflation.

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Real estate does well with inflation. This is because, as inflation rises, so do property values. This helps to keep inflation at bay. For this reason, property income is one of the best ways to protect an investment portfolio against inflation.

However recent government policies discourage investors from investing in plots and files or other non-rental properties. If you know real estate and have some leverage, you can effectively hedge against inflation. Depreciation of PKR is also easily managed by investing in real estate.

You may not see immediate results and you will need some patience when working in Pakistani real estate. However, if you invest in the right place, you will eventually beat inflation. However, real estate creation may no longer be possible in non-income producing real estate.

Pakistani banks currently offer one of the highest interest rates in the world, where you can put your money and get 8 to 9% returns. It probably won’t make you rich, but it will protect you somewhat from inflation. At least you get poverty at a slower rate than those who only have cash.

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If you don’t use leverage and keep compounding, you’ll still be able to make what you can make today in ten years. However, you must have another active source of income to maintain your lifestyle.

Commodities are a broad category that includes grains, precious metals, electricity, oil, meat, orange juice, natural gas, and more. are included. Commodities and inflation have a unique relationship, where commodities are an indicator of future inflation. As the price of a good rises, so does the price of the product used to produce the good.

Fortunately, it is possible to invest in commodities widely through exchange-traded funds (ETFs). Commodity trading returns are variable and depend on your experience.

Before investing in commodities, investors should understand that they are very volatile and I advise investors to be careful in trading commodities. Because commodities depend on supply and demand factors, slight changes in supply due to geopolitical pressures or conflicts can negatively affect commodity prices.

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In the current geo-political scenario, global inflation, I expect commodities to outperform and rank above equities. A good trader will effectively beat inflation and build wealth, but since it is very risky and not for everyone, I rate it number 5.

However if you are a smart investor, you can definitely make money and beat inflation when you invest in stocks.

The stock offers significant long-term upside potential. In general, businesses that benefit from inflation are those that require less capital (while natural resource businesses are inflation losers). Both technology and telecommunications services are capital light businesses, so theoretically, they should be inflation winners.

However, stocks are very volatile in a country like Pakistan which is facing political and economic turmoil, so not something I would recommend.

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Stocks are a great investment vehicle, but many people lose money instead of making money. So this is not what I am recommending in this time of political and economic crisis in Pakistan.

If you have cash and are afraid to invest, as USD has shown an average growth of 6% per year against PKR, it is better to convert your PKR to USD. While this will protect you against PKR depreciation, it may not actually be a good hedge against 11 to 12% inflation.

So while keeping your money in USD instead of PKR is smart, it won’t win the battle for you. If you are one of those who want to keep extra cash on hand, in addition to your regular investments, this is the place to go. Especially for old money that is offered by banks in Pakistan on their foreign currency bank accounts with good interest rates.

Gold is often seen as a hedge against inflation. In fact, many people see gold as an “alternative currency”, especially in countries where the main currency is losing value. These countries use gold or other strong currencies when their own currencies fail. Gold is a real, physical asset, and for the most part has its own value.

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However, gold is not a true perfect hedge against inflation. When inflation rises, central banks raise interest rates as part of monetary policy. 1 Holding an asset such as gold that does not pay any returns is not worth holding the asset that it has, especially when the price is high, which means the return is high.

There are better assets to invest in when you want to hedge against inflation. But like any solid portfolio, diversification is key, and if you’re thinking about hedging against inflation, gold is worth a look.

The general rule is that asset classes that have physical intrinsic value and provide regular income cash flow perform

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