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Investment opportunity during the pandemic

Investment opportunity during the pandemic

There’s no doubt that COVID-19 has changed our daily lives. This pandemic is difficult for everyone. Even those who have managed to keep their jobs are feeling the financial. Those who haven’t been laid off may be wondering whether they’re next on ‘right sizing streak’. And with the economy largely being shut down, finding a new job is a seemingly impossible task right now. The COVID-19 crisis has caused several inconveniences for entrepreneurs and it has affected many sectors negatively. The strategic decisions made during this time are crucial and will define the future of the companies. However, it is essential to highlight that there are many investment opportunities that have arisen in many sectors as a result of the pandemic.

Investment opportunities in Pakistan

Pakistan’s economy already had volatile growth pattern past many years. The FY2021 began in the midst of the most severe global health crisis experienced in modern history. Pakistan’s economy, like rest of the world, has struggled to combat the economic consequences of COVID-19 shock through prompt measures for supporting the economy. As Pakistan successfully subsided the first wave of COVID-19 during the summer of 2020 through effective containment measures, the country was hit by the second and third wave. Now Pakistan is experiencing the fourth and most virulent wave of pandemic with Delta Variant. Smart lockdowns and drastic measures on pandemic response front allowed the continuity of economic activities and supported the ongoing recovery.

Pakistan holds great potential not only for native investors but for Pakistanis living overseas as well. A lot of people are unacquainted that there are many investment avenues in Pakistan apart from the commonly known opportunities like Stock Exchange, Property and Mutual Funds. Today, now we will take a look at the major investment avenues and possibilities that hold incredible potential for people to invest in.

What is an Investment Plan?

The investment plan is the simplest and easiest way to build wealth over time. Life insurance providers offer various investment plan options. These are the wealth creation of financial products for the future when you will need and require it. It requires planning and proper understanding of different options available.

The Gold Market

Bullion is the main commodity of financial Institutions around the world since the start of the pandemic. History provides strong evidence for the hedge and safe-haven properties of gold against stock market indices during stress periods. As an investment asset it attracts considerable attention in the financial community due to its ability for hedge inflation and to produce an appealing risk adjusted. Gold prices are more stable than equities and their returns are generally right-tailed. Notably,gold is appreciated by investors and portfolio managers because it is (positively) weakly or negatively correlated with stock market indices, which makes it able to offset stock market losses especially during stressful periods

Time has proved that gold’s value appreciated during a period of extreme uncertainty, as the stockpiled gold is an insurance policy against the unknown. There are many reasons why people are buying gold such as in the form of strategic investments, offsetting losses, in the form of jewels and high-quality products and many others.

Studies has shown that in the first half of 2020 Gold was a diversifier in Indonesia, Philippines, Thailand, Vietnam, and Malaysia and a strong hedge in China, Japan, India, Hong Kong, Pakistan, Taiwan, South Korea, and Singapore. Gold is a strong safe-haven in Indonesia, Singapore, and Thailand, but a weak safe-haven in China, Japan, Hong Kong, India, Pakistan, These findings were helpful for portfolio diversification and risk management. For example, investors in China, Indonesia, Singapore, Vietnam, Pakistan, and Thailand can consider combining stock and gold investments to maximize returns and reduce the downside stock market risk associated with the COVID-19 outbreak, since gold prices are likely to increase during the outbreak while stock markets lose some of their value.

The Stock Market

Stock marketing has given open small investment opportunities in Pakistan to everyone. The stock market shows the Economy of a nation and Stock prices show how much companies and industries of a particular nation are growing over time.

Encouraged by the growing fear that COVID-19 will continue spreading globally and disrupt supply chains, the stock market turned in its worst state in more than 11 years. There is a famous saying “Be fearful when others are greedy and greedy only when others are fearful.” So, it is investors’ choice whether they want to be fearful or greedy in the current circumstances of COVID-19. The performance of the Pakistani stock market has been influenced as a result of COVID-19 positive cases, fatalities and recoveries. Studies has shown that only COVID-19 recoveries have influenced the performance of the market and positive cases and fatalities are not relevant in the given case. The fluctuations which have been observed in the Pakistani stock market during the first half of 2020 are subject to some other variables. The only COVID-19 recoveries are a strong predictor of the performance of the stock market and positive cases and fatalities have a non-significant relationship with the performance of the market. However, other variables such as economic growth, interest rate and inflation rate along with the COVID-19 related variables at a cross country level should be taken into consideration.

For those fortunate enough to receive a steady paycheck amid the coronavirus crisis, now might be a good time to cautiously strategically consider investing only available liquid funds in the stock market.

To invest in the stock market is now popular investment scheme as, in this fast and digital world, it allows to invest with shockingly small amount of money. Those who want to invest in the stock market but have fewer resources of income should now invest in it because they can get two benefits in common from it. Investing in stock markets with less sum of money lessens the risk of money loss. With less sum of money, it higher the opportunity to grow for a layman with his modest investment. Spending in the stock market is one of the well-organized and professional ways to add a profitable sum in the total annual worth even on the individual level investment. Those who spent their wealth in Stocks are smart enough to keep an eye on buying the stocks at very lesser prices and then selling them when the stocks are giving a reasonable value of your interests. It all revolves around buying and selling stocks which will gradually be the very creative process of being wealthy this is all the effort or procedure to invest in the stock market, how easy is that of course no rocket science involved. The time determines the risk of loss so just buy when the stock prices are cheap and affordable enough to invest in it and then sell at the right time when the stocks have a high value that is when the stock prices are higher.

The Currency Market

This investment includes buying and selling different currencies somehow resembles stock but it is a simpler way of investment through lesser money in lesser time. This process happens through a foreign exchange market or Forex in which the two different currencies are bartered with one another for example one can buy US dollars and then sell all the dollars in Pakistani Rupees. The pairing techniques are used which is done through the help of brokers there are 3 easy processes:

Spot Trading

On spot, value is used for the currency which is decided in accordance to value. It is a faster way of trading.

Forward Trading

This allows you to buy or sell certain currencies on decided time at a decided rate.

Future Trading

This is much like forwarding trading but apart from forwarding trading, this allows us to trade your currencies on the rates of foreign exchange.

Mutual Funds

Smart minds know that their little sum of money can propagate at an immense rate with compound interests on investment! This is one of the reasons why mutual funds have been the point to focus on initiating their investment.

Mutual funds are one of the most available forms of savings without the expense of high capital per person and risk of urgent need of money. It is just like a collective investment of money from many investors and then that money collected by any investment or assets managing company that can further invest it anywhere in business or shares through a fund management system. This pooled money every month in case of emergency can be taken in bulk double or triple according to the policies of the asset management company which means a little saving will pay with the big bonus of wealth. Investing in Mutual Funds is could easily be done by visiting the branch office of fund houses or brokers or through connecting easy online assets managing companies after a little search for your convenience. They will certainly offer a return after some time based on the agreements and preferences chosen before applying and investing in the asset management company with a percentage of tax rebate on mutual fund plan.

Savings Accounts

Savings and investing are relative to each other supporting to invest that money into a small business in the future or wait for savings to grow as it may prove to be the most secure investment policy for better coming days. Savings are the upcoming investing security for a successful business it is for people who want to do something for their potential future output in their life and those having very fewer salaries/per person capital can confidentially rely upon it with their small saved amounts because of convenience it offers initiating with ease from your locker to bigger scale savings.

In Pakistan, normally, people relies upon financing in banks for saving wealth bit by bit, monthly, annually, and sometimes whenever they get to save a small amount of money without any restriction of announced dates a layman gets his wages as his ultimate savings.

What is a savings account?

A savings account is a basic type of bank account that allows to deposit money, keep it safe, and withdraw funds, all while earning interest. Savings accounts offered by most banks, credit unions, and other financial institutions are FDIC insured and typically pay interest on deposits.

A savings account is an excellent option for people who do not have huge upfront capital. It is a perfect money-saving opportunity for people such as students, elderly people, housewives, and children. A savings account can be opened with a mere investment of Rs.500. The bank saving account interest rate Pakistan varies from 4.15% to 11%. This means that if you deposit Rs.500 in your account, you are going to get Rs.556 with 11% interest.

The biggest advantage of a savings account includes minimum financial risk or loss. The return on investment maybe less but at least money invested would be secure.

Prize Bonds

The Prize bonds of different value are available to the public in the open market. A committee of National Savings by the Government of Pakistan hold draws on a fixed schedule through hand-operated draw machine at easy accessible public places. The Serial number of the prize bond can determine the winning number. The government of Pakistan guarantee the prize money awarded to the holder of that prize bond if the serial number matches in the lucky draw. Prize bond has always been the best return on investment in Pakistan. Prize Bond are cashable at any bank, anytime.

Invest in Real-Estate

Investment in real estate business is one of the profitable investments in Pakistan. Though field is rough and tough but provisions of profitable earnings are noteworthy. The large groups of investors invest in small fractions of a larger property for a business and then earn the shares in larger amounts. Bulk funding has always been favorable for the investors with a lesser amount of money for investment. Investor can rely on that for future growth. However, buying a whole asset of land may cost much but in Pakistan. Likewise, for minor investors there are sales on lands which can start from 5% to 40%.

There are many other ideas of low-cost investment in the real estate market. The real estate land prices rise much faster than the normal non-commercial areas. Normally investors invest in cheaper land in some non-constructed place where the commercialization is yet to be started and leave it for few years until the area is well commercialized and the investors can make good profit.

Some other options are:

Rental Properties: After buying a house or shop etc. give it on a monthly rent.

Real Estate Investment Groups: Land investment groups are ideal for individuals who need to possess rental land without the issues of running it. Putting resources into REIGs requires a capital spot and admission to financing.

House Flipping: House flipping is for individuals with striking involvement with land valuation, showcasing, and remodel. House flipping requires a huge revenue and the capacity to do, or direct fixes varying.

Real Estate Investment Trust (REIT): It is best for speculators who need portfolio introduction to land without a conventional land exchange. A REIT is made when a partnership utilizes speculators’ cash to buy and work salary properties. REITs are purchased and sold on significant trades, similar to some other stock.

Regardless of whether land financial specialists utilize their properties to produce rental revenue, or to await their chance until the ideal selling opportunity emerges, it’s likely to work out an ultimate investing program by paying a moderately little aspect of a property’s absolute worth on the spot. Also, similarly to any project, there is benefit and potential inside the land, regardless of whether the general market is up or down.

Government Treasury Bonds

This is an investment idea that is highly dependent on your luck. The Government of Pakistan issues treasury bonds starting from merely Rs. 100. Get those and regularly check them for prizes. If you are lucky, you may win cash prizes of thousands of rupees. For example, the first cash prize for a bond of Rs. 750 is around Rs. 15 million. See the amount of effort you are putting, and imagine the rewards you are getting. And the best thing? You can always use bonds as a substitute for cash. Student bonds are one of the safest and easiest investment ideas for students in Pakistan.

Government Securities & Bonds

Pakistan Investment Bonds (PIBs) are debt securities issued by the State Bank of Pakistan. These bonds are issued in the number of multiples of Rs 100,000/- and available in tenors of 3, 5, 10, and 20 years. The yield on these bonds is fixed and disbursed semi-annually. The coupon rate or semi-annual returns on these bonds are paid until maturity.

PIBs are a good way to earn competitive returns while keeping the investment secure. These bonds are guaranteed by the Government of Pakistan and therefore the chances of a default or any discrepancy in the payouts from these bonds are very low.

There are two ways to invest in PIBs. Either through Primary Dealers/ Scheduled Banks or the Secondary Market/ Stock Market. An Investor Portfolio Securities (IPS) Account is opened with the Primary Dealer/ Scheduled Bank which allows an investor to invest in the PIBs. Any person or entity which has an account with a Primary Dealer or a Scheduled Bank offering this facility can open an IPS account. Click here to learn more about Pakistan Investment Bonds.

[box type=”note” align=”” class=”” width=””]The author, Nazir Ahmed Shaikh, is a freelance columnist. He is an academician by profession and writes articles on diversified topics. Mr. Shaikh could be reached at[/box]

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