How to start investing in Pakistan: a beginner's plan, step by step

In short

• Before investing: build an emergency fund, clear expensive debt, and protect your family's income.
• Match the investment to when you need the money: under 3 years, keep it safe; 10 years or more, you can take market risk.
• Pakistan's main options are bank deposits, National Savings, mutual funds, shares on the PSX, gold, property and life insurance savings plans. Each does a different job.
• Invest a fixed amount every month, and ignore anyone who promises a fixed high return.

Before you invest a single rupee

• Emergency fund: three to six months of household spending somewhere safe and easy to reach. Without it, the first surprise forces you to sell at a bad time.
• Expensive debt: pay off credit card balances and instant loan app debts first. Their cost is usually higher than anything an investment can reliably earn.
• Protection: if anyone depends on your income, make sure they would be looked after if you died. See how much life insurance you need.
• A goal and a date for each pot of money: a child's university in 12 years, retirement in 20, a car in 2.

Match the money to the time

The main options in Pakistan, compared

A closer look at each

• National Savings, run by the government's Central Directorate of National Savings, offers Defence Savings Certificates, Special Savings Certificates, Regular Income Certificates, Short Term Savings Certificates and savings accounts, plus Islamic Sarwa accounts. Behbood Savings Certificates are for people aged 60 or over, widows and persons with disabilities; the Pensioners' Benefit Account is for government and armed forces pensioners. See savings.gov.pk.
• Mutual funds pool many people's money and a professional manager invests it. Money market funds are the safest, equity funds the most volatile. Islamic versions of each exist. Buy only from asset management companies licensed by the SECP.
• Shares: the KSE-100 is the Pakistan Stock Exchange's main index. You buy shares through a brokerage firm; the PSX lists them on its Find a Brokerage Firm page. If you cannot follow companies yourself, an equity fund does it for you.
• Life insurance savings plans, such as State Life's, combine protection with a lump sum at the end. The sum assured and declared bonuses are guaranteed by the Government of Pakistan. They suit long goals you are sure you will keep paying for, and they are a poor place for money you might need back soon.

When life insurance is not the answer

• Money you might need in the next few years: surrendering a policy early returns less than you paid. See surrender value.
• Your emergency fund: keep it in a bank or National Savings account.
• If you have no dependants and only want growth, a savings plan's protection is something you do not need to pay for.
• Where it is the answer: long goals such as a child's education or retirement, where you want a guaranteed core and your family protected if you are not there. See the best savings plans compared.

Want it halal?

Every main option has a Shariah-compliant version: National Savings' Sarwa Islamic accounts, Islamic bank deposits, Islamic mutual funds, Shariah-compliant shares, and Takaful instead of conventional insurance. See whether life insurance is halal and State Life's Takaful plans.

Six beginner mistakes

• Putting everything in one place: one share, one plot, one scheme.
• Following tips from WhatsApp groups and social media.
• Selling in a panic when markets fall, and buying in excitement when they rise.
• Ignoring charges. A fund's yearly fee or a dealer's margin quietly eats your return.
• Falling for "guaranteed" high returns. Check that any company is registered with the SECP, and walk away from promises of fixed monthly profit.
• Never starting, because the amount feels too small. Rs. 5,000 a month is a real start.

Key terms

Mutual fund

A pool of many investors' money, invested by a professional manager in shares, bonds or deposits.

KSE-100

The Pakistan Stock Exchange's main index, tracking 100 large listed companies.

Diversification

Spreading money across different investments so one bad result cannot sink the whole plan.

Behbood Savings Certificate

A National Savings scheme for people aged 60 or over, widows and persons with disabilities.

Questions people ask

What is the best investment in Pakistan?

There is no single best one; it depends on when you need the money and how much risk you can take. Safe options suit money you need within 3 years; shares and equity funds suit money you can leave for 10 years or more; a life insurance savings plan suits long goals where you also want your family protected.

How can I invest Rs. 10,000 a month in Pakistan?

First make sure you have an emergency fund. Then split it by goal: for example, part into a monthly mutual fund plan for long-term growth, and part into a guaranteed savings plan or National Savings for the safe core.

Is investing in the stock market risky?

Yes, over short periods. Share prices can fall sharply in any year. Over long periods, shares have historically grown faster than safe options, which is why they suit money you will not need for 10 years or more.

Where can senior citizens invest safely?

National Savings' Behbood Savings Certificates are designed for people aged 60 or over, as well as widows and persons with disabilities. Bank deposits and the Pensioners' Benefit Account, for government pensioners, are other low-risk options.

How do I know an investment company is genuine?

Check that it is registered and, for funds and brokers, licensed with the SECP. Be very wary of anyone promising a fixed high monthly profit or asking you to bring in other investors.

Sources

• Central Directorate of National Savings, Products
• Central Directorate of National Savings, Behbood Savings Certificates
• Pakistan Stock Exchange
• Pakistan Stock Exchange, Find a Brokerage Firm