Where to Invest in an Inflationary Economy?

Inflation Is on the Rise: Where to Invest?

As Ronald Reagan said – Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.

A political crisis followed by an economic crunch is what Pakistan is facing these days. Not only this, to add insult to injury, inflation – already in the double digits, is further rising.

With the increase in the prices of petrol and other goods, inflation is ready to set another benchmark.

In uncertain times like these, people have one question in mind: How to save and prevent money from further getting devalued?

If there is something that all of us agree on, regardless of our political stance, it is that we need to invest our money smartly. Looking at the current scenario, it won’t be a surprise to see our savings losing their worth unless they are invested in less risky instruments.

Here are a few less risky investments that will help you save and grow.

1. Government Bonds

Government bonds are a way of investing by lending money to the government. There are two kinds of government bonds:

A Treasury Bond – Where the government borrows for a year or less.

Pakistan Investment Bond – Where the government borrows for over a year.

No matter which kind of investment bond you choose to get, the government pays a mark-up on the amount that it borrows.

You must be thinking how is it possible to lend money to the government? The first thing you should know is that almost 55% of the money that you have in your bank account is either invested in treasury bills or bonds by the banks and they earn a higher return than you, or any other person, would as an investor.

The query here is why let banks earn money when you can earn it yourself?

To earn money through government bonds, you can open an Investor Portfolio Profile with your bank. Once that is done, you can ask the bank to invest in either an investment bond or a treasury bill.

Looking at the current situation, you may be able to lock a higher interest rate which means higher gains in the future.

2. National Savings Scheme

Another great option to invest your money is the government’s National Savings Scheme. Since the interest rates are increasing, the next few months are great for investing in for a period of 10 months and locking in high interest rates.

Even if the rates do not rise in the future, you will still be able to make profit on the rate that you lock. Senior citizens can invest in Behbood Saving Certificates of the National Savings Scheme. This gives them the option to enjoy tax-free fixed-income returns.

If you are a pension holder, you can open a Pension Benefit Account which is also tax free and has similar rates.

Along with the youth, it is also extremely important for senior citizens to use their funds wisely and in low risk government schemes.

3. Property

Even though the prices of property are soaring, it still makes a good option to invest in. You can either choose to buy a land and get a house constructed or keep it and resell the land in future. Some people also choose to buy a constructed house and rent it out.