In our comprehensive analysis of the past 24 years in Pakistan, we evaluated the performance of four key investment assets: Currency, Gold, Property, and Bank Interest. Our findings revealed that these assets exhibited similar growth patterns, with only a few percentage points differentiating them. In this report, we will provide a detailed overview of these investment options, highlighting which ones have proven to be the most advantageous for long-term investment in Pakistan.
We did an analysis of last 24 years in Pakistan and we found out that all four assets:
- Currency
- Gold
- Property
- Bank Interest
Had almost the same results. However, there was a difference of around a few percentage points in each of these. So we will just go over them to tell you what is the best option for investment in Pakistan.
Summary:
| Investment Option | Average Interest Rate | Percentage Increase/Appreciation |
|---|---|---|
| Bank Interest Rate | 14% | 1518% |
| Bank Interest Rate to USD Return | 4% | 121.05% |
| Gold Price (Local Currency) | 10% | 886.42% |
| Gold Price (USD) | 4.5% | 388.37% |
| USD to PKR Exchange Rate | 5% | 462.75% |
| Plot Value | 13% | 1185.71% |
| Plot Value (USD) | 4.5% | 374.45% |
| US Real Estate Price | 2% | 142.86% |
| S&P 500 Index | 3.91% | 150.85% |
Interest Rates growth in Pakistan in last 24 years.
- Bank interest rate at 14% avg (Value increase from 100 to 1618): Approximately 1518% increase.
- Bank Interest Rate to USD Return at 4% avg: Approximately 121.05% appreciation.
- Gold Price (Local Currency) at 10%avg: Approximately 886.42% increase.
- Gold Price (USD) at 4.5% avg: Approximately 388.37% appreciation.
- USD to PKR Exchange Rate 5% avg: Approximately 462.75% appreciation.
- Plot Value 13% avg: Approximately 1185.71% appreciation.
- Plot Value (USD) 4.5%: Approximately 374.45% appreciation.
- US Real Estate Price 2% avg: Approximately 142.86% appreciation.
- S&P 500 Index 3.91%: Approximately 150.85% appreciation.
I analyzed the data from 2000 to 2024 for various investment options, observing diverse growth rates influenced by market dynamics and economic conditions. Here’s a summary of the percentage increases based on their average annual interest rates over this period:
- Bank Interest Rate: With an average interest rate of 14%, the value increased by approximately 1518%, demonstrating substantial growth in local currency terms.
- Bank Interest Rate to USD Return: At an average interest rate of 4%, the appreciation in USD terms was around 121.05%, indicating moderate gains when converted to a stable foreign currency.
- Gold Price (Local Currency): Averaging a 10% increase per year, gold prices surged by about 886.42%, highlighting its strong performance as a hedge against local inflation and currency devaluation.
- Gold Price (USD): When measured in USD, gold appreciated by approximately 388.37% at an average rate of 4.5% per year, reflecting its global value increase.
- USD to PKR Exchange Rate: The exchange rate between USD and PKR appreciated by approximately 462.75% at an average annual rate of 5%, indicating significant depreciation of the PKR against the USD.
- Plot Value (Local Currency): Real estate plots increased by about 1185.71% at an average rate of 13% per year, showing robust growth in local property values.
- Plot Value (USD): In USD terms, plot values appreciated by approximately 374.45% at an average annual rate of 4.5%, reflecting solid returns in the global currency.
- US Real Estate Price: US real estate prices increased by approximately 142.86% at an average rate of 2% per year, indicating steady growth in the American property market.
- S&P 500 Index: The S&P 500 Index appreciated by approximately 150.85% at an average rate of 3.91% per year, showcasing the significant gains in the US stock market.
Investing inside Pakistan
Here’s a summary of the percentage increases based on their average annual interest rates over this period:
- Bank Interest Rate: With an average interest rate of 14%, the value increased by approximately 1518%, demonstrating substantial growth in local currency terms.
- Gold Price (Local Currency): Averaging a 10% increase per year, gold prices surged by about 886.42%, highlighting its strong performance as a hedge against local inflation and currency devaluation.
- Plot Value (Local Currency): Real estate plots increased by about 1185.71% at an average rate of 13% per year, showing robust growth in local property values.
So based on this data, the best option for investment in Pakistan for 20 years or more is banks. Banks have given a safe return on investments of around 1500% overall in last 24 years. In comparison, real estate investment has remained lucrative but uncertain. In some years, the real estate sector has given a profit of over 300% but in some years it has remained in negative 200%. So overall, it is a second best investment option for anyone that is looking for growing returns in Pakistan.
However, real estate in Pakistan is not a safe sector. Land grabbing, illegal plot files, scams by real estate companies and builders are just some of the problems people face when investing in real estate in Pakistan.
Third best sector in Pakistan is of course Gold. Gold has remained a promising sector in Pakistan for remaining above inflation. It is also a very safe investment for anyone who would want to keep all their money in a safe and secure asset that is not bound to be impacted by land grabbers, scams, and other various challenges.
Investing Outside Pakistan
- Bank Interest Rate to USD Return (4% avg): 121.05%
- Gold Price (USD, 6.5% avg): 388.37%
- Plot Value (USD, 6.5% avg): 374.45%
- US Real Estate Price (2.9% avg): 142.86%
- S&P 500 Index (3.31% avg): 150.85%
If you plan to invest outside Pakistan in USD or any other dollar pegged currency, then Gold and real estate sector are two of the best sectors over all. S&P 500 has given an average return which is not great for most people. Although you will remain above the inflation and PKR depreciation but you will not get a lot of benefit from the investments.
Just note that S&P 500 dividends are not included in this study, if we include the dividends, then S&P and real estate returns have almost remain the same at around 350% overall increase. So if you are planning to invest outside Pakistan, then gold, stocks, and real estate all are very promising options giving a return of over 6.5% annually.
Conclusion
When investing either in Pakistan or abroad, make sure that you know what type of returns you should be expecting. On an average, returns are around 7% in US and 14% in Pakistan. In short term, these figures can vary significantly but in the long term this is what you should be expecting from any investment that you are planning to make.
