KARACHI: People have been virtually in a fix for the last few years as rising cost of living does not allow them to think for making investment in lucrative options.

Even retired officials have also been facing the same dilemma these days as the amount, which they had received after the retirement, have been draining on the burgeoning current domestic expenditures, thus tarnishing all their hopes for making a profitable investment and improving their living standards.

Developing countries like Pakistan are faced with some sort of vicious circle of poverty. Income of people is hardly enough to provide two square meals, leaving nothing for savings purpose, rather they resort to dissaving. Hence they continue to remain below poverty line.

A large segment of middle class does strive hard to save a small chunk out of their hard-earned income to meet their future needs. "But you cannot term it wilful savings rather it is forced savings," said Sultan Ahmad, a retired officer of a bank, while talking to Dawn at a National Saving Centre (NSS), located in city's posh area.

He said he had invested all his savings plus the retirement benefits of Rs5 million into NSS after finding it as a best option at that time. "I did not want to take risk and there were no other options available where a sustained and risk-free return was ensured."

But, he said it was now losing its charm as the rate of return on it fell to a historic low, just 7.03 per cent on defence certificates, and the highest return of 10.08 per cent was being offered on pensioner and widow schemes.

He said the inflation rate was above nine per cent and the return on NSS was just 7.03 per cent and it came down to 4.4 per cent after deduction of taxes, so actually there was negative return if "we take inflation into account".

He said it seemed that the government did not want to borrow from public and that was why it was cutting down the interest rates on NSS," he said.

"I am withdrawing my investment from NSS to put it somewhere else for better gains," he said and added that he planned to invest in mutual funds as they were offering an attractive return of above 18 per cent.

"Yes, I have two more options - real estate and stocks. Stocks are a little bit risky and requires active monitoring that I find hard. But for real estate I am confident it will give you much more than you are getting from NSS," he added.

He said, real estate option also involves lot of hassles and investment could be stuck up due to unstable law and order situation.

The 67-year old is the only bread-earner of his four-member family and was not inclined to take risk by investing his money in some business. He said doing business was a matter of aptitude, a person who had spent all his life working in offices from 9:00 a.m. to 5:00 p.m. will be lost in the field. "It is more risky," he added.

A private sector employee, Umair Khan, said that after performing Hajj he came to realize that the return on NSS was un-Islamic and he had decided to withdraw all his investment.

"I would like to invest in some business. "There are very few options to go for with Rs500,000, but real estate in a Malir or adjoining areas can be a possibility."

As opposed to them, Muhammad Abdullah, a retired government school teacher, said he had never invested a single penny in any business or scheme to secure future needs of old-age.

"I have been a teacher in a government school for more than two decades, but you will be surprised after retirement I had nothing to invest. "Whatever provident fund I got was spent in retiring old debts," Mr Abdullah told Dawn.

Somehow, I managed to set aside Rs100,000 but that was too small an amount for meeting expenses of my wife and mine during the years to come. "But unfortunately, I lost that amount."

"I had invested it in stocks in the hope of better returns, unfortunately the share market collapsed and what I had invested turned negative and with difficulty I was able to secure only 25 per cent of my principal.

Another middle-class saver, Kamal Ahmad, whose saving ranges between Rs1 million and Rs1.5 million, said though the return on NSS had fallen sharply, it was still the top choice of white-collars.

He complained of rush in NSS centres due to non-computerization of records, and suggested setting up of NSS counters in each scheduled bank for smooth sailing.

A total of 366 branches of NSS are working across the country, of which 33 branches are working in the Karachi region.