“There are no sure bets in the world of investing; there is risk in everything,” says the American investment guru Jim Cramer. But people cannot just thrust cash in a pot of clay and bury it in the backyard.

Money needs to be invested, at worst to retain its value, at best to make it grow. Small investors with moderate savings face a dilemma in the choice of investment avenues. Investment options tend to shrink or expand according to the money available.

In Pakistan, for the risk-averse investor, the first savings option has forever remained the National Savings Schemes (NSS). Considered a refuge for small savers and senior citizens, the National Savings Certificates now no longer offer enough returns.

Earlier this month, the government—out to please everyone in an election year— announced an increase in the rate of returns on different NSS products in the range of 0.56 per cent to 1.09pc, breaking a four-year spell of static yields.

Investment in equities that provided mouth-watering returns of 44pc has now wiped out half the savings of most investors in the last one year of equity meltdown

Yet, over the years, profits from NSS products have dwindled. The Behbood Savings Certificates, designed for senior citizens, were supposed to offer the highest returns. But over the past nine years, the return to vulnerable investors has stood slashed by almost 45pc.

For less risk-averse investors who opt for higher returns, stocks are the preferred asset class. The trouble with equities, however, is that no one can second-guess the market trend. Investment in equities that provided mouth-watering returns of 44pc—the highest among the regional markets just two years ago—has now wiped out half the savings of most investors in the last one year of equity meltdown.

Khurram Schehzad, chief commercial officer at JS Global, affirmed that investors having the appetite for high risk, high returns, strike the road leading to the stock market. He refers to three classes of investors in equities.

The first are those who follow the advice of Warren Buffet, one of the most successful investors of this century. In a famous annual general meeting, Mr Buffet whispered: “I will tell you how to become rich. Be fearful when others are greedy. Be greedy when others are fearful.”

That is to say, invest in a down market and seek an exit in a soaring market. Then, there are investors who in uncertain times and massive volatility liquidate their portfolio and prefer to sit on the sidelines on their heaps of cash.

But the smartest of them all are the value investors, who take a long-term perspective and put money in stocks based on underlying company fundamentals. Investors who lack knowledge and skills are increasingly entrusting their money to the mutual funds.

Among the host of funds available to choose from are the equity funds and money market funds. Equity funds are further divided into Shariah-compliant funds, capital protected funds and other classes that cater to specific needs of the investors.

A report prepared by Abdul Azeem, head of research at Spectrum Securities, shows that in April 2018 Assets Under Management of mutual funds industry loomed at Rs596 billion. These included equity market funds of Rs173bn and money market funds amounting to Rs129bn.

Given the dismal conditions at the stock market, equity funds grew by 2pc over the earlier month against growth of money market fund by twice that at 4pc. For greater comfort investors in uncertain times opt to diversify their investment.

Money parked in banks is safe and risk free, though gives out a pittance in return. Real estate is an asset class which only high net-worth individuals and institutions with minimum investable sum of Rs10 million can explore.

But in the current calendar year, investors in all classes of assets have been rewarded with lower yields. Director research and business development at Arif Habib Ltd, Samiullah Tariq, provided a chart showing average return on various classes of assets.

In the current calendar year 2018-to date, stocks have provided returns of 5.7pc; Treasury Bills (T-Bills) 6.8pc; Defence Saving Certificates (DSC) 8.1pc; Bank deposits 2.9pc; US dollar 4.4pc and Pakistan Investment Bonds (PIBs) 8.6pc. Gold gave out negative returns of 0.7pc.

Incidentally, the returns on all classes of assets are lower than the average rate of return over 2001 to 2018. During that period, stocks offered real return of 27.1pc; gold 10.1pc; T-Bills 8.5pc; DSCs 10.6pc; bank deposits 4.1pc, dollar 4.20pc and PIBs 9.5pc.

But the debate currently rages on big finance. The Amnesty Scheme 2018 is expected to result in an inflow of $150bn. In case the scheme goes through, people who willingly pay 2pc on their money currently banked abroad would be faced with the question of where to invest their whitened wealth in Pakistan.

Stock market participants are as always licking their lips, expecting the money to enter their attractively valued scrips. But would some of the dollars flow into productive use such as setting up industries, expansions and modernisation of plants and creation of jobs to spur growth?

Iqbal Ebrahim, CEO Orient Textile Mills, talking about the biggest export-earning industry of the country affirmed that it is inevitable for textile mills to pull in fresh investment in the sector in order to remain viable.

He said that the new state-of-the-art technology that consumes less of electricity and gas has to be introduced in place of obsolete plant and machinery presently in use. He believed that the economy managers had shown their lack of basic business knowledge by curbing imports of yarn.

“Unless the industry is facilitated to import yarn from international markets at cheaper price, remove unnecessary taxation and let the industries come up with high standard of value-added products, how is it possible to compete in international markets?” he asked.

Published in Dawn, The Business and Finance Weekly, May 28th, 2018