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Time to think about savings, investment

September 06, 2012

ISLAMABAD, Sept 6: Experts have stressed on individuals, regardless of their age, to start developing a habit of making savings and investing it intelligently to secure their future.

At a seminar on ‘Investor’s Education’ on Thursday, participants were informed that the three main categories of safe investments available in Pakistan are bank deposits, National Saving Schemes (NSS) and capital markets based investments.

The seminar was organised by the Islamabad Stock Exchange (ISE) at International Islamic University (IIU), Islamabad in collaboration with Securities and Exchange Commission of Pakistan (SECP).

It was essentially recommended that planning about retirement is vital to ensure that a decent standard of living is maintained without becoming a burden on anyone at a later stage of life.

The participants were informed about the basics of capital markets based investments, which are referred to securities listed and traded on various stock exchanges.

A major issue highlighted on the occasion was the unawareness of many individual investors about the investment products available, potential risks and returns associated with them.

SECP Management Executive Salman Hayat said that the investor education programme has been initiated collectively by stock exchanges and SECP to ‘remove mistrust from the financial sector’ in Pakistan and build investor confidence.

The programme is initially structured over three years with realistic but achievable targets. On completion of each year an evaluation of the programme will be undertaken to identify any shortcomings and build on the positives for future years.

The programme will focus on different segments of the population with specific initiatives addressing each segment, taking in to account their needs, experience and accessibility.The speakers said that vast majority of Pakistanis prefer to invest in real estate, gold and bank accounts but all these areas have either limited return or lacked formal regulatory regime.

However, for those entering the capital markets diversification of investments across various investment instruments, is needed i.e. making a portfolio of investment products rather than putting all available money in a single instrument, is recommended.

The investor’s programme managers have divided the investors in three segments, starting with school and university students with the aim to develop life-long saving and investing habits at an early age.

It is followed by the ‘general investors’ who are the corporate sector and business community from various professions with a view to educate potential and existing investors on their rights, responsibilities, risks and rewards.

While, the third category comprises, ‘grey individuals’ which focus on individuals close to the retirement age with a life long of savings.

Islamabad Stock Exchange (ISE) Deputy GM Waris Niazi gave a detailed presentation on investments, structure of financial system, role of stock exchanges, CDC and NCCPL and overall procedures of investments.

He detailed the financial products available in the market for existing as well as potential investors. The basic level of education includes knowledge about savings, budgeting, investing basics, overview of capital markets, role of intermediaries and investor protection, he said.

The intermediate level of investors’ education includes product-specific knowledge that are capital market instruments, mutual funds, insurance, pensions, investment banks, modarabas, corporatisation and entrepreneurship.

Advanced level of investors’ education involves risk analysis, portfolio analysis, fund management reports, taxation and financial reports, the participants were informed.

ISE MD Mian Ayyaz Afzal said in order to keep their savings in their own hand, it was necessary that the investors open their own CDC accounts.

It was highlighted that the SECP has divided the areas for the three stock markets of country for investors’ education and invite investments.