If you are one of the many second or later generation of adult urban dwellers, living in a family-owned property and have a decent-paying job, you probably earn more than what you need to spend.
This leaves room for some upscale shopping, vacations, and some savings for rainy days.
And the ongoing pandemic has created a scope for more savings as vacations have become a dream and shopping somewhat pointless right now.
However, we all want our hard-earned money to grow and fetch more for us. Naturally, that does not happen if we place them under our mattress. So we put them in savings accounts with the hope of interest.
But, with the recent 6.5 percent cap on saving interest rate and our average inflation of around 5.6 percent, we make next to nothing at the end of the year. So, instead of saving, we need to invest.
And that brings us to the million-dollar question, where to invest and how to invest?
First on the list of painless gain from our hard-earned money is government savings certificate.
The government has lowered the bank interest rates, including the one on post office savings.
But the interest rate on savings certificate remains at around 12 percent, significantly higher compared to bank interests.
However, savings certificates are a low-risk investment that intends to help low income, marginalised and retired groups. The government has also tightened rules around them lately. So this investment opportunity is not open for all.
Next and the more obvious on the list is the stock market.
The stock market in Bangladesh is a mystery to many, if not all. Although it is supposed to be the growth indicator of the private sector of a country, historically our stock market has hardly done so.
The primary issues with stock markets in Bangladesh are that the market volatility is too high and the long-term investors are scared.
Most importantly, our investors hardly seek any training or education related to investment before jumping into the market.
There is a significant lack of financial advisors who can guide young investors and relatively stable instruments like index funds.
And the investors need to dive in at their own risk, with enough time and patience, to choose their portfolio wisely.
Although the Bangladesh Securities and Exchange Commission has taken some remarkable steps lately to stabilise the market and overall monitoring system along with introducing more financial instruments like bonds, it will obviously take a while before the impact is felt.
And if you are really willing to brave the challenging stock market, first seek advice from people who have good knowledge about it.
Then make sure to do your study. Start small and with a long-term plan.
Another commonly considered investment sector is the real-state or property market. However, given the investment in buying a property, the revenue generated from the rent is substantially low.
So, the purchase of a property should be considered as an asset accumulation rather than an investment. The main return on property investment comes from the sale of the property after holding it for several years.
Considering the recent price trend in the property market – which has been on the decline for the past couple of years – this might be a good time for investment.
And housing will stay in demand as the population of Bangladesh, especially the one of Dhaka city, is continuously growing.
Also, the government's housing support for young adults is non-existent and interest rates on a mortgage are ridiculously high.
So, property remains a sound investment in Bangladesh, provided that one has the money and willingness to make a long-term investment.
Also, some startups, which manage all the business processes and give a fixed or variable return on investment, emerged recently.
iFarmers is one such startup which allows investment in farming and agricultural sector. The return on investment from such case is appreciable as well.
However, initiatives like this that allow anyone to invest without hassle are scarce and we desperately need more of them.
Also, for a county that is soon approaching a developing nation status, our financial market is annoyingly poor.
Our young adults and middle-aged population are desperately looking for investment opportunities, but the financial system is simply failing them.
Generally, in developed nations, retail banks mostly provide investment-related advice. Unfortunately, our retail bankers themselves – along with numerous other professionals – are seeking financial advice.
We have a significant lack of both financial education and financial instruments.
Overall, we have simply failed to focus on creating investment opportunities for our general population and it is high time that both our public and private sector give due attention to it.
H. Islam is an investment enthusiast and researcher by profession. He can be reached at [email protected]