Where to invest 5000 rupees in Pakistan? Small Amount Investment Series!

Looking to invest 5000 rupees in Pakistan? We understand that most investment guides cater to people with larger amounts to invest, so we've created a guide specifically for individuals like students or those with a smaller budget.

May 30, 2023
We wrote a 6000 words article on the best investment in Pakistan a few months ago! But that article is relevant for people that have a lot of cash to put in and make passive income.
That guide doesn’t cover students or some that only have a small amount of money and want to use it to make the most profit a Rs5000 note can bring!
So here is it for you!

Assumptions about You:

Let's start with a few assumptions about you:
  1. I will assume that you only have 5000 rupees in your pocket to put somewhere and you want to use it in the best possible way to make the most profit!
  1. The legacy investment opportunities don't make sense to you. For example, you can only make Rs83/per month if you put in a fixed deposit or you can only make Rs104/month if you buy the best dividend stock at Pakistan Stock Exchange. These are too low for you!
  1. Even if you correctly predict and buy the stock in Pakistan Stock Exchange and double your money within one year, you would still only have made Rs5000 profit at best. This comes down to Rs416/month - still low on an impossible assumption.
  1. You can’t buy any real estate or any high-ticket investment item.
  1. I am assuming that you want to make money over the Internet or in the finance world and do not want to set up a small business, online retail store, or food stall. You want to make money while you work on a job or if you are a student.
So legacy investment options aren’t for you!
So if you have 5000 rupees to invest in Pakistan, this is what you should do ⬇️

Learn technical analysis and then start trading in Forex, Stocks, Commodities, and Cryptos

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Your first step is to learn a skill that can be both QUICK and can bring lucrative profit! And if you have just 5000 rupees to invest, learning to look at charts and doing technical trading is the best option I see for you to achieve the best results.
Once you have learned technical trading properly, the world of finance will open in front of you. You can use the same technical principles to trade forex, any commodity, cryptos, or any local or global stock.
You can learn technical trading through well-known YouTube channels for free.
There are numerous channels out there both English and Urdu that teach you how to start technical trading.
Just type “How to learn technical analysis?” in the search bar!
Make sure that you watch these videos properly and do the following:

Start with a demo account:

Remember, you just have 5000 rupees as your total investment. For technical trading to work, you will need to use leverage. Leverage can bring you quick money/profits and it can also take away your money quickly. So you will need a lot of practice to have a chance.

Stop loss is your friend:

I am sure you will learn about this when you are watching YouTube videos but make sure to give extra time to this chapter.
What is Stop loss with an example?
Stop loss is a tool used in trading to help protect your investment from big losses. It's like having a safety net for your trades.
Here's how it works: Let's say you buy a stock at 500 per share, and you don't want to lose more than 50 per share. You can set a stop loss order at 450. If the stock price drops below 450, your order will automatically sell the stock to limit your loss.
Remember, stop loss is not a guarantee that you won't experience losses, especially in fast-moving markets or during periods of high volatility. However, it can help you control and minimize potential losses in your trading activities.

Start with commodities like gold and silver.

Their trading ranges and leverage are much lower than Forex. This way even if you go wrong in your first few trades and use stop loss, you will still have money to trade with and recoup the loss and make money.
This is the best you can do in the shortest possible time. But mind it, you will have to be extraordinarily great so that you don’t lose money in the first few trades.

Important things that you should know about Forex, Stocks, and Crypto trading

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You will use leverage!

Forex trading, crypto trading, or stock trading will require you to use leverage. Without leverage, even if you double the amount during a year, you will still make only Rs416/month.
As we assumed above, this might not be enough for you!
Through leverage, you will multiply your initial investment of 5000 rupees by a much higher amount (depending your the broker and service you use) and hence if you make a profit, it can much higher.
What is Leverage Trading with an example?
Leverage trading is a method of trading where you use borrowed funds to buy or sell assets like stocks, cryptocurrencies, or commodities. It allows you to control a larger position in the market with a smaller amount of your own money.
Let's say you have 5000 rupees, but you want to trade with 100,000 rupees. With leverage, you can borrow an additional 95,000 rupees from a broker or an exchange. This enables you to have a total of 100,000 rupees to invest in the market.
The borrowed money acts as a loan, and you are required to pay it back with interest. However, the potential benefit of leverage trading is that if your investment performs well, you can make more profit compared to using only your initial 5000 rupees. On the flip side, if the investment goes against you, the losses can also be amplified.
However, Islamic principles don’t allow for leverage.
Other than that, like there is a higher chance of profit, there is also a higher chance of loss.
That is why, I would recommend you to give extra time to learn technical trading properly and start with a demo account.

Don’t use unreliable platforms

You will see many ads on social media about certain types of forex and stock trading apps that are both legally banned and very risky to work with.
They don’t have any legal backing meaning that the app may close tomorrow and you can lose whatever money you have put in or made through profits.
Pakistan Mercantile Exchange is the only platform in Pakistan that is both legal and allows forex trading. You can open an account through many brokers that have put their ads on PMEX’s website.

Final thoughts

Technical Trading will teach you how to spot demand and supply zones and what to do when it reaches a specific level according to your charts! If done correctly, this has the potential to make much more money than your initial investment.
And since you only have 5000 rupees to start with, this looks to be the best financial option for you!