Fixed Deposits vs Stocks in Pakistan
A fixed deposit (FD) promises a known return. A stock promises nothing but can pay far more, or far less. This page compares them with current rates and real examples from two of PSX's biggest companies, OGDC and HBL, so you can see the trade-off in rupees.
The short version
- Money you need within about 3 years belongs in a deposit or government security, not in stocks.
- With inflation near 10%, a bank deposit paying about 6% loses purchasing power, even though the number in your account grows.
- Stocks have rewarded patient investors over long periods, but there were years when good companies lost half their value.
The two side by side
| Fixed deposit | PSX stocks | |
|---|---|---|
| Return | Fixed profit rate agreed in advance | Dividends plus price changes; not guaranteed |
| Risk of loss | Very low (bank risk only) | Real: prices can fall 30-50% or more |
| Access to cash | Locked until maturity, or early-withdrawal penalty | Sell any trading day, at the market price that day |
| Inflation | Often below inflation | Companies can raise prices and dividends over time |
| Tax | Profit is taxed at source | Dividends and capital gains are taxed under different rules |
| Effort | None | Research and monitoring (or use a fund) |
Tax rules differ by filer status and change with each federal budget, so this page does not quote rates. For shares, see tax on PSX trading and dividends; for deposit profit, ask your bank or an adviser.
What rates look like today (September 2026)
| Instrument | Approximate rate |
|---|---|
| SBP policy rate (held on 14 Sept 2026) | 11.5% |
| 6-month T-bill cut-off yield (16 Sept 2026 auction) | 11.7% |
| 10-year PIB cut-off yield (18 Sept 2026 auction) | 12.5% |
| Bank 1-year term deposit (a major Islamic bank, depends on amount) | about 6% |
| Consumer price inflation (September 2026) | about 10% |
Figures are rounded and as of September 2026, from State Bank of Pakistan announcements and a bank rate sheet. Rates move often: check your own bank and the SBP before deciding.
Two things stand out. First, bank deposits pay roughly half of what the government pays on T-bills and PIBs, so an FD is not the safest way to earn a return, only the most convenient. Second, a deposit paying about 6% against inflation near 10% earns a real return of roughly minus 4% before tax: Rs. 1,000,000 buys about 4% less after a year than it did before.
What stocks paid: OGDC and HBL
Here are the dividends two large companies actually paid, taken from their latest annual reports (see how to read a PSX annual report):
| Company | Dividend per share | Year-end share price | Dividend yield |
|---|---|---|---|
| OGDC, year to 30 June 2026 | Rs. 17.00 | Rs. 334.87 | 5.1% |
| HBL, year to 31 Dec 2025 | Rs. 20.00 | Rs. 323.41 | 6.2% |
The dividend alone was about the same as a bank deposit, before counting any rise in the share price. Dividends are not guaranteed and can be cut, and they are taxed, but companies that earn steady profits tend to grow them: OGDC's dividend rose from Rs. 6.90 per share in 2020-21 to Rs. 17.00 in 2025-26.
What Rs. 1,000,000 did: three real periods
| Period | Where Rs. 1,000,000 went | Value after the period (price only) |
|---|---|---|
| 5 years, 30 Jun 2021 to 30 Jun 2026 | OGDC shares (Rs. 95.03 to Rs. 334.87) | Rs. 3,524,000 |
| 5 years, 31 Dec 2020 to 31 Dec 2025 | HBL shares (Rs. 132.28 to Rs. 323.41) | Rs. 2,445,000 |
| 5 years, 30 Jun 2021 to 30 Jun 2026 | Bank deposit at 6% a year, before tax | Rs. 1,338,000 |
| 1 year, 31 Dec 2021 to 31 Dec 2022 | HBL shares (Rs. 116.6 to Rs. 63.7) | Rs. 546,000 |
| 5 years, 30 Jun 2016 to 30 Jun 2021 | OGDC shares (Rs. 139.75 to Rs. 95.03) | Rs. 680,000 |
| 5 years, 31 Dec 2015 to 31 Dec 2020 | HBL shares (Rs. 201.04 to Rs. 132.28) | Rs. 658,000 |
Share prices exclude dividends, which would improve each stock line, and the deposit line assumes a constant 6%. Prices are year-end closes from the companies' annual reports and our price history. The deposit rate is an example, not a quote.
Both stories are true. The last five years were excellent for these two stocks. The five years before were poor: an investor who bought OGDC in mid-2016 or HBL at the end of 2015 was behind on price after five years, and an investor in HBL during 2022 watched the share fall by almost half in twelve months. A fixed deposit would never have shown those numbers, and also never would have shown the gains.
How to decide
- Start with your time horizon. Under 3 years: deposits or short-term government securities. 5 years or more: stocks can make sense for part of the money.
- Keep an emergency fund in cash. Three to six months of expenses should never depend on the stock market's mood.
- Decide how much loss you can sit through. If a 40% fall would make you sell in panic, hold fewer stocks.
- Consider the middle options. T-bills and PIBs usually pay more than bank deposits, and money market and income funds sit between deposits and equity funds. Ask your bank or broker how to buy them.
- Diversify. Several companies in different sectors, or a mutual fund, reduce the damage from one company's bad year.
Try it yourself
Pick any PSX stock and any past date in our "If I Had Invested" calculator to see what Rs. 1,000,000 would be worth, then compare it with a fixed rate in the Investment Growth Calculator. For stocks that pay dividends, the dividend discount model shows how to value them.
Sources: OGDC Annual Report 2026 and HBL Annual Report 2025 (dividends, prices); State Bank of Pakistan policy-rate, T-bill and PIB announcements (September 2026); Meezan Bank profit-rate sheet; Pak Stock Exchange daily closing prices. For education only, not investment, tax or financial advice. Past performance does not predict the future.