Beating Inflation with PSX Stocks
Pakistan’s average InflationA rise in prices over time. When inflation is high, the same money buys less than before.Full list of terms → over the past 20 years: ~8%. PSXThe Pakistan Stock Exchange, the national stock exchange of Pakistan. People buy and sell the shares of listed companies there. It was formed in 2016 from the Karachi, Lahore and Islamabad stock exchanges.Full list of terms →’s KSE-100 indexThe main share index of the Pakistan Stock Exchange. It follows the prices of 100 large companies and shows if the market is going up or down overall.Full list of terms → returned ~14% annualized. Result: stocks beat inflation by 6% per year on average.
Bank deposits have paid much less. In September 2026, for example, a major Islamic bank's one-year term deposit paid about 6% a year while consumer price inflation ran at around 10%, so the real return was negative even before tax. Government securities paid more (the 6-month Treasury bills (T-bills)Short-term loans that you give to the government. The government pays you back with a fixed extra amount. They are considered low risk.Full list of terms → about 11.7% and the 10-year PIB about 12.5% in September 2026) but not far above inflation. Rates change often, so check the current figures. See Fixed Deposits vs Stocks for a worked comparison using real PSX examples.
Lesson: A DiversificationPutting your money into different shares or sectors. If one share does badly, the others can protect you from a large loss.Full list of terms → PortfolioEverything you own as an investor, taken together: your shares and your cash.Full list of terms → of PSX stocks is one of the best long‑term hedges against rising prices.
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