Invest Like A Zimbabwean!

When it comes to investors, three widely accepted factors influence investor behavior. These factors are personal, financial, and environmental factors. Because of these factors, I believe studying successful Zimbabwean investors will make anyone a great investor.

Zimbabwe gained independence in 1980, and since then, the economy has gone through so many peaks and valleys. Through each peak and every valley, there have been vital investment lessons that everyone in the world should apply if they were paying attention.

As we all build global wealth, we first need to understand one key concept. There is a stark difference between our financial fears and investment risk.

Financial fears morph and evolve, but Risks don't.[1] Your financial fears can be the following: not being able to pay bills, losing your job, losing all your money, not understanding how money works, not saving enough for your children's education or retirement, having to support your parents or loved ones.

Your financial fears are very valid and can affect your health & wellbeing. To overcome/solve your financial worries, it takes much hard work and sometimes luck. Once you take ownership and control your fears, you will sleep better at night.

We all have money stories from our lives that affect how we think about money today. No matter what your account is, facing our fears and making a realistic plan to deal with them is often the best solution. Once you start finding some financial success from your plan, your confidence will grow.

When it comes to investing, five risks will NEVER change, depending on where you are in your life. Some investment risks may be more or less present based on current events or conditions.

1.      Market risk-possibility of experiencing a loss due to factors that affect financial markets-e.g.-Recessions, Political turmoil, Interest rate changes, natural disasters, terrorist attacks, pandemics, wars, etc.

2.      Inflation-Money not growing fast enough to keep pace with inflation.

3.      Shortfall risk-Chance you won’t have enough money to make your goals.

4.      Liquidity & Timing risk-Potential of selling investment below-listed value due to either not having enough buyers or bad market conditions.

5.      Political risk-Prospect that government decisions will damage the value of our investments-e.g.-Taxes, government changes, foreign policymaking, geopolitical risks, environmental regulations, etc.

NO MATTER HOW MUCH MONEY YOU HAVE, INVEST IN STOCKS, CRYPTOCURRENCY, REAL ESTATE, KEEP YOUR MONEY AS CASH, IF YOU HAVE STARTED INVESTING OR NOT, RETIRED, STARTED WORKING, AMERICAN CITIZEN OR ZIMBABWEAN CITIZEN-THESE ARE INVESTMENT RISKS, & THEY WILL ALWAYS BE THERE!

The key is to find ways to mitigate these inherent investment risks in line with your financial goals. Zimbabweans have always had to be aware of these investment risks and incorporate them into their decision-making. All investors should be aware of investment risks and incorporate them when growing, protecting, and preserving wealth.

So how did successful Zimbabwean Investors grow, protect, and preserve their wealth facing a young and ever-changing economy? They focused on the following; Investment education, having the courage of their convictions, and most importantly, we're very resilient.

“An Investment in knowledge pays the best interest.” Benjamin Franklin

Ignorance when it comes to investing is very costly. Do you know the different kinds of property investments? Do you do the necessary due diligence steps to take before putting your capital at risk? Do you know the difference between investing & gambling? Do you know the difference between an income, growth & conservative strategy?

One of the critical advantages of knowing is it stops you from panicking. It prevents you from making emotional, financial decisions, and most importantly, it shows you how to create opportunity from chaos.

Investment knowledge helps you understand historical trends that help you move your money from one investment opportunity to another. Zimbabwe went through a period of hyperinflation between 2007 and 2008. However, it was not the first country to experience hyperinflation. Hungary between 1945 and 1946 had a daily inflation rate of 207% compared to Zimbabwe’s daily inflation rate of 98%.

Long before Zimbabwe's hyperinflation period began in 2007, signs were already apparent that the country's economic system was in trouble. The nation's annual inflation rate hit 47% in 1998, and this trend continued almost unabated until hyperinflation began. Except for a small decrease in 2000, Zimbabwe's inflation rate continued to grow through its hyperinflation period. By the end of its hyperinflation period, the Zimbabwean dollar's value had eroded to the point that various foreign currencies replaced it. [2]

There are always economic indicators that investors can use to protect their current investments and know-how from maximizing the opportunity. Investors benefit by having a team of investment specialists that can assist them in making optimal financial decisions.

Every investment opportunity comes with its advantages and disadvantages. An intelligent investor needs to understand the opportunity costs of each investment. Understanding your opportunity costs leads to patience, and a patient investor has always beaten a frantic/impatient investor.

The courage of your convictions.

Zimbabwe gained independence in 1980. Since then, there have been 47 global economic crises. Your WHY has to be stronger than all of those crises put together. The key is to use your WHY to create a robust investment strategy. If history repeats itself, there will be 47 more economic crises by 2061. Will you're WHY and your current INVESTMENT STRATEGY stand the test of time?

If you invested $1000 on the S&P 500 on April 18th, 1980, you would have had $75,378 as of January 28th, 2021. We invest for various reasons, such as securing our financial futures, for our families, to create legacies.

Would your why & your investment strategy have withstood the Dot-Com crash, 2008 great recession, Covid-19, or any other economic crises between 1980 & 2021?

Resilience

"An optimist is a person who believes that the future is uncertain," Howard Lindsay. A resilient investor is always preparing for a wide range of possible futures. A resilient investor can survive and even thrive in a world that is increasingly unpredictable and turbulent.

As the world continues to battle Covid19 and with the pandemic's overall economic effects still to be known, investors can lose sight of why they started investing and why one should invest.

Zimbabwe's economy, compared to other countries, is still very young. They were and will be a lot of teething pains. Investors needed to be resilient in the face of an uncertain financial future.

The goal of resilient investing is to provide a strong-yet-flexible foundation for short, medium, and long-term decision-making; in the face of an uncertain future, we want to make things better for ourselves and the world.[3]

A resilient investor is always prepared to adapt and make the necessary adjustments to ensure they achieve their goal. Successful Zimbabwean investors have learned how to achieve their investment goals in an ever-changing and dynamic environment. They have learned how to mitigate risks through different investment hedging techniques.

The bible gives keys to succeeding at Investing. In the New Living Translation Bible, Ecclesiastes 11 verse 2 states, "But divide your investments among many places, for you do not know what risks might lie ahead." This verse is talking about diversification. Diversification has been the key to being successful in Zimbabwe. You cannot rely on one type of investment to help you get to your destination, and you need to diversify.

2020 was a great year for so many investors because they knew how to thrive within the chaos. Life waits for no man, including your money. There is never a better time to invest; imagine if Zimbabweans had waited for seven consecutive years of GDP growth to plan for their financial future.

You have to be in it to win it!

[1] Jaffe, Chuck. “9 Financial Risks Everyone Should Understand.” MarketWatch, MarketWatch, June 16th, 2014, www.marketwatch.com/story/whats-your-greatest-financial-fear-2014-06-13.

[2] Johnston, Matthew. “Worst Cases of Hyperinflation in History.” Investopedia, Investopedia, August 28th, 2020, www.investopedia.com/articles/personal-finance/122915/worst-hyperinflations-history.asp#citation-7.

 [3] “What Is Resilience?” Resilient Investor, www.resilientinvestor.com/go-deeper/bonus-material/what-is-resilience/.