Investing is the dream. You take a little money and use it to make more money. The problem with dreams is you must wake up from them at some point, and nowhere is this more apparent than in Zimbabwe. From investment scams, savings and investments being wiped out to continually changing laws investing in Zimbabwe is a tricky exercise. Here we have accumulated 10 rules that will help anyone who wants to or is investing in Zimbabwe.
Time is key
Time is the most significant force in investing as long as you invest in the right thing. If you’ve ever played with compound interest tables, you will understand. If not, you can contact me for a compound table template which I will gladly share. Allowing your investment more time to grow and compound (growth on the growth) will double or even triple your outcome. The sooner you start, the better. The longer you stay at it, the better.
Things will change
Things will change, so you need to make decisions that will age well and resist foreseeable change. Now in Zimbabwe, we have demonetised a currency, adopted multi-currencies, and later turned around and said that what we thought were US dollars were Zimbabwean dollars and so much more. Change will come. Invest in places that will resist or withstand the shocks of these changes.
There’s method to the madness
You’ll often hear that traditional investment methodology doesn’t work in Zimbabwe, but the truth is it does. It’s just enormously complicated. For example, an American’s currency is a real value unit, so they only need to calculate once. Contrast this with a Zimbabwean who transacts in Zimbabwean dollars and then uses US dollars as a real value unit to store value. Zimbabwe isn’t outside the reach of popular investment thinking; many factors complicate it. Speaking of which.
Know your methods from your principles
One big mistake I see many people make is focusing on methods or tools rather than principles. A method is something like a tax-free investment retirement account, which you will quickly find Zimbabwe doesn’t have the exact same thing you read about elsewhere. Even where we do, these investments were wiped out by our many monetary changes. Principles use available tools and methods to reach an idea. Principles are universal, but tools are not.
Verify things – it’s easier than you think
In Zimbabwe, there is information asymmetry – certain groups have easier access to information than others. This is more impacted by cultural factors than access factors, which would take forever to discuss. Did you know that you can easily reach many public institutions, such as ZIMRA and ask questions? ZIMRA even has extremely accurate online duty calculators. Public institutions are slowly opening up to using WhatsApp to communicate with the public. You can verify anything in Zimbabwe, you have to keep the next point in mind.
Ask the right questions (to the right people)
I have no idea where I first came across this, but it has stuck with me since; the answer doesn’t matter if you’re asking the wrong question. Say you’re speaking to someone who offers one of those double your money in two weeks “investments”. The right question to ask is, what happens if they fail to pay your money? What is your guarantee? Also, it helps to ask the question to the right people. If you want to check if something is registered or licenced, that’s SECZim.
You can’t evaluate what you don’t understand
Your understanding of investments will depend on your financial literacy or financial education. In part, people fall prey to scams because of a lack of financial literacy though it is not the only factor. Financial literacy will help you realise when an idea is playing on your emotions to get you to act. You must invest in your ability to understand what you invest in.
Discipline beats all
Discipline is also a vital force in investing. For people on small incomes, investing doesn’t happen as a flash-in-the-pan event but as a process that happens over time. Consistently investing both money and time. That takes discipline. Challenge yourself to learn one new thing daily and invest at least every month if possible. The key is to sow a habit, and that is all about discipline.
Start small, just start!
Time was number one on the list for a reason. The sooner you start, the sooner you learn your early lessons. Some things you can only learn in practice. Once you learn these early lessons, you are ready to invest with awareness. We also mentioned the effect of compounding, and this also suggests that starting earlier is better. Many who have enjoyed the benefits of investing say they would’ve started sooner if they had known. This is your signal to start if you’re sitting on the fence about investing.
Do not run before you can walk
We have come across many stories of people who have started their investment journey but had to cash out to sort out a problem. This obviously goes against giving yourself time. It is important we understand that things like emergency funds and savings play a big part in successful investing. Also, investing in property is very taxing, no pun intended. Certain investments require more financial muscle to back them, like starting a business. So make sure you are in a suitable condition to invest successfully before you invest.
As much as the Zimbabwean environment is crazy, people are successfully investing in it. With these rules, you will be better equipped to join those successfully investing in Zimbabwe.
