Start Where You Are, Invest Like a Zimbabwean: Building a Global Legacy (3 Years Wiser)

One of my all-time favourite quotes is by Arthur Ashe. He said, "Start where you are, use what you have, do what you can!" I wrote an article titled Invest Like A Zimbabwean three years ago. The world has been through a lot since then. It has become ever clearer to me, especially today on Zimbabwe's 44th birthday, that everyone can and should learn something from Global Zimbabwean investors.

Three years ago, I explored the unique strategies Zimbabwean investors have developed in a constantly evolving economic landscape. Now, as Zimbabwe celebrates its 44th year of independence, reaching a similar milestone to someone who can hear retirement knocking, it's a fitting time to revisit these strategies and see how they translate for global investors today.

Financial Fears vs. Investment Risks: A Behavioral Battlefield

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Financial fears and investment risks are two sides of the same coin but are not created equal. Investment risks are the inherent uncertainties of the market – fluctuations, inflation, political risks, and economic downturns. Financial fears, however, are fueled by our behavioural biases – the mental shortcuts and emotional responses that can cloud our judgment.

Zimbabwe's economic journey provides a powerful case study in overcoming these biases. Let's explore how:

• Loss Aversion: Loss aversion describes our tendency to feel the pain of losing twice as intensely as the pleasure of gaining the same amount. Imagine allocating your savings towards a specific goal, only to have hyperinflation erode its value. Zimbabweans have had to become adept at managing this bias, but not by simply accepting losses. Here's the key: One way of overcoming loss aversion is to follow a strategic asset allocation strategy. This doesn't involve trying to time the market, a near-impossible feat perfectly. Instead, strategic asset allocation focuses on the long term. You can automatically "buy low" and "sell high" over time by rebalancing your portfolio periodically across different asset classes and geographic regions. Think of it like planting a diverse vegetable garden – sure, some crops might underperform in a particular season. Still, others will thrive, ensuring a bountiful harvest overall. This diversification helps mitigate the sting of loss aversion by ensuring that gains in another balance losses in one area.
• Herd Behavior: The allure of following the crowd can be strong, especially during periods of panic selling. Zimbabweans have learned to be wary of this herd mentality, understanding the importance of independent research and long-term perspective.
• Emotional Gap: Fear can be a powerful motivator, often leading to impulsive decisions. Zimbabwe's economic volatility has forced investors to confront these emotions head-on, developing a sense of discipline and emotional resilience. (Ask a Zimbabwean how many currencies they have used in their lifetime!)
• Anchoring: Clinging to past experiences or outdated information can be a recipe for disaster. Zimbabweans have had to constantly adjust their anchors, re-evaluating strategies and adapting to a new economic reality.
• Self-Attribution: Overconfidence can be a dangerous pitfall. The Zimbabwean experience highlights the importance of humility and a willingness to learn from past mistakes, both personal and national.

By understanding these behavioural biases and how Zimbabweans have navigated them, we can invest more strategically in a world of uncertainty.

The 5 Ever-Present Investment Risks: A Zimbabwean Perspective

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Remember the five core investment risks we discussed previously? (If not please look up "Investing Like A Zimbabwean" on my profile) Market risk, inflation, shortfall risk, liquidity risk, and political risk? These don't disappear – they're the constant companions of every investor, regardless of location or experience. The key is understanding them and developing strategies to mitigate their impact on your portfolio ( And use them to your advantage)

Learning from Zimbabwean Resilience: Mastering the Art of Investment

Zimbabwe's economic journey has been a test of resilience. Through hyperinflation, political turmoil, and periods of growth, Zimbabwean investors have honed their ability to adapt and navigate uncertainty. Their story offers valuable lessons for all of us.

Consider agriculture, a significant component of Zimbabwe's GDP. As investment author Clifford Sosin states, "No reasonable person would expect a farmer to sell his farm to buy a different farm every decade, let alone every year or several times a year." This quote emphasizes a crucial concept - long-term perspective. Just as farmers wouldn't impulsively sell their land, investors should not react to market fluctuations with panic-driven decisions. Zimbabweans, forced to navigate a challenging economic landscape, understand the importance of a long-term view.

History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable, as Shelby M.C. Davis reminds us. Zimbabwe's economic history is a testament to this truth. We can be better prepared for future challenges by learning from past crises.

Becoming a More Global Investor

Today's wealth management clients worldwide need a team of global investment experts. A global suite of customized services for wealth creation, growth, and preservation, with leading experience from trusted advisors and worldwide reach and reputation. Zimbabwe's economic story highlights the interconnectedness of the global market. (Zimbabwe was the UK's 103rd largest trading partner in the four quarters to the end of Q3 2023, accounting for less than 0.1% of total UK trade.)

Investors today need to understand and navigate this complexity. A team with a global perspective can help you diversify your portfolio across asset classes and geographic regions, building resilience against localized risks.

Investing for Your Legacy: Beyond Making Money

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At 44, many will start thinking about legacy and how to create value from their wealth. Making money, as many Zimbabweans have known over the last 44 years, is the easy part, but keeping it safe and growing it is the very difficult part. A comprehensive wealth management strategy goes beyond just accumulating assets. It considers your long-term goals, risk tolerance, and tax implications. By working with a team of financial professionals, you can develop a plan that ensures your wealth survives and thrives for future generations.

The Zimbabwean Investor's Toolkit: Mastering the Elements

Cash as a Strategic Weapon: Zimbabwean investors understand the importance of having a readily available cash reserve. This provides a buffer against emergencies and allows them to seize fleeting opportunities from market fluctuations. Knowing how much cash to hold is crucial, striking a balance between liquidity and potential returns.

Opportunity Funds: Be Ready to Pounce: Market downturns create "buying opportunities." A dedicated "opportunity fund" allows you to capitalize on these moments. The key is determining the optimal size for this fund based on your overall investment strategy and risk tolerance.

Active vs. Passive: A Balanced Approach: Allocating your wealth between actively managed funds and passive index funds offers a balance between the potential for higher returns and lower fees. Understanding your risk tolerance will guide this allocation.

Hedging Against Inflation: Gold and real estate have historically served as hedges against inflation. Using these strategically within your portfolio can help preserve your purchasing power over time.

International Property: Income Streams Beyond Borders: International property investment can generate rental income and potential capital appreciation. Researching different markets and understanding currency fluctuations is crucial for success.

Plan B Passports: Global Mobility for the Discerning Investor

In an increasingly interconnected world, global mobility is no longer a luxury but a strategic advantage. Plan B passports, also known as second citizenship, offer a path to residency or citizenship in another country. This can provide benefits such as:

• Enhanced travel freedom: Visa-free travel to a wider range of countries.
• Diversification of risk: A hedge against political or economic instability in your home country.
• Business opportunities: Easier access to new markets and investment opportunities.
• Improved quality of life: The chance to live, work, or retire in a country with a more favourable climate or healthcare system.

Zimbabwe's economic history underscores the importance of adaptability. Plan B passports are another tool in your investor's toolkit, allowing you to adapt to changing circumstances and pursue global opportunities.

Building a Resilient Portfolio: A Zimbabwean Inspiration

By incorporating these strategies – maintaining a cash reserve, having an opportunity fund, diversifying your asset allocation, using hedges against inflation, considering international property, and exploring plan B passports – you can build a resilient portfolio inspired by the Zimbabwean spirit. (Assuming you have a Retirement Fund & Education fund in place already; if not, start there)

Remember, the best time to invest is now. Don't wait for a crisis to prompt action. Start building your investment foundation today, and take control of your financial future. By learning from Zimbabwe's experience and adopting these strategies, you can invest with confidence in a complex and ever-changing world.