Paul Nyakazeya, Group Digital Editor 
ZB Financial Holdings (ZB) says Zimbabwe’s capital markets still provide some viable investment options, despite the prevailing high inflation and an unstable exchange rate.
In a presentation at the week-long Zimbabwe Agricultural Show, which ended last Saturday, ZB said the stock market, bonds, life insurance and mutual funds were long-term investment options investors could invest in.
“Economic agents seek to hedge against inflation by investing on the stock market so as to preserve value. Stocks usually follow the performance of companies. The benefits come in the form of increase in value per share and also declared dividends,” said ZB.
The financial services firm said trading on the Zimbabwe Stock Exchange (ZSE) is expected to increase going forward due to an increase in dominance of online trading platforms like ZSE Direct and C-Trade, which have allowed retail investors to participate in the stock market electronically.
ZB said the Victoria Falls Stock Exchange, which trades shares in foreign currency, was also another long-term investment vehicle, adding that buying shares does not, however, guarantee a positive return.
Commenting on bonds, ZB said: “When you purchase a bond, you are allowing the bond issuer to borrow your money and pay you back with interest. Generally considered less risky than stocks, however, they tend to offer lower returns. Consider the possibility that the issuer could default,” the bank said.
Corporate bonds are debt instruments issued by a company to raise funds for projects such as expansion and research and development. Corporate bonds usually offer higher yields than government or municipal bonds to offset this disadvantage. Municipal bonds are issued by a city, town, or state to raise money for public projects such as schools, roads, and hospitals.
“Treasury bonds are issued by the government. Since they’re backed by the government, treasury bonds are considered risk-free. Due to its almost-no-risk nature, t-bonds yield less interest rates than corporate bonds.
“Life insurance is an investment you get not for yourself but for others who depend on you… One can get a life insurance that doubles as an investment. The investment feature works like a mutual fund wherein the cash value can be invested in a variety of separate accounts,” said ZB.
ZB said if the idea of picking and choosing individual bonds and stocks does not appeal to an investor, there is also the option of investing in mutual funds.
Through mutual funds, investors are able to purchase large investments in a single transaction. These funds, in turn, pool money from multiple investors and are managed by a professional fund manager to invest that pooled fund in stocks, bonds, and other assets.
“Mutual funds follow a set strategy—a fund might be invested in a specific type of stock or bond, like stocks in a foreign market, government bonds, or even a mixture of the two in a single fund.
“The point is, each fund has a specific objective. The beauty of mutual funds is that investors are given the option to choose which fund to invest in based on their goals,” said ZB.
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