adminZIMBABWEANS are not exploiting existing platforms for wealth creation on capital markets due to financial illiteracy, Chengetedzai Depository Company (CDC) chair Mr Zwelibanzi Ndlovu contends.
Mr Ndlovu told The Sunday Mail Business at the recent Buy Local Summit in Victoria Falls that millionaires and billionaires around the world made their bones on capital markets – something not happening in Zimbabwe. He said the lack of participation on local markets could be due to a perception that such investments were for the elite.
“The likes of Mark Zuckerberg made it through investing on capital markets. People think you have to be a billionaire to invest on the stock market.
“Even educated professionals like medical doctors have no clue on how capital (markets) operate, yet they guarantee high returns and ensure the markets are robust.”
Outside the stock market, money market instruments and fixed income securities such as bonds also provide viable investments.
Mr Ndlovu said introduction of financial literacy modules at Ordinary Level would help groom citizens conversant with investment. While the stock market may be volatile and therefore risky for short-term and minority investors, the bond market is considered a safe haven for those in for the long haul. The performance of a stock is linked to a company’s performance and of late, bears have been hounding the Zimbabwe Stock Exchange.
According to Investopedia, the bond market provides a predictable stream of income when stocks perform poorly and are a great savings vehicle when an investor does not want to put money at risk.
A basic education on the nature and risks of financial markets can help boost investments from locals. Added Mr Ndlovu: “It has to be taught to everyone, not only those doing finance-related programmes in tertiary institutions. People need to able to separate between long-term and short-term investment, and that the higher the risk, the higher the return.”
Online Reporter