Sean is a diligent school teacher who loves his job. He spends most of his time at his workplace, teaching Physics. For many years now, Sean has been teaching Isaac Newton’s Laws of Motion. One of the laws states that; Every action has an equal and opposite reaction.
Sean has seen this law playing out even in the Zimbabwean economy. The point here is that Sean earns ZWL2,500 every month and pays his rentals in United States Dollars at a rate of USD80 per month. He has been working with an exchange rate of USD1 to ZWL15 for some time now. This means that his rental costs per month had been 80×15 which equals ZWL1,200. That said, some form of action occurred on the foreign exchange market in Zimbabwe recently and caused the exchange rates to jump to ZWL 20. The reaction was that prices shot up and Sean’s income was affected. In fact, his new rental bill would be 80×20, which equals ZWL1,600, representing a ZWL400 increase.
Sean’s story demonstrates how household incomes in Zimbabwe are so vulnerable to shocks such as exchange rate movements. The underlying fact is that Sean earns in ZWL whilst his major monthly bill (rent) is in USD and this exposes Sean’s income to exchange rate shocks.
Piggy has always advocated for individuals and households to consider (i) buying shares as a value preservation strategy and (ii) earning hard currency through forex trading. The most frequently asked question has been; Where do I start from?
Buying and selling shares in Zimbabwe has been made easy after the introduction of the C-Trade platform. Here is an article on how one can register and get started;
The following article guides you on how to fund your account;
As for forex trading, Piggy recommends that individuals start by completing the babypips course and then registering a free demo or practice Iron FX account. Here are details for the babypips course;
Overall, this twinned approach to Sean’s personal finances will not only preserve value but also hedge against shocks given that his income stream will also include foreign currency.
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