Investing In Africa: 10 Tips
Investing in Africa: 10 Tips, will consolidate the best advice experts in the field have to offer for those desirous of venturing in to these uncharted waters. While on the one hand there is instability and political unrest, on the other hand, Africa presents an opportunity that has been compared to Russia after the breakup of the Soviet Union. Here are ten tips to enable you to take advantage of this opportunity.
- Complete your due diligence. There is much to learn and educate yourself about before you invest your hard earned money. Learn about the African Market as a whole, as well as the market in its individual forms with its local currencies. Use the African Securities Exchange Association Indices Chart and keep up with the ETF’s (Exchange Traded Funds) when formulating your diverse portfolio strategy.
- See the market for what it is. Don’t mistakenly conclude the African market is small and that research is not needed. There are thirteen liquid markets in Africa; from these markets spring 250 companies with annual revenues of two million dollars. There are 100 large cap companies with 5 billion in revenues; and they have 2,000 actively traded companies. (The US, for example, has 3,500 actively traded companies.) The African market is certainly big enough to view in a serious light.
- Slow your roll. Americans have a hurried mind-set that can prove disastrous when combined with African investment strategies. You must view your investments as slow movers that will pay out over time. Do not bring a hurried mind-set to the African market.
- Buy low, sell high. It is an oldie, but a goodie. This basic investment principal has to be applied in the sometimes unstable market that is Africa. Panic selling cannot be a part of a successful portfolio. If everyone else is selling at a low price, you are waiting for the price to go back up, before you sell. When a market is saturated, you will not poor your money into an over-priced fund. You will wait patiently for the price to come down.
- Do what China Does. It is no secret that China has invested heavily in Africa and that they are having success. Africa’s natural resources have never been in question as to value. If it is good enough for China, it can be good enough for you. Keeping close taps on China is a good tip to keep in mind.
- It takes less money to buy and sell shares in Africa. Use that to your advantage, putting your proverbial foot in the water with less money, thereby lowering potential financial losses.
- In for a penny, in for a pound. Again following this advice requires patience and long-term goal setting. If you are going to make a risky investment, you might as well do it right! A long-term investment is generally considered to be at least 5 years. If you do not want to be involved with African markets for the long-term, look elsewhere for a suitable fund.
- Get out the geography books or get together reliable web sites. You will need the information to evaluate your options. Don’t forget there are 4 parts that make up Africa: North, South, West, and East all have different resources, currencies, and funds. You cannot invest in Africa without a working knowledge of the people, the country, the governmental stability, and each section’s natural resources. Learn about more than just the African financial market, learn about the African nation.
- Try to find a company already well-placed in Africa. A company that is regulated and works according to US laws is a company you want to locate and analyze.
- New and inexperienced investors should look into a diversified mutual fund. A mutual fund that contains portfolios of diversified companies is less risky. ETF’s are risky but can usually be depended upon over the long term if checked out carefully.
With prior planning, patience, and long-term goals; a drop of daring, and a morsel of curiosity, investing in Africa can be a successful adventure.