Is offshore investment the answer?

Dear Impact Corporate Risk Managers Client

The hottest topic in the investment space is offshore investment.

Locally we have a lot of factors affecting our market and everyone is looking beyond our borders to find growth.

So let us discuss some options and bust some myths.

  1. Offshore investments are for the ultra-richThis was definitely true in the ’90s and early 2000s, but today there are various options to get offshore exposure and you can enjoy those benefits from as little as R500pm.
  2. Offshore investments are less likely to declineAlthough offshore investments have outperformed local markets the past 5 years, this has not always been the case and historically the SA market has outperformed offshore markets comfortably.
  3. Offshore investments are expensiveAnother old myth that was true in the ’90s, but today some of the offshore investment options are actually cheaper than local investments.
  4. Offshore investments require a lot of paperworkTaking money offshore requires one additional form for your first R1mil, and only after that you need SARS clearance which requires a bit more paperwork.
  5. Local pension funds are not allowed to invest offshore.Local pension funds (RAs and provident funds) are allowed to take up to 30% offshore in line with regulation 28. Currently the bigger funds like Coronation and Allan Gray are very close to the 30% maximum offshore exposure.

When is offshore investment a good idea?

  • If you have a long investment timeframe 5 years and longer.
  • If you are planning to send your children overseas to study, it is a very good option.
  • Clients who can afford taking higher risk. Remember there are two risk factors in offshore investments namely currency and the offshore markets.

If you would like to discuss your offshore options, please do not hesitate to contact me.