Offshore investing may sound daunting to first-time investors and may still seem rather complex for the avid investor, but we are here to help you understand what it is, how it can benefit you, and the best way to go about it.
Essentially investing offshore gives you the opportunity to tap into different economies and regions, as well as access industries and companies that aren’t available to invest in within South Africa.
While global investment may seem like a better idea considering the current economic climate, investing offshore doesn’t mean that you will get the most bang for your buck. Returns depend on current global economic conditions and exchange rates, which you can prepare for together with your financial planner.
The benefits of offshore investments include:
- Reduced risk because of the diversified portfolio
- Access to a wider range of investment opportunities
- The ability to grow your money across global industries, companies and currencies not available in SA
When you spread your money across various markets and currencies, you minimise the impact of currency depreciation, political factors, market trends and events, which can have a sizeable impact on growing your wealth. Taking a portion of your investment out of the country means that capital loss risks are minimised as greater diversification is a key element in reducing risk when it comes to financial investments.
One of the major benefits of investing offshore is that you can reduce the emerging market risks that come when investing locally. SA remains an emerging market regardless of all the first world investment industries available to local investors. We are still a small fish in a big ocean, with an open economy that is illiquid and has a consistently volatile stock market.
A long-term view is required to fully benefit from offshore assets’ return potential. While investing offshore can seem attractive, it’s important to consider where the return from investment could come from, the exchange rate and/or the underlying foreign investment. The impact of the exchange rate needs to be strongly considered when it comes to foreign investment.
What is the best way to go about investing offshore?
This all depends on you as we believe that no two lives are exactly alike. We would need to look at your personal circumstances, risk profile and your long-term planning goals.
The answer depends on investors’ personal circumstances, risk profile and longer-term financial planning objectives.
If you would like to discuss the potential of investing offshore, get in touch with us and we can talk you through everything you need to know.
☎️ +27 11 839 2302