In light of the financial, political, and global challenges, South Africans are increasingly exploring means to enhance their financial stability and pursue wealth within a more stable framework
Pieter Koekemoer, the head of personal investments at Coronation, offers guidance for South Africans on offshore investing:
You may have enough. Many investors saving to retire in South Africa through a domestic balanced fund may have the appropriate level of offshore exposure to fund their future liabilities in rand. This is because Regulation 28 permits investment managers to hold up to 45% of international assets.
But you may need more. Investors who can invest beyond what they need to fund a retirement income in rand terms will benefit from additional international exposure in their overall investment portfolio.
When we earn a salary or income in South Africa, we are all exposed to the domestic economy. As such, country-specific challenges and the volatility of the rand can materially impact the purchasing power of our income over time as many consumer products such as fuel, food and technology are priced in foreign currencies and are imported.
It's more straightforward and more accessible than you think: You can invest your rand in a South African fund that invests all or part of its underlying assets internationally or via an offshore fund. An offshore fund diversifies jurisdiction risk and allows settlement in foreign currency, making it easier to fund those future international expenses mentioned above.
But what about the paperwork and minimum investment requirements?
Offshore investments can be funded from your foreign currency holdings or your annual single discretionary allowance of R1 million. The allowance is available to all South Africans over 18, without any tax clearance requirements (that is, minimal paperwork).
How do I choose the right fund for my future offshore expenses?
You need to go for an offshore fund range that is easy to understand and specifically tailored to meet critical investor needs, simplifying the fund selection process for new investors.