What you Need to Know about Investing Offshore as a South African

Feb 19, 2016 | Savings, Trusts & Tax Planning

Avoid Mistakes and Invest Wisely

With South Africa’s economy struggling, it is wise to consider offshore investment to make your rand go further. South Africa’s GDP is less that 1% and as such, access to global growth industries is limited. The political risks are high too.

Couple this with the depreciation of the rand against established currencies, a 30% drop last year, and your reasons to invest offshore increase all the time. So what are your options for offshore investment as a South African?

Physically Moving your Money Offshore

If you choose this option bear in mind the following:

  • You will need to invest between $20-25k.
  • This investment is long term – minimum of five years.
  • You can take up to R1M without tax clearance and up to R10M with tax clearance a year. The R1M will have to be registered with the reserve bank and the transaction conducted by an authorised dealer.
  • Once your money is offshore, your world is your oyster. Investment options are all there for you so stocks, unit trust funds, or leave it in a bank account with your name. As you can imagine the implications and risk needs to be quantified, so good financial planning advice is needed.
  • Offshore investments of this kind still form part of your estate. As such, they will be liable to estate duty in the relevant jurisdiction. That said you do have certain options. Some investment providers offer endowments which remove the need of an offshore executor and probate. You also have the option to nominate beneficiaries. Both of these can be exercised outside of the estate process so are with considering.
  • Endowments also provide tax advantages as CGT is paid at a lower rate than for individuals. Tax administration is done via the endowment.

Foreign Rand and Currency Exposure

Alternatively, you might want to consider investing in offshore unit trust funds. Although you buy them in Rands, your money is exposed to foreign currency and global diversification. This also applies:

  • Minimum lump sums are a lot lower and you do not need SARS tax clearance as your investments are paid out in Rands upon disinvestment. The transactions can also be managed by direct debit.
  • You can invest up to 25% of your pension fund offshore
  • You can invest your exchange traded funds offshore if you have a stock broking account.

Award Winning Financial Planning

As you can see your options require careful consideration and the political risk should never be ignored. To get insight and clarity it is best advised to bring in a financial planner. My award winning services combined with my South African roots will ensure your money is placed in the right option to suit your needs. Click here to get started.

Source: BizNews.com

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]


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