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It’s been 20 years since South Africans were first allowed to invest savings overseas and the volatile rand in the past few months has made the decision to move hard earned savings to foreign shores increasingly more relevant.
Despite the rand historically depreciating against developed market currencies at a rate of 6% pa, the 2015 drop still managed to shock most by delivering a 30% depreciation. In a subdued global economy, the US dollar has continued to remain strong – a Credit Suisse 2016 outlook report forecasts moderate returns for credit and equities and the US dollar realising further gains. “Given the prevailing environment, it makes sense to put some of your capital in offshore investments,”, said Discovery Invest’s Head of Product and Research, Craig Sher, “Clients are looking to offshore assets to diversify their investments and to immunise themselves against the volatility in the rand.”.
There are many benefits to offshore investing besides creating a buffer against a depreciating rand. The most significant one being that it diversifies your investment portfolio, as you are exposed to different economies, currencies and products. Investing offshore provides a valuable opportunity for people who want to grow their wealth, and it’s not only the super-rich who can access these international opportunities. If you have children overseas, spend a lot of time travelling overseas, or have significant unlisted assets in South Africa, such as property and agricultural land, then it may make sense to increase your offshore exposure.
