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In today’s advisor insight, I aim to demystify certain aspects of offshore investing and provide a clear path to decision making. Hopefully, this will help you be in a better position to make an informed choice about whether you should offshore or not.

When investing, the decision-making tree doesn’t change much and can be considered in the following ways:

1. Do you need access to your money within a five-year period?

2. What is the purpose of the investment? Education planning, wealth creation etc.

3. What is your current tax situation and what is the current rate of tax on your income?

4. What is your personal tolerance to investment risk?

5. What are the implications to the investment should something unforeseen happen such as death, health decline, or a financial issue?

Only once you have answered the above can you begin to consider local or foreign investment choices.

Offshore investments, for the most part, have the same investment products that you would be utilising locally such as unit trusts, endowments etc.

Where the money is invested, within those investments, is also very similar: Equity, Property, Bonds and Cash.

So, if there isn’t a massive difference between the investment products and the type of assets you are investing in, why invest offshore?

Getting the most out of your money

In my view, there are two primary reasons to consider offshore investment diversification and investment returns.

Having too much invested in any one investment / asset can have a negative impact on your objectives. The same goes for the country you are investing in. Having too much invested in one location can increase your investment risk and have negative long-term consequences to your wealth.

The main reason we invest is to get a return on our money. Currently, the outlook of many South Africans on the state of their country is uncertain. Investing offshore, and picking different economies to invest in, can provide investors with the returns they are looking for to keep their money growing faster than the rising costs of living.

It is my recommendation that you raise these points when next visiting your financial advisor, who will be able to provide the proper framework for your offshore and local investment decisions.