The offshore investment process is often seen as unwieldy and complicated but this assumption is far from true. And many people still think it is a preserve for the super-rich – another false perception.
Truth is, offshore investing serves a variety of practical needs for all sorts of people from ordinary households to the super-rich. And opportunities are galore.
“We live in a global era,” says Chantal Robertson, Head of Global Wealth Solutions at FNB Wealth and Investments. And global citizens come in all shapes and forms, from the young professional saving for his first overseas holiday, to a corporate executive establishing an offshore account to cover tuition fees should her children wish to attend university abroad, to an experienced trader looking for access to the global exchanges, to a wealthy family using existing allowances to accumulate significant value offshore and structure it appropriately.”
Robertson explains that the critical feature of offshore investing is that it is a practical way to achieve diversification in an investment portfolio. “Diversification, in turn, is a big word for a relatively simple concept: Spread your wealth and your hard-earned resources between different investment options. Or, don’t put all your eggs in one basket.”
At its core, says Robertson, the notion of diversification assumes that various asset classes – like cash, property or stocks – vary in nature and will behave and perform differently over a period. So, when one is on a high, another might be going through the doldrums. But, together, they’ll even each other out. This reduces your risk.”
She notes that it is no longer sufficient to diversify among different asset classes, especially if they are all based in the same country and are subject to the same economic, political and social pressures. “Today’s investor is a mobile global citizen who is unrestricted by borders and boundaries, and wired consistently into a world of potential opportunities.
“Being a global citizen is no longer a question, but it is a different journey for each one of us,” says Robertson.
In South Africa resident individuals older than 18 can take R1 million offshore annually as a Single Discretionary Allowance. These funds can be used for
- foreign investment
No tax clearance is needed.
And residents can obtain tax clearance to take R10 million offshore under the annual Foreign Investment Allowance. Wealthier individuals can apply to the SA Revenue Service and SA Reserve Bank to take more than R10 million offshore in terms of a special dispensation.