Many South Africans do not invest offshore as they feel more comfortable investing at home. Many investors also perceive local investments to outperform offshore investments. This may have been the case over the last few years especially if you are invested offshore in cash accounts as interest rates are almost at zero. While in SA the interest rates have remained relatively high even though the repo rate has fallen to around 5.5%.
However, investing offshore does not necessarily mean you need to settle for "lower returns." For example, a fund many of my clients are invested in has returned 24.4% in Pounds over the last year and this fund has returned 23.4% over 5 years.
The Rand is clearly overvalued at present and SA may have it's credit rating reviewed shortly. Should our credit rating fall, this will devalue the Rand. There is also great concern about the future political uncertainty ahead and all eyes are on SA at the moment. In my opinion there has never been a better time to start investing offshore than now. The Rand has remained firm, today trading at R7.33 to the US$. The majority of economists expect the Rand to start depreciating in the 3rd Quater of this year so why wait and see?
Investing offshore is easy. You can invest up to R4 million offshore. All you need is the usual FICA documentation and a Tax Clearance Certificate. The fund I use for my clients is offered through a major South African Investment House and these funds can be accessed abroad or locally, so there is no need to feel insecure about having your money far from home.
If you would like to know more about investing offshore and would like to beat the returns of cash, feel free to contact me.
