Time to invest globally? Consider your profile and goals
For South Africans keen to spread investment risk through diversification and gain access to well performing sectors, investing abroad is generally a no brainer.
Global investing is becoming more accessible and appealing
Many people assume global investing in hard currency is only for wealthy people, but the minimum capital investment for many offshore investment products is the equivalent of 10,000 US dollars. This is a savings goal that may be more accessible than many think as they can gradually work towards it by setting modest amounts aside each month.
There are recurring offshore endowment products available on the market for $200 a month. Starting early with this goal in mind is key. It allows the benefits of global investing to become accessible and appealing to more people.
Now may be the right time for you to invest globally
For some investors, it's particularly prudent to start an offshore investment sooner rather than later. This is likely the case if:
1. You want to preserve your purchasing power globally
Through geographical and currency diversification, global investing can help protect your wealth against the significant concentration risk of investing too much in one region and currency. Global investing balances out losses caused by the structural depreciation of the rand: even if the rand gets weaker, any investments you have in hard currency (like dollars or sterling) can make up for it.
Importantly, different rules (with significant implications) apply depending on where your money resides and the investment vehicle you use to take your wealth abroad so these should be carefully considered. A global endowment is useful in this respect in simplifying all the legislative, tax and estate planning considerations.
2. You foresee any international expenses
Having assets in currency other than rand is especially handy if you want to educate your kids abroad. It's also handy if you plan to live between South Africa and another country or are likely to emigrate one day. Additionally, a large portion of the costs of what we purchase in South Africa is influenced by exchange rates.
3. You want to build capital over the long term
If you're prepared to wait at least five or more years, you may profit from positive global growth trends and compounding. Once you've saved enough of a buffer to cover short term expenses in rands, global investing offers access to great offshore options to build your capital over time.
This article is not financial advice. Please consult a financial adviser for financial advice.
Invest with people who invest in you
In 2007, Discovery Invest revolutionised the local investment space through this profound insight: By changing the way people behave, we can change the South African landscape for the better. Discovery Invest is the fastest-growing unit trust company in the country, offering a full range of investment solutions to help you earn compound interest to grow your wealth.
Recently, we've expanded our successful local offering to create the first international shared-value offering. Through our global investment offering, we give clients unique benefits and associations with some of the largest and strongest asset managers in the world, along with efficient structuring and a seamless digital investing experience. Navigate the world of global investing with ease - ask your financial adviser about us today.
Discovery Life International, the Guernsey branch of Discovery Life Limited (South Africa), licensed by the Guernsey Financial Services Commission under the Insurance Business (Bailiwick of Guernsey) Law 2002, to carry on long-term insurance business. Discovery Life Limited is a registered long term insurer and authorised financial services provider. Registration number 1966/003901/06. Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, is an authorised financial services provider. The views and opinions expressed in this article are for information purposes only and should not be seen as advice as defined in the Financial Advisory and Intermediary Services Act. Discovery shall not be liable for any actions taken by any person based on the correctness of this information. For full details on the products, benefits and any conditions, please refer to the relevant fact file. For tailored financial advice, please contact your financial adviser.
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