Five things you didn’t know about investing offshore

Jo-Anne Bailey, Sales Director & Country Manager for Africa at Franklin Templeton Investments.

With state capture, rating agency downgrades and cabinet reshuffles dominating news headlines, offshore investments have become increasingly attractive to those preparing for their financial future. The good news is that diversifying your portfolio in this way is not as daunting as it may seem, and all four of the country’s big banks, or any reputable asset manager, can assist you with this key investment decision.

Here are five things you didn’t know about this exciting asset class:

1. Risk mitigation: This is perhaps the most important benefit of investing offshore. Not only do you protect yourself from political and economic uncertainty, but you also reduce the effects of Rand volatility on your overall portfolio.

An important rule of thumb is to minimise your exposure to risk, the closer you get to retirement age. If, however, you are in your twenties with many working years ahead of you, there is still time to indulge your risk appetite. No matter where you may be on your investment journey, offshore investments remain an effective tool to mitigate the country risks that could reduce the value of your portfolio.

2. New investment horizons: Something that is particularly exciting about diverting your funds in this way is that you are able to invest in global companies that may not be listed on the Johannesburg Stock Exchange (JSE). If your iPhone never leaves your side and you have a particular passion for Apple, by way of example, you can buy shares in this leading technology company as part of your offshore investment portfolio.

3. Sector savvy: Similarly, different industries that may not be open for investment locally, such as the oil sector, become an exciting opportunity for financial growth when you invest offshore.

4. Travel smart: If you have plans of visiting an international destination any time soon, offshore investments offer you the opportunity of saving in the local currency of the country to which you will be travelling, prior to your departure. This means that if the value of the Rand drops, your spending money will remain protected and you won’t have to forgo that extra cappuccino while on holiday, simply because of the exchange rate.

5. The global investment village: While many of us tend to be more parochial and inward focused in our approach to money management, offshore investments allow us to take our rightful place in the global village of investment opportunities. While it may seem overwhelming at first, South Africa’s leading asset managers can assist you to dip your toe in offshore waters until you find your feet.

In short, offshore investments offer direct exposure to certain stocks, sectors and asset classes that may not otherwise be available to investors wishing to grow their portfolios. By engaging in a small amount of research about offshore investments, you’ll soon discover the exciting world that awaits those seeking to mitigate the country risks associated with living in our current political and economic climate.