Invest offshore to achieve portfolio diversification

The offshore investment process is often seen as unwieldy and complicated but this assumption is far from true.

Offshore investing is, at its core, a practical way to achieve diversification in your 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, this notion assumes that various asset classes – like cash or property – 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,” explains Chantal Robertson, Head of Global Wealth Solutions at FNB Wealth and Investments.

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 in to a world of potential opportunities,” says Robertson.

Customers with different needs have vested interests in various offshore investing opportunities. These days investing offshore is no longer the preserve of the super-rich, stresses Robertson. “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.” Resident individuals older than 18, for example, can take R1 million offshore annually as a Single Discretionary Allowance (these funds can be used for travel, gifting or foreign investment and no tax clearance is needed), or they 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.

Structuring advice is particularly important when you are looking to invest offshore, explains Robertson, and is another requirement of the global investor.

As the world gets smaller and investment options burgeon, it’s vital to have a local bank with an offshore footprint on hand to highlight the options on the table and enable offshore investing with ease. – Moneyweb

Today’s investor is a mobile global citizen