What to know about investing

YOU DON’T NEED AN OFFSHORE ACCOUNT OR MILLIONS AVAILABLE TO YOU

It has become far simpler for South Africans to invest offshore. Not only have exchange controls been loosened, but the options available to local residents have increased significantly.

There are four common ways of investing offshore:

Set up an international brokerage account.

Invest in a foreign currency unit trust, usually through a local platform;

Invest in shares or funds through an insurance wrapper, e.g. the Glacier Global Life Plan;

Set up an offshore trust to which you lend money to make investments.

It has become very hard for South Africans to open transactional bank accounts offshore. If you haven’t lived and worked overseas, having a personal account outside SA is quite rare.

“Maintaining an offshore account is even harder because you will be hit with bank charges on a monthly basis,” says Nick Jeffrey at Sanlam Private Wealth.

Fortunately, it’s not necessary to have an offshore account to invest outside SA.

“Opening an international brokerage account is about the same process as you would follow for a local account,” says David Nathanson at Bellwood Capital. “You sign a mandate, brokerage application form, complete your Fica documents, and transfer the funds.”

However, you’ll need an offshore account if you want to withdraw your money but don’t want to bring it back to SA. The range of options now available to SA investors have made investing internationally far more accessible.

EasyEquities allows investors to access a selection of US-listed shares and exchange-traded funds with no minimum investment amount through its USD accounts. However, there’s a cost involved in moving money offshore via a bank, with charges coming to around R200 per transaction.

Other online brokers have minimum amounts, but these aren’t necessarily that onerous. PSG accepts minimum initial investments of £5 000 (R84 000).

Investec offers structured products held offshore that generally require a R50 000 minimum investment. Most foreign currency unit trusts registered in SA and accessible through local platforms tend to require minimums of $10 000 (R126 000) plus.

If you want someone to manage a bespoke portfolio for you, that may need bigger amounts.

“The most important thing you can do is get proper advice,” says Jeffrey. “Go to your wealth manager and if they don’t know the offshore space, ask them to recommend someone who does. If you are trying to do it yourself or with an advisor who isn’t that up to speed, chances are that you might end up in something that you would pay more tax on or cost you more than you would expect.”

Know where and how you’ll be paying tax, especially regarding capital gains and what your estate may be liable for on your death.