What is Offshore Investing?

Investing any of your money can be a risky and often rather daunting prospect and for the layperson – e.g. the average personal investor – navigating the options available alone can be rather overwhelming.

In researching the types of investment available to them many South Africans come across mentions of the concept of offshore investing. But just what is that and why should anyone consider it as a viable option?

Just What is Offshore Investing?

As the name basically implies offshore investing is the official term for moving one’s money out of your country of residence and investing it in foreign concerns. The money is invested in the currency of the country where the investment is located, and so in the case of South African investors funds invested in Rands are converted into USD, UK Sterling or Euros and dividends are paid in those currencies and then converted back to local tender if and when they are withdrawn.

Why Invest Overseas?

One of the biggest questions many people have when they first hear about offshore investing is quite simply why? Why ‘send’ their money abroad rather than investing it at home?

The biggest key perhaps is the diversity of opportunity offshore investing offers to South Africans. Our local economy relies predominantly, in the investment market anyway, on mining and the natural resource sector and it only makes up 0.6% of the global economy. Offshore investing offers access to far bigger markets in the US and Europe, and often in sectors that are underrepresented in the South African market such as electronics, high tech and pharmaceuticals.

Offshore investments also help to protect your money from the upheaval that local politics sometimes exert on the market and by working with established and respected South African Brands such as Investec , Allan Gray and Sanlam your interests as a South African consumer will always come first, no matter where your funds are actually located.

Won’t Investing Offshore Harm Our Local Economy?

Some worry that by investing offshore they will be in some way damaging the local economy and essentially being ‘disloyal’ to their own country. That really isn’t the case though, as the concept behind offshore investing is to build a diversified investment portfolio that includes a range of interests both within the local markets and those abroad. And in addition should your personal investments pay off you will have more to spend within your own local community, so you’ll actually be making a very personal contribution to the local economy.

How Much Can I Invest Offshore?

Offshore investing is a very diverse proposition. A minimum investment of $1,000 USD is required, but beyond that just how much you invest is up to you and your broker and advisor, as is how long the money remains invested and just when the right time to divest the funds might be.

Offshore investments, like any investment, do not come without risk and do need to be considered carefully. However, if you are interested in increasing your wealth via the investment markets then it is a newer option that is certainly well worth exploring further.

At Sweidan and Co our professional Independent Consultants will always provide you with the best investment advice to suit your unique circumstances.

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