If the idea of investing offshore causes a paradoxical mix of comfort and confusion for you, you are not alone.
Comfort comes from international diversification, which gives you the opportunity to gain access to a multitude of global opportunities and industries that aren’t present in our relatively small and concentrated domestic economy. Confusion may arise from simply not knowing how to go about investing offshore.
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If you read further, we hope that any confusion will be replaced with clarity. It’s all about knowing where to start. And with offshore investing, you start with the end in mind.
Simply ask yourself where you plan to spend in the future
The answer to this question will put you on the right track to making the right decisions when investing offshore for discretionary purposes - in other words, when you are already saving for retirement and have additional savings to invest.
Your ‘where’ may be guided by your ‘what’
Your future plans may require that you spend money in a foreign currency. You may want to travel abroad during retirement, visit your children (and grandchildren) living on different continents, pay for a child’s international education, or even live abroad yourself.
If these are your kind of goals, then consider investing in a foreign-domiciled international fund that only holds international assets such as Coronation Global Managed or Coronation Global Capital Plus.
You can use some or all of your R1 million annual discretionary foreign allowance to invest in these funds. You can also apply to SARS for an additional foreign investment allowance of R10 million per year.
Given that the above funds require a minimum investment of $15 000 (roughly R220 000 at current rates), you can choose to invest a smaller amount (starting at R500 via monthly debit order) in a rand-denominated feeder fund that still gives you all the benefits of international exposure but allows you to build up capital in rand terms first before you eventually invest it in a foreign-domiciled fund.
If your goal is to remain in South Africa but you don’t know what portion of your discretionary savings should be offshore, consider investing in a rand-denominated worldwide flexible multi-asset fund such as Coronation Optimum Growth. This fund manages international exposure on your behalf without constraints, while still aiming to provide long-term growth for your investment in local currency terms.
Alternatively, if you know what portion of your discretionary savings you want to invest offshore, you can consider a rand-denominated feeder fund that only holds international assets.
Investing offshore with Coronation
To meet these varied offshore investing needs, Coronation offers a range of international funds managed by a global team of 66 individuals with expertise across all asset classes and geographies. You can read more about investing offshore in our Corolab guide.
The information contained in this article is not based on the individual financial needs of any specific investor. To find out more, speak to your financial adviser.
* Coronation is an authorised financial services provider.