Brenthurst Wealth investment strategist Magnus Heystek has provided an easy-to-use checklist to protect your money against the failing South African state.
He provided this information in response to a speech from Free Market Foundation CEO David Ansara where he discussed the failing state.
Although South Africa is not yet a failed state, he said the government is failing and has effectively run out of money.
Instead of admitting failure, the state continues to expand its scope and authority, hampering business in the country.
Ansara advised individuals, businesses, and communities to ‘state-proof’ themselves by becoming self-sufficient.
As a first step, he said individuals and businesses should pay as little tax as possible by using legally acceptable methods.
He also urged big businesses to stop supporting the government. Instead, people should support civil society organisations that are creating alternatives to the state.
Heystek agreed with Ansara’s views but felt he could have gone further on some of his proposals to protect wealth.
“All wealthy South Africans should offshore as much of their wealth as possible – a financial get-off-the-grid-strategy – to protect their lifestyle in South Africa,” he said.
He believes the best way to state-proof yourself and your family is to create structures in a place such as Mauritius by setting up trusts, companies, or foundations.
“The more you can break the hold the state has or could have over your financial affairs, the better,” Heystek said.
Protect your money against the failing South African government
Heystek provided a strategy to protect your wealth and state-proof it against the ANC government. The full version is available on Biznews.
- Sell down your local property assets as much and as soon as you can, as South African property investments have become a dreadful investment and a capital trap.
- Consider renting rather than buying, especially when retiring. Renting is cheap, and the owner of the property is most probably subsidising your lifestyle.
- Move all your discretionary investment offshore while you still can. The weakening rand reduces the amount of foreign currency you can buy, and regulatory changes may make it more difficult.
- Consider moving your offshore assets and investment portfolio into a Mauritian trust to further put distance between your assets and the ANC in South Africa.
- If you have a business which can offshore some of its operations, do it. An easy way is to set up a holding company in Mauritius and run some of your operations from there.
- Open a bank account in Mauritius and link this account to your offshore investment portfolio. Any withdrawal from your portfolio can be done into this account.
- Invest in US dollars. It can reduce your taxes payable in South Africa as capital gains are only levied on your USD profits and not due to the rand weakening.
Heystek said this strategy will help protect your wealth and place you in a position to emigrate should South Africa become untenable and risky.