Did you know it is becoming easier and more affordable for South Africans to invest in offshore funds?
You may have enough
Many investors saving to retire in South Africa through a domestic balanced fund may already have the appropriate level of offshore exposure to fund their future liabilities in rand. This is because Regulation 28 now permits investment managers to hold up to 45% in international assets.
But you may need more
Investors who can invest beyond what they need to fund a retirement income in rand terms will benefit from additional international exposure in their overall investment portfolio.
When we earn a salary or income in South Africa, we are all exposed to the domestic economy. As such, country-specific challenges and the volatility of the rand can materially impact the purchasing power of our income over time as many consumer products (think fuel, food and technology) are priced in foreign currencies and are imported.
You may also have future international expenses, such as education and travel, or plan not to retire in South Africa. In all these instances, it is sensible and probably prudent to build up a pot of capital outside of South Africa which can effectively assist in meeting your long-term financial planning objectives.
It’s more straightforward and more accessible than you think
You can invest your rands in a South African fund that invests all or part of its underlying assets internationally or via an offshore fund.
The latter option diversifies jurisdiction risk and allows settlement in foreign currency, making it easier to fund those future international expenses mentioned above.
But what about the paperwork and minimum investment requirements?
Offshore investments can be funded from your existing foreign currency holdings or your annual single discretionary allowance of R1 million. This allowance is available to all South Africans over 18 without any tax clearance requirements (i.e., minimal paperwork).
In turn, we have made our offshore funds more accessible by reducing the minimum initial investment required to only $500. And, to reduce the red tape as much as possible, registered users of our secure online service are now able to open an offshore account with one click.
Domestic banks are also making it easier and more affordable to obtain foreign exchange and open a foreign currency bank account, while the emergence of global money apps such as Standard Bank’s Shyft* is also making it easier to turn rands into foreign currency.
How do I choose the right fund for my future offshore expenses?
Coronation’s offshore fund range is easy to understand and specifically tailored to meet critical investor needs, simplifying the fund selection process for new investors.
The Coronation Global Managed Fund , which represents our best investment view across global markets and asset classes, is well-positioned to meet the needs of most long-term global investors. We also offer a lower-risk alternative, Coronation Global Capital Plus , for global investors with shorter-term capital preservation needs.
To learn more about investing offshore and the options that you can consider, watch our 6-minute video below:
*Coronation is now a pre-loaded investment partner on the Shyft app, making this a very convenient and affordable way to fund your future foreign currency investments with us.
Coronation is an authorised financial services provider.