The Five Pillars of Offshore Investment for South Africans

As global economic landscapes continue to shift, South Africans are increasingly considering the potential of offshore investing as a means to diversify their wealth and safeguard against domestic economic volatility. However, embarking on such financial ventures brings its own set of challenges and considerations, according to Citadel's chief economist and advisory partner, Maarten Ackerman.

Ackerman underscores the importance for investors to approach offshore investing with a structured strategy that goes beyond merely seeking the next big stock like Nvidia or Amazon. The first crucial step involves choosing the right investment instruments that will grant exposure to global markets. Options such as exchange-traded funds (ETFs) and index-tracking unit trusts have gained popularity, offering an affordable route to a broad range of companies, although they may not provide the same currency hedging benefits as hard currency investments.

Further, Ackerman highlights the need for a clear objective behind the investment. Protection against rand depreciation is a common goal, but Ackerman stresses viewing the broader picture, considering what currencies you transact in and aiming to preserve purchasing power across borders.

Governance and compliance represent the third pillar and perhaps one of the more intricate challenges, as illustrated by the impact of sanctions on Russian investments and the increased compliance expenses due to South Africa's recent greylisting.

The fourth aspect revolves around choosing a reliable and suitable platform to carry out these offshore investments, which influences both the accessibility of global markets and the security of one's wealth.

Finally, Ackerman enforces the value of quality financial advice. While DIY investing has been simplified through new platforms, expert guidance can prove invaluable, especially in navigating greylisting compliance costs, tax structuring, and making well-informed decisions in the complex world of global investment.

For South Africans looking to secure their financial future, thoughtful consideration of these five rules for offshore investing can make the difference between a successful global portfolio and a missed opportunity for wealth protection.