In this offshore investment series, we focus on the options available to investors, how South Africans can access these offshore investment opportunities, and the impact product choice can have on investors. offshore portfolios.
If you missed Part 1 of our series and want to learn more about the different offshore investment options available to South Africans, you can read it here.
In Part 2 of our practical guide, we look at how to access these investment options and what to consider when structuring a diversified investment portfolio.
An investor can make a direct investment either by opening a direct offshore unit trust or a direct offshore stock brokerage portfolio. The process is quite simple as there are several platforms that provide direct offshore investments.
What is important to remember, however, is that location and probate taxes may apply to foreign direct investments and can have a significant impact on the value of the investment portfolio upon transfer upon your death. .
Offshore investment packaging
A suitable investment product can help avoid the complexity and cost of offshore inheritance tax. An offshore investment package offers such a solution. These products are structured with either an underlying endowment policy or an underlying sinking fund holding the assets.
The result is that investments are taxed in the product itself, so no ongoing tax is payable in the hands of the investor.
Offshore Investment Packaging vs Offshore SICAV
Structure a diversified investment portfolio
The most important elements of your offshore investment portfolio are that it is structured in a sustainable and profitable way (including from a tax perspective) and that the underlying investments are well diversified.
As part of our advisory and investment advisory services, we help our clients build a bespoke offshore portfolio consisting of the following key elements:
- Choose the most appropriate administrative platform to use, based on a client’s investment needs and requirements as well as administrative platform fees and product offering.
- Choose the most appropriate investment product(s) to use, based on tax considerations, liquidity needs and the client’s long-term investment needs.
- Build an underlying investment suited to the client’s personal investment objectives and risk profile.
Other diversification mechanisms to consider:
- Diversify your currency exposure (for example, combining more than one currency in your portfolio);
- Diversify your geographic exposure by including both developed and emerging markets (other than South Africa);
- Diversify your allocation in asset classes according to your risk profile and your investment horizon (equities, bonds, real estate, cash and alternatives allocation); and
- Diversify your fund allocation across various investment managers, passive tracking funds and different investment themes, like Megatrends and Disruption portfolios.
Technological disruption, urbanization and climate change are redefining the investment landscape, creating new opportunities for wealth creation.
Investors who have existing offshore portfolios and wish to further diversify through these Megatrend and Disruption portfolios can do so either by consulting with one of our investment experts or by simply purchasing the ETNs through a brokerage platform. existing offshore shares. You can learn more about these wallets through our website.
If you would like to better understand the offshore investment opportunities available, we encourage you to engage with our team of experts in structuring your own offshore investment.