Why now is a good time to invest offshore

No matter whether you’re planning on leaving South Africa to live abroad, or are a South African resident concerned about the future, all the signs are that now is a good time to invest your surplus cash offshore.

Clouds are on the horizon

South Africans are famous for being positive and upbeat, but it’s hard to ignore the warning signs on the horizon that indicate that a prudent move would be to protect your savings in another country. In contrast to the strengthening global economy, South Africa’s economy is struggling and government debt has increased to over 50% of GDP compared to the healthy situation of below 40% back in 2000. South Africa is also experiencing tremendous political uncertainty as we head in the general elections in 2019 and the country also has a current tax shortfall of R50 billion.

There is also the strong chance South Africa could receive a further downgrade of our local debt by Standard & Poor’s to below investment grade, which will mean our bonds, fall outside of the Citigroup’s World Government Bond Index, which could result in foreign bond outflows. Our equity market has already responded to the uncertainty in the country, resulting in over R90 billion of foreign investment leaving our equity market. With the threat of future downgrades and the looming political uncertainty, it is expected the market will respond negatively, resulting in further outflows.

Looking for the silver lining

Even if things improve in South Africa with a strong political outcome and an ethical leadership, it still makes financial sense to consider diversifying your risk and investing offshore, where you can access many opportunities not available in South Africa. At FinGlobal we understand you may not want to keep ‘all your eggs in one basket’ and we have specific services tailored to South African residents who’d like to invest their money abroad.

Every resident above the age of 18 has two allowances that they can use to transfer funds from SA:

• Single Discretionary Allowance

As a resident, you may transfer a total of R1 000 000 from SA every calendar year. Please note that all card transactions while you are abroad are included under this allowance.

• Foreign Investment Allowance

As a resident, you may also use this R10 000 000 allowance per calendar year. A tax clearance is required from SARS. This tax clearance is associated with the Foreign Investment Allowance and differs from a normal ‘good standing’ tax clearance. You may also transfer funds abroad in excess of these allowances.

In all your offshore financial transactions, with FinGlobal you’re in the safe hands of a foreign exchange intermediary approved by the South African Reserve Bank. In addition to your complete peace of mind, when it comes to moving your money our total solution provides you with:

• Excellent exchange rates
• Low fees
• Unrivalled personal service
• Free exchange control advice
• Signature ready documentation
• Secure and compliant processing

If you’re thinking of moving money abroad, contact FinGlobal for financial advice, the most competitive rates, low fees and exceptional personal service.