For most South Africans watching the Rand, there is always that dull feeling of impending doom, regardless of whether the Rand is falling or climbing. Despite South African companies, that are, for the most part, continuing to grow, we are still faced with a struggling economy. The result of this is that any local investments have a rather muted performance and this affects the growth of your wealth.
The value of that local nest egg is being further eroded by inflation and the depreciation of the Rand. As a South African you need to hedge against the local economy and diversify by investing offshore. Once your money is overseas you will have more freedom with your options and the scope of those options is far less limited.
High net-worth investors are reducing their exposure to the South African economy and investing overseas by taking advantage of their allowances.
But what about those South Africans who are not so well off?
Should you be taking advantage of your allowances and transferring money overseas?
The short answer is YES, as by building an offshore exposure you are diversifying, and this is key to being more financially secure. It is recommended that you should have at least 60% of your money overseas. As you approach retirement you will need more funds available in South Africa to cover your expenses.
What are your options for moving your money overseas?
You can physically take the money overseas by going through the exchange control process, opening up an offshore bank account and sending your Rands in the chosen currency to this account. Don’t try to do it this way though - Woman caught trying to leave SA with almost R15m
How much money can you send overseas to invest offshore?
An individual is allowed to take a maximum of R10m a year offshore subject to SARS tax clearance and a maximum of R1m without tax clearance. The R1 million allowance will, however, need to be registered with the reserve bank.
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