Is Your Money Better Off Overseas?

GQ South Africa|March 2020

Is Your Money Better Off Overseas?
With the fluctuating exchange rates and inflation spikes, you might be wondering if investing offshore could be the solution to securing your financial future. Here, financial planner and investment specialist, Michael Haldane, explains why it’s a good idea
Thobeka Phanyeko

Investing offshore allows you to diversify by spreading your risk and allowing you to benefit from a broader global universe of industries, companies, geographical regions, currencies and investment ideas.

‘Although the idea can be intimidating, offshore investing, in my opinion, should form part of your long-term investment plan,’ says Michael Haldane. Currently, South Africa only represents an estimated 1% of the global financial markets, which essentially means that by only investing locally, you’re giving up on 99% of the global market opportunity. With South Africa being an emerging market, Haldane encourages diversifying and investing part of your assets in developed economies. ‘These developed markets can assist in providing your investment portfolio with more stable growth, a choice of different currencies, different asset classes and the fund managers may adopt different investment strategies.’ Investing offshore won’t only help you to capitalise on circumstances beyond our borders but can also serve as a buffer against our markets.

‘The South African Rand is a volatile currency and very often tends to overreact, which is influenced by economic, political and social unrest. International investing may also offer a hedge for individuals and investors who fear the depreciation of the Rand,’ says Haldane. If this is an investment option you’re looking at exploring, he weighs in:

KEY POINTS TO TAKE INTO CONSIDERATION WHEN INVESTING OFFSHORE

> Investment terms: It’s advisable to have a longterm investment objective: no less than five years to allow the portfolio to rebalance if there’s economic or market volatility.

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March 2020