Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

I am an SFP affiliated Financial Advisor

No. 090 – The pros and cons of investing funds offshore

by | Oct 15, 2024 | Estate Planning, Offshore

Question

I retired three years ago, with half my income coming from my company pension fund and the other half from interest from investments. I am paying tax at a rate of 41%. Is there anything that I can do to reduce this amount?

Answer

It is easy to invest funds offshore. Your financial adviser or a currency specialist can convert your rands into dollars very quickly. Each individual is allowed to take R1-million offshore each year with relative ease. This is usually referred to as your travel allowance. In addition to this, if your income tax affairs are in order, you can take a further R10-million overseas each year.

The next question is, what should you do with this money once it is offshore? 

Many people leave their money in a bank. This is not always the wisest course of action, as overseas bank rates are very low. There may be merit in investing in some growth assets. 

Despite their poor performance this year, global equities – when converted to rands – have been the best-performing asset class over the past five, 10 and 15 years, as can be seen in Table 1. 

 Besides not providing you with inflation-beating returns, an offshore bank deposit will incur a lot of unnecessary costs and complicate the wrapping up of your estate at the time of death. 

I usually recommend that people invest their offshore assets in an offshore wrapper such as a global endowment. As you can attach a beneficiary to it, you do not have to deal with the hassles of probate.   

Also, even though the investment is housed offshore, it is deemed to be an asset in your South African estate, so you only have to pay South African estate duties ­rather than the potentially higher offshore death duties. 

In terms of the proportion of assets you should have offshore, a model that I often use is seen in Table 2. 

If you are a conservative investor, you should have 25% of your assets offshore, and, if you are aggressive, you could go up to 40%. 

I would recommend that you chat to your financial adviser about how to go about reducing the risk of having all your assets in one country.  

KENNY MEIRING IS AN INDEPENDENT FINANCIAL ADVISER

Contact him via phone, email or via contact phone on the financialwellnesscoach.co.za website

Read more of our articles on the Daily Maverick website or newspaper weekly!

Jun 01 2026

No. 257 – Managing financial affairs after a loved one dies

Question My father passed away recently, and I am helping my mother sort out the finances. We are overwhelmed and don’t know where to start. There are debit orders...
Jun 01 2026

No. 256 – The numbers behind a university flat investment

Question I bought a flat for my children to stay in when they went to university. My last child graduated at the end of last year. Should I sell the property or rent it...
Jun 01 2026

No. 255 – Don’t let short-term panic derail long-term plans

Question I recently received the quarterly statement for my investments and was shocked to see how much they have fallen. What should I do?Answer When you open an...
Jun 01 2026

No. 254 – How you can protect your finances when faced with retrenchment

Question I am 50 years old and work for a large company. We have been told that the company will be going through a retrenchment process and that my role may be...
Jun 01 2026

No. 253 – Navigating the tricky challenges the sandwich generation faces

Question I’m supporting my parents financially, and I’m also helping my adult children where I can. I don’t mind doing it because I want to help, but I’m starting to...
May 04 2026

No. 252 – A late-life divorce settlement must still work after the dust settles

Question My husband and I are divorcing after a long marriage.   I took time out of the workforce to raise our now adult children, so my retirement savings are much...
May 03 2026

No. 251 – Paying off credit card debt with a bond only works with discipline

Question I built up R80,000 of credit card debt during a difficult period. Things are now more stable, but the debt is expensive at 20.6%. I also have available credit...
May 03 2026

No. 250 – How to prepare your investment portfolio for retirement income

Question I will be retiring in three years. Should I be moving my money into the money market fund?Answer As retirement approaches, it is important to reassess your...
May 03 2026

No. 249 – How to manage retirement income in a falling investment market

Question I will be retiring at the end of June and I am horrified by what has happened to my retirement funds. They have dropped significantly since the beginning of...
Mar 29 2026

No. 248 – Savvy divorce planning starts with seeing whole financial picture

Question I am getting divorced. Everyone talks about the house, the pension and maintenance, but I do not even know where to begin. From a financial planning...

Download the Life File