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!

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...
Mar 29 2026

No. 247 – Balancing care, finances and dignity for a parent with dementia

Question My mother is a widow and has been diagnosed with early-onset dementia. She owns several rental properties that provide her with income. She now needs to move...
Mar 29 2026

No. 246 – The case for not making hasty decisions in times of uncertainty

Question I am really worried about what is happening in Iran.  Should I move my investments into gold or the money market until things settle down?Answer The current...
Mar 29 2026

No. 245 – Think twice before establishing a trust to fund future education

Question I’d like to set up a trust for my five-year-old daughter’s education. Is that the right move?Answer A trust can be an excellent vehicle for providing for your...
Mar 02 2026

No. 244 – How modern endowment policies can make tax and estate sense

Question My financial adviser recommended that I invest in an endowment. Is this advisable? I’ve heard bad things about it.Answer For many South Africans, endowments...
Mar 02 2026

No. 243 – The right questions you should be asking about a living annuity

Question I will be retiring shortly and am looking at buying a living annuity.  I was told that the main item to look at would be costs.  The plan that I am looking at...
Feb 19 2026

No. 242 – How time, consistency and simplicity grow retirement savings

Question I started my first job after graduating last year.  The company offers group risk cover but no retirement fund.  How much should I invest each month and what...
Feb 19 2026

No. 241 – Ironing out the problems of leaving a home for future generations

Question How can I leave my home to my children and grandchildren without them selling it once I've passed away?Answer Many people have a family home or holiday home...
Feb 02 2026

No. 240 – Weighing up the pros and cons of RAs and tax-free investments

Question I pay tax at the 45% marginal rate and want to invest R3 000 a month for the next 10 years. Should I use a retirement annuity or a tax-free investment for my...
Feb 02 2026

No. 239 – Group RA versus cash: which one is the smarter financial choice?

Question I am from the UK and have been working in South Africa for a couple of years. I am a South African taxpayer and intend returning to the UK in about five years’...

Download the Life File