Navigating Offshore Investments for South Africans

Offshore investments are becoming increasingly popular among South African investors, driven by a desire to diversify assets, accumulate hard currency, and access international markets. Rex Cowley, co-founder of Overseas Trust and Pensions, explains that South African investors typically fall into three categories: those living in South Africa who want exposure to international markets, South Africans working abroad who face decisions about how much wealth to send back, and those who have emigrated and need to reorganise their financial affairs.

While offshore investments offer significant benefits, such as protection against currency devaluation and access to global stocks like Microsoft and Google, they also introduce complex legal and tax challenges. Cowley highlights that many investors use low-cost, technology-driven platforms based in countries like the U.S. or UK, which can create unforeseen issues, including double taxation and legal complications around succession laws. If assets are not structured properly, investors can find themselves subject to unfavourable foreign inheritance laws or high taxes upon death.

Cowley strongly advocates for working with regulated financial advisors who understand both domestic and international financial planning. By doing so, investors can navigate the complex landscape of offshore investments while minimising risks. Advisors can ensure that assets are structured in tax-efficient vehicles, such as foreign pensions, which offer benefits like protection from probate and seamless wealth transfer across generations.

Ultimately, Cowley emphasises that cross-border financial planning requires a thorough understanding of local and international laws. His firm works closely with financial advisors, providing them with the knowledge and tools to support clients in managing their wealth internationally, ensuring assets are protected, and legal challenges are avoided.

Key Points

• South African investors seeking offshore investments fall into three categories: those living locally, working abroad, or emigrating.

• Offshore investments offer diversification and protection against currency devaluation, but they also come with complex legal and tax implications.

• Using low-cost trading platforms may lead to issues such as double taxation and problematic foreign inheritance laws.

• Working with regulated financial advisors is crucial to properly structure assets and avoid legal pitfalls.

• International pensions can be a tax-efficient way to manage wealth across borders.