Investing offshore could help you protect your money and even profit from the weak rand

by , 04 May 2016

Since 1990, the rand has depreciated at an average of 6% per year against the US dollar. Due to the growing budget deficit and poor economic situation in South Africa, the rand is likely to get worse.

Think about this. The JSE only contributes around 0.5% to global GDP, that means if you stick to local investments only, you're not taking advantage of international investment opportunities.

Let me explain...

Diversify and protect your assets by going offshore
 
Offshore investing is a great way to diversify your portfolio and hedge your investments against a weakening rand. If you hold all your assets in rand and the currency falls, the value of your assets decreases too. But holding some of your assets in dollars, euros or pounds can help you overcome that risk.
 
But no investment comes without risk, you need to make sure that you understand all the risks you may be facing when taking your money outside of the country.
 
So what should you do to minimise your offshore risk?
 
Just like every investment opportunity, you need to carefully consider your investments.
 
That’s why Joshua Benton, Editor of the South African Investor says, “You need to invest in the best regions and sectors if you’re going to capitalise on the incredible profit opportunities out there.”
 
Joshua believes that you can reduce the concentration risk by investing in international sectors like information technology, energy, commodities and pharmaceuticals that aren’t available on the JSE.
 
Where do you find global investment opportunities?
 
You want to look for countries that are relatively stable and free from civil unrest, political scandal and poor economic performance. Also remember that some countries promote themselves for investment, while others just tolerate it.
 
That means, look for a government that welcomes offshore investing and includes financial incentives. This sends a positive message to offshore investors.
 
A jurisdiction that doesn’t completely support the activities of their offshore industry or with a history of radical government policy upsets could possibly change their policy overnight at any time.
 
This can leave your investments exposed!

So make sure your investments stay safe and you’ll have a lot more confidence in your international investment opportunity. If you'd like to find out Joshua's favourite offshore investment locations, I suggest you start reading the South African Investor

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