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What type of offshore investments should you opt for?

by , 07 October 2014

When it comes to investing offshore, you may think you're only option is putting your cash into shares. But you have another couple of options to consider too.

Different investment opportunities comes with varying amounts of risk. It's crucial you're happy with the risk you take on before investing.

So what should you look for in offshore investments? And what types of offshore investments are there?

Let's take a closer look…


Key factors to consider when investing offshore


Have a look at the performance of different offshore investments you’re interested in before going any further.

You want to look at the performance over a minimum of five years. This will give you a better idea of the long-term performance.

Also have a realistic idea of how your investments are going to perform. You want to aim for around 3% after inflation over the long-term.

This might not sound a lot, but if you let your investment do its work, compounding will work in your favour over the long run.


The three offshore investments you have to pick from


Equities
Shares are perhaps the first thing you might think about investing in offshore.

Equities are an important aspect of investing, but they’re not everything. Equities also carry a higher risk than other options, like bonds.

Keep in mind that equities tend to perform best when inflation is moderate.

Bonds
Unlike in South Africa, bonds from a number of countries pay a rate of interest well above inflation.

Bonds also carry lower risk than equities. So if you’re a more conservative investors, bonds are definitely worth a look.

Currency funds
This is perhaps one of the safest way to invest offshore. Yes, the returns aren’t great, but the only major risk they carry is currency risk.

So there you have it. The three types of offshore investments you could opt for.

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