2025 was a great example of why, as a South African, you should never have 100% of your investments offshore.
It was a sensational year for local assets, while the double digit appreciation of the Rand (ZAR) versus the US Dollar (USD) reduced returns from locally held offshore investments.
You may remember
If you were one of those South African’s reading Magnus Heystek’s sell everything, pay the tax and go 100% offshore a few years ago, this would be a good opportunity to recognise the value in a more balanced approach.
When you live in SA and the majority of your costs (liabilities) are in SA, you cannot afford to have all your money offshore for this exact reason.
I would go one step further. Mentally store this information for the next time someone urges you to go 100% offshore. (there will be a next time)
Even just one year ago it was easier to believe the Rand would trade at 25 to the US Dollar than to think 15 was possible…… how things change.
The past returns of an asset are the returns you are not going to enjoy.
A comparison between the 1 year returns and the average return over the last 10 years, can provide some insight.
The real question remains what comes next?
Asset Class Returns – 1 & 10 Years to end December 2025
Looking at average returns over longer time periods suggest that returns over the next few years will probably not match 2025.
This is not the same as saying 2026 will see a major sell-off.
Fact is:
– Strong recent performance makes assets more expensive. – Future returns are determined by the price you pay for the assets you own. – Ergo periods of sustained strong performance are likely to be followed by more tepid returns.
You know what helps
Managing your expectations around returns and accepting that occasional sell-offs or downturns are what inevitably bring us closer to long-term average returns over time is important.
Sell-off’s are a feature of investing, not a bug that can be fixed or avoided altogether.
Matching your investment strategy to what you are trying to achieve, knowing you can’t predict future returns is why you build a diversified portfolio.
100% Offshore is never the right option if you are looking at your overall financial position.
You can own pretty much as much offshore exposure as you like these days without having to use any exchange control allowances. There are an increasing number of unit trusts or exchange traded funds which will give you exposure to any number of geographies or themes (tech/healthcare/ESG) without you physically sending your money overseas.
But there are still reasons why you would potentially want to take your money directly offshore.
Reasons to invest directly offshore from South Africa:
You can separate decisions between the currency and the underlying investments you own (asset allocation).
You can separate the sources of returns between the currency and the underlying assets. (tax efficiency).
Your assets are physically offshore and less exposed to any potential changes in legislation or political risk.
The variety of opportunities are broader than the offshore options in SA.
You can invest for specific future costs or events you expect to have in another country. (Liability matching – like tertiary education at a UK university for example)
It can be cheaper to buy exposure to the same markets on an offshore platform.
Invest for the right reasons – not out of fear.
I am not an advocate of knee-jerk reactions when it comes to investment planning. I certainly don’t want to promote a service using fear tactics. However, I am aware that many South African citizens feel very uncertain about our beautiful country’s future and this is a service which can help mitigate some of the risks and give you peace of mind when done well.
White Investments manages direct offshore accounts
I am a registered partner with a top offshore platform that gives you access to global markets in multiple currencies and securities. I worked in the UK asset management industry for 9 years and have managed offshore investment solutions since the inception of my current business.
If you have any questions around how I can help you set up a portfolio offshore please get hold of me here.
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