Let’s Talk Offshore

The last few years we have seen a substantiable amount of our clients opting to invest in Offshore Investments. And with good reason. In general terms, including some international exposure in a portfolio has been shown to be beneficial for almost all long-term investors.

The stocks listed on the JSE represent only 1% of the world’s total listed equity market capitalisation – so if you invest only in South African equities, you are missing out on 99% of the global equity universe. There are many fast-growing industries under-represented on the local exchange like pharmaceuticals, biotechnology, and alternative energy. There are also many world-class companies in which to invest.

Living in an emerging market like South Africa, it can be very beneficial to diversify into developed markets, which are often driven by different macro factors, can offer more stable growth, and provide hard-currency exposure to a wide variety of sectors.

For those who are concerned about political or social instability in South Africa, having a portion of an investment portfolio offshore helps mitigate the associated investment risks and can help ease investors’ worries, making them more likely to stay invested for the longer term and avoid panicking and selling their investments at the wrong time.

One of our favourite avenues to invest offshore is through Liberty’s Offshore Investment Plan. This investment plan allows you to harness the benefits of accessing global markets with strong currencies, while preventing complications of beneficiaries needing to appoint a foreign executor. You can also benefit from global leading asset managers taking care of your money together with great tax benefits and it being a cost-efficient investment.

Tax Benefits

The proceeds from this investment will generally be regarded as capital in nature and exempt in your hands as an investor. The preferential tax rates applicable to the Offshore Investment Plan will work to the advantage of any earner in a higher tax bracket. Also, investors will not be adversely taxed on currency fluctuations. This all allows your funds to have more opportunity for growth.

No foreign legal complications

Investments in the Liberty Offshore Investment Plan are a lot less complicated because they still fall under the South African legal jurisdiction. This means that, should you as the investor and policyholder pass away, your loved ones don’t have to comply with any potentially complicated or costly foreign legal requirements.

Estate planning

Find comfort knowing that you can specify that the nominated beneficiaries will receive the value of the investment directly when the insured passes away. The investment will be dealt with under South African rules and can be transferred into any offshore or local bank account of your choice.

How does it work?

An easy-to-use long term investment

• Make minimum lump sum investments of US$ 15 000 or more.

• Invest in up to 7 portfolios and change them whenever you choose.

How much does it cost to invest?

What is free of charge to you?

• You can switch between portfolios as often as you like, free of charge to you.

• If you need to withdraw some of your money, or add money, it is free of charge to you.

 Access to your funds

• The tax, legal simplicity and portfolio benefits of this Offshore Investment Plan are some of the useful benefits as it falls under the Long Term Insurance Act. While this is a long-term investment, we understand that life does not always go according to plan. Should you want to access some of your money sooner than expected, the Act allows you to access your funds once during the first five years. This is at no cost to you. If you need to withdraw funds for a second time within the first five years, you’ll need to draw the full value of the investment. You can also add different bundles within the investment to make it easier to access a portion of the investment without affecting the rest of your investment in the other bundles.

• Proceeds of the investment can be paid into any bank account in the name of the owner or beneficiary (if the life assured has passed away). This includes payment into a local or offshore bank account.

How to invest

With the Offshore Investment Plan, it is simple and easy to invest in a range of different investment portfolios. And you can make use of a South African investor’s foreign capital allowance (currently R10 million per annum) allowed by the exchange control provisions of the South African Reserve Bank.

For South Africans, no SARS tax clearance certificates are required for the first R1 million moved offshore every year. For amounts of R1 million or more, a SARS tax clearance certificate is required. The easiest way to get a certificate is to use the SARS e-filing website.

Your funds are denominated in US dollars and the Liberty Branch is located in Jersey in the English Channel.

Stay Safe,


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