What to weigh up before committing to an offshore investment

Julie Brownlee, Fsp Invest, 02 Jun. 2015

Tags: offshore, investing offshore, offshore investments, investing,

If you invest on the Johannesburg Stock Exchange or South African unit trusts, have you thought about putting some of your cash to work offshore?

Investing offshore gives you the chance to invest in different sectors and stocks that aren’t available on the JSE. And by investing in carefully chosen offshore investments, you can help to lower the overall risk of your portfolio.

So if you are considering investing offshore, what do you need to think about before you commit?

Read on to find out…

The principles of investing offshore are very similar to those for investing in SA

Any investment decision you make, whether offshore or in SA, requires you to weigh up all the advantages and disadvantages.

You need to consider aspects like:

  • The future growth prospects for the investment;
  • If now is the best time to invest;
  • How well the investment suits you; and
  • The risk the investment carries.

Three things to check before investing offshore

Whether it is individual shares, exchange traded funds, or mutual funds you’re looking at, you need to check…

When you invest offshore, the regulatory bodies that ‘police’ the industry are different to those in South Africa. It’s vital you check the investment you’re looking at is regulated in the appropriate way for the country you choose to put your money into.

Check what the costs are for investing. For instance, if it’s a fund you’re looking at, make sure the management and admin fees aren’t too high.

Any costs you pay to invest eat into your potential profits, so it’s vital you keep an eye on these. They can make a big difference to your returns over the years.

Past performance
Check how well the investment has performed over the past few years. Of course, recent performance isn’t a guarantee for future performance, but it gives you a chance to check the investment is performing as it claims.

So there you have it. What to weigh up before committing to an offshore investment.

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