Offshore investing basics

Why invest offshore?

Investing offshore opens up a world of possibility because it offers compelling benefits like geographical diversification, reduced emerging market risk, currency diversification and access to global opportunities.

Diversify your portfolio

Diversification is about not putting all your eggs in one basket. Offshore investments offer exposure to different sectors and markets that may not be available locally, such as social networking (like Facebook), e-commerce (like Amazon), innovative motor manufacturers (like Tesla) or biotechnology (like Gilead).

This exposure ensures your risk is spread, so if one asset class underperforms, the value of your other assets makes up for it. Offshore investing also lets you diversify your investment portfolio by investing in different currencies.

Expose yourself to growth opportunities

South Africa offers a relatively small market: the JSE has less than 500 listed companies, compared to the thousands available globally. Offshore investments give you access to a much bigger investment universe, which makes it a powerful strategy to grow your wealth.

Investing in developed markets offers stable growth, while investing in fast-emerging markets offers high growth potential. This means a higher probability of better returns than with investments limited to the domestic market.

What to consider when investing offshore

Offshore investing comes with different risks and rewards, it's very important that you work with a competent financial adviser to structure your investments to suit your needs.

Realistic expectations of the risks and rewards

Typically, the more risk you take, the better your return – but also the higher the risk of loss. Investing offshore is typically associated with better returns over the medium to long term, but also with a higher risk of loss over shorter periods. Setting realistic expectations can help avoid short-term disappointment and panic reactions.

A long-term approach

Offshore investing is typically a long-term commitment because of the higher level of risk associated with it over short-term periods. You need to keep in mind that although investing offshore can offer prospects of higher returns, you need a longer investment term to balance out the additional currency and market risk you accept. Speak to your financial adviser and see if it's the right time for you to invest offshore. 

A trusted and competent financial adviser

The professional expertise and strategic network of a financial adviser can be very valuable when it comes offshore investing. They can help you set realistic expectations, assess your risk appetite, reduce risks and costs, and guide you in making healthy investment decisions. Here are some tips on choosing a financial adviser to help you create an offshore investment portfolio that suits your needs.  

We make it easy for you to invest offshore through our global investment offering. We have four investment plans to cater for different investment needs.

Find out about our global investment plans

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