Invest Globally, Prosper Locally: Offshore Strategies for SA Investors
Ruvan J Grobler • July 1, 2025
In an increasingly interconnected global economy, South African investors are finding compelling reasons to look beyond local borders when building long-term wealth. Offshore investing offers access to broader, more resilient markets, particularly in developed economies with stronger currencies and more stable political environments. Given South Africa’s constrained economic growth, fiscal uncertainty, and the rand’s vulnerability as an emerging market currency, allocating a portion of your portfolio offshore can serve as both a growth engine and a hedge.
Investing offshore provides exposure to world-leading companies, industries, and fund managers that are often unavailable in the local market. It allows investors to participate in innovation-led growth in sectors like technology, healthcare, and clean energy, which are typically underrepresented on the JSE. Most importantly, it supports diversification—not just across asset classes, but across geographies, currencies, and economic cycles—reducing concentration risk tied to the South African economy.
Key Reasons to Invest Offshore:
- Diversification: Reduce reliance on South African markets and benefit from a broader global opportunity set.
- Currency Hedge: Protect your wealth against rand depreciation by investing in hard currencies.
- Global Access: Gain exposure to top-tier international asset managers and world-class investments.
- Growth Potential: Participate in faster-growing economies and industries driving global expansion.
Important Considerations for South African Tax Residents
Before investing offshore, it’s essential to evaluate how your investment aligns with your broader financial planning, particularly around access, succession, taxation, and estate planning:
- Flexibility: Will you have access to your funds when needed? What types of investments can you hold?
- Succession Planning: Can your investment be transferred to your heirs? Will Capital Gains Tax (CGT) apply?
- Tax Compliance: Is the structure tax-efficient, and what must be declared on your tax return?
- Estate Structuring: Will your investment attract foreign estate duties? Is an offshore executor required?
An Efficient Offshore Solution: The Offshore Wrapper
A tailored offshore wrapper can simplify many of these complexities, offering a cost-effective and administratively streamlined solution. Key benefits include:
- No exposure to offshore estate duties
- No South African executor fees on death
- No inheritance tax in the offshore jurisdiction
- Ability to nominate beneficiaries directly for smooth succession
- Creditor protection for assets held within the structure
- Consolidation of various investments (e.g., share portfolios, funds) under one structure
- Minimum investment from $25,000
Tax Treatment
The offshore wrapper also provides significant tax efficiency:
- Taxes are calculated and settled annually by the platform—no action required by the investor
- CGT is capped at 12%, and income tax at 30%
- Taxes are applied to USD returns, meaning rand depreciation is not taxed
Reach out to me at ruvan@bovest.co.za for more information.
Ruvan J Grobler RFP™ (PGDip Financial Planning)
For many professionals, personal savings are what’s left over — if anything is left at all. The data is clear: South Africa’s domestic savings rate remains worryingly low. Even among high-income earners, inconsistent or delayed investing is common. Income alone does not create wealth. Behaviour does. The real risk isn’t lifestyle inflation — it’s time. Missed early contributions cannot be fully recovered later, no matter how high your income becomes. Compounding rewards consistency, not intention. Paying yourself first isn’t about sacrifice; it’s about ensuring today’s success translates into future independence. If Your Business Needs a Budget, So Do You No business operates successfully without a budget. Yet many professionals try to run their personal finances without one. Paying everyone else first — the bank, SARS, suppliers, schools, lifestyle — is what happens when there is no clear structure. Fortunately, a simple framework solves this: the 50/30/20 principle. 50% – Essential Expenses Bond or rent, food, medical aid, school fees, fuel, insurance and other “must-have” costs. 30% – Investments (Your Future Self) Long-term wealth building. Retirement funding. Investments that compound over decades. This allocation happens before discretionary spending. This is how you pay yourself first. 20% – Lifestyle & Discretionary Spending Travel, entertainment, upgrades, dining out and lifestyle enhancements. This framework also brings clarity to big financial decisions. If a new home or vehicle pushes your essential expenses above 50%, it is not affordable — regardless of what the bank approves. Affordability is not what you qualify for. Affordability is what fits sustainably inside your structure. The Cost of Waiting: A Simple Illustration Let’s consider two investors with similar careers and earning potential. Investor A starts investing R15,000 per month at age 30 and contributes for 10 years — stopping at age 40 — but leaves the money invested. Investor B delays saving while focusing on practice expenses and family commitments. At age 40, they begin investing R15,000 per month and continue until age 65 — 25 years of contributions.
28 February marks the end of the tax year. If you have some extra funds available, this might be the perfect time to consider adding to your savings in a retirement annuity (RA) or tax-free savings account (TFSA), thereby enjoying the significant tax benefits these products offer. Below are the benefits of both an RA and a TFSA, as summarised by our partners at Ninety-One. As always, please contact your personal financial adviser to assist you in calculating the amount you can still contribute, as well as whether this will be best for your portfolio and personal situation: Why invest in an RA? 1. RAs can be viewed as gifts from the taxman. For example, at a 45% marginal tax rate, a deductible RA contribution of R100 000 can generate up to R45 000 in tax relief (within the limits). Tax will be applicable when the funds eventually pay out at retirement, but due to the tax-exempt portion of the lump sum, as well as the tax rebates for individuals over 65 and 75, you may pay less tax at that time. 2. You do not lose your tax benefits, even if you contribute more than the maximum annual tax deduction (excess contributions) If you contribute more than the maximum (excess contributions), your tax benefit will roll over to the next tax year of assessment. Any excess contributions in subsequent tax years will continue to be rolled over. This means that you could receive a tax benefit at retirement, after retirement, or your beneficiaries could benefit when you have passed away, as explained below. RA contributions and tax Before retirement When contributing to an RA, your maximum tax deduction for the year is the lesser of: R350 000 27.5% of the higher of remuneration or taxable income Taxable income excluding taxable capital gains At retirement If you elect to receive a lump sum: The remaining excess contributions will be paid out free of tax R550 000 could be tax-free – if not previously utilised After retirement Excess contributions remaining after your retirement are deductible from your compulsory annuity income for tax purposes (section 10C of the Income Tax Act). After you pass away If your beneficiary elects to receive the full death benefit, or a portion thereof, as a lump sum: The remaining excess contributions will be paid out free of tax R550 000 could be tax-free – if not previously utilised The tax deduction limit applies to the combined total of RA contributions and all member and employer contributions to workplace pension and provident funds. 3. You enjoy estate-planning benefits. An RA is exempt from estate duty. Please note that excess contributions may be included for estate duty purposes, to the extent that a lump sum is received. The growth on your excess contributions is not subject to estate duty – you can therefore effectively peg the value of your estate (similar to the benefit obtained from a trust, prior to the introduction of section 7C of the Income Tax Act). Over time, the value of excess contributions could be reduced, which would decrease the potential estate duty payable on these excess contributions. 4. No tax is deducted within the investment (no income tax, capital gains tax or dividend withholding tax). This means you will benefit even more from compounded growth. 5. You remain disciplined with your retirement savings. The two-pot retirement regime was introduced on 1 September 2024. This system allows members access to a small portion of their retirement savings before they retire, while preserving the remainder until retirement (unless one of the exceptions specified in the Income Tax Act applies). To achieve this, various notional components within a member’s retirement fund benefit or contract were created. These components are referred to as: The Vested Component The Savings Component The Retirement Component Members are able to withdraw from the Savings component once in a tax year. Withdrawals from the Savings component are subject to a minimum of R2 000 per withdrawal and are taxed at your marginal tax rate. 6. You have protection from creditors. This means your savings for your retirement will be available when you need them. Key considerations when investing in an RA RAs are subject to Regulation 28 investment limits. On the death of the investor, the Board of Trustees will have full discretion when deciding on a fair allocation of the benefit to dependants and/or nominees, in terms of section 37C of the Pension Funds Act. There are liquidity restrictions prior to reaching retirement age. This means that you will only have access to the funds in the Savings component before reaching the age of 55 (unless you qualify for one of the exceptions). Why invest in a TFSA? TFSAs are exempt from tax on interest, dividends and capital gains. There are no restrictions on withdrawals; however, if you replenish the funds withdrawn, this will count towards your annual and lifetime contribution limits. For this reason, these investments are generally more suited to long-term investing. TFSAs are a great way to save for your child’s education (be aware of donations tax if the annual exemption of R100 000 per donor is exceeded). Contributions No matter how many TFSAs you have with different product providers, the total combined value of your contributions may not exceed R36 000 per tax year and R500 000 over your lifetime. If you exceed these contribution limits, a penalty of 40% will apply on the amount contributed above the limit, which will be added to your tax assessment.
