Offshore Investments: how to guide your decision process

Investing offshore should never be a knee-jerk reaction to events, but rather a decision taken as part of an overall financial plan. Your personal circumstances and risk tolerance should govern how much of your portfolio you should take offshore and into which asset class.~ Tamryn Lamb, head of client servicing, Orbis.

Offshore Investments

Offshore investments are any investments made in countries other than your country of residence. The key to offshore investing is to not only invest in a different country but also in different economies, markets and currencies, thereby diversifying your investment portfolio. It’s a good way to avoid keeping all your eggs in one basket. South Africa has a relatively narrow market and relies on only a few big stocks. It sits as the 17th largest stock market in the world, and for these pertinent reasons, you should be considering bigger opportunities in more developed markets. There are substantial and growing sectors to explore in global markets such as, Healthcare, Energy and Technology.

Factors to consider when investing offshore – or why your financial planner is vital:

Time Horizon

Global investment portfolios differ according to the timespan you are willing to invest. How fast or slow you want your returns will be affected by your personal risk aversion. Looking for quick returns can be a risky business, especially on international markets which can become volatile.

Tracker/Index funds or Actively Managed Funds

The former track the performance of a particular market benchmark—or “index”—as closely as possible. Index funds tend to be more tax-efficient and have lower expense ratios than actively managed funds because they generally trade less frequently. Alternatively, actively managed funds try to outperform their benchmarks and peer group average. However, there is risk involved because these funds can also miss their goals, resulting in losses for the fund—and therefore also, the investors.

Tax and Estate Planning

This will also affect your choice of investment. You will need to ensure that you derive maximum benefit from your assets during your life time, whilst also ensuring that you will be providing for maximum transfer of wealth to the next generation.

Choosing the funds right for you

Firstly it is important to lay out your objectives and consider what type of an investor you are. In this way, you are more likely to achieve the portfolio that’s specific to you. Your financial planner has not only the expertise, but also vital access to global insights and the world’s leading companies and fund managers. You need to work together to create a customised portfolio, choosing the right funds that will meet your individual requirements as closely as possible, taking into account your goals, family and current life stage.

Advantages of investing offshore

  • The South African financial market comprises only one percent of the global market, so you should give yourself the opportunity to invest in companies that have an international footprint, and which may therefore generate substantial profits.
  • By allocating just a portion of your investments offshore, you can spread risk, and enhance the possibility of generating better returns.
  • Offshore investing also gives you access to sectors that you would not find on the JSE.
  • A longer time frame is essential because of the dual volatility of currencies and the markets.
  • In addition, Estate Planning may benefit from investing in an offshore trust, and your financial planner can advise on this.
  • Investing offshore can also be a way of providing for your children’s tertiary education at overseas universities, or your own travel ambitions, or any plans you might have for retiring overseas.
  • Offshore investing offers a hedge for people who fear political or social unrest.
  • Offshore is also a way to protect your investments against the depreciation of the rand.
At the Foster Group, we take into account – whether short term or long term – your risk profile, your personal goals and other factors. Besides having a personal advisor who is backed by a team with extensive and diverse experience and qualifications, we have multiple investment strategies. We do not just offer you a product, we take you through our advice process and find you an investment solution best suited for you.

Adding quality to every stage of your life

The Foster Group, backed by a proud 28-year history, believes in working for only the best results in all areas, from investments through to retirement planning, and including insurance matters. Creating a personal partnership with each client – and mindful of every individual’s plans, dreams and goals – we are there to guide and advise you on each milestone of your financial journey, not only during your working years but well into retirement. For us it’s about more than just generating income and retaining capital in investments, it’s about the quality of your life each step of the way and your peace of mind. That’s why we focus on building sound relationships based on professionalism, experience, and friendship. Find out more about us at:
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The Impact of Culture on Investment Performance

Over the years of researching asset managers in South Africa and globally, there have been many cases of successful asset managers who have seemingly fallen apart, lost assets and faced uncertain futures. This deterioration often happens quickly and without warning. We spend significant time analysing whether there is a common thread running between these firms that face collapse. Is there any specific factor or common denominator that we could focus on which would allow us to identify those asset managers in advance and avoid them?

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Financial Needs Analysis: counting pennies, creating wealth

To build a sound investment plan for the future, the first thing you need to do is consult a financial planner who will conduct an analysis of your current situation with the view to connecting your financial status with needs and goals. From this starting point, a strategy can be set in place comprising steps to a well-considered investment regime that will ultimately build the kind of wealth you dream of and hope for. It’s a thorough investigation of your financial affairs. A financial needs analysis is therefore essential to preparing for, and accessing, future financial needs.

There is no one plan that suits everyone, which is precisely why the individual analysis must be done. It’s a process that will be affected by five major factors: current wealth; income; health; dependents; and goals.

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A Partnership for Life: transparency and your financial advisor

“There’s no single professional that’s right for all clients.” ~ Gerri Walsh, vice-president for investor education, Financial Industry Regulatory Authority (Finra).

Service is generally about politeness, competency and going the extra mile to help a customer. But the service provided by your financial advisor is a different story altogether – because here you are looking at the very epitome of trust, the basis of a partnership for life.

And therefore it should be a relationship that is open, honest, forthright and enduring. In fact, a friendship. And the key to this, is transparency.

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Thirtieth Anniversary of Foster Wealth

The 1st of June 2018 marks the thirtieth anniversary of the founding of Foster Wealth.

Honesty, integrity and loyalty to clients were the cornerstones on which we started to build the business and these values still remain integral to our business thirty years later.

While we celebrate what we have achieved over the past thirty years, we reflect most of all on what a great privilege it has been to serve our clients. Many of the families that became clients in 1988 remain clients today, even though some of them no longer live in South Africa.

There are many events to reflect on:

  • We didn’t think in 1988 that a number of our clients would leave South Africa.
  • In 1988 there were 36 unit trust funds to choose from, however, little did we realise that by 2018 they would have mushroomed to 2103!
  • We were all generally concerned about the political landscape and had no idea that Nelson Mandela would be released in 1990 and that there would be a democratically elected government by 1994.
  • “State capture” was unheard of.

Nevertheless, despite all the political changes over the last thirty years, our clients’ investments have grown. This is, perhaps, the most significant reflection: we should not be influenced by short-term political issues.

We have survived major stock market crashes:

  • Most notably 1987,
  • The so-called Tech stock implosion of 1998,
  • The global financial crash of 2008/2009,
  • At least one major South African currency crash being that of 2001,
  • Several downgrades of the countries credit rating.

Consequently, we feel that it is worth reflecting on what long-term investment truly means: it means staying in the market, sticking to your long-term objective and not being distracted by political issues, stock market crashes or credit rating downgrades.

Our founder, Peter Foster, retired in 2017, handing over the reins of Foster Wealth Management to his son, Thomas Foster. Thomas and his team are passionate about maintaining and enhancing the honesty, integrity and loyalty that our clients have come to expect.

With this, we would like to express our sincere gratitude towards our clients for their loyalty to Foster Wealth and consider it a privilege to continue to serve you in the future.

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