Offshore investing allows South Africans to invest in global assets outside the local economy and currency. It has become increasingly popular as investors look to diversify risk, protect purchasing power, and access opportunities beyond South Africa.
However, while offshore investing has never been easier, doing it well has never been more important. Poor structuring, tax inefficiency, and false diversification can quietly undermine long-term outcomes.
This guide explains how offshore investing works, why South Africans use it, the risks people often miss, and how to approach offshore investing as part of a long-term financial plan.
Offshore investing refers to investing money outside South Africa, typically in foreign markets such as the US, Europe, Asia, or emerging markets, using foreign currency.
In practice, this can include:
For South Africans, offshore investing is not about abandoning local assets. It’s about reducing concentration risk … in the rand, the local economy, and South Africa-specific risks.
South African investors face a unique set of challenges:
Offshore investing helps address these realities by providing:
Holding assets in foreign currency reduces reliance on the rand and protects long-term purchasing power.
Many of the world’s largest, most innovative companies and industries are simply not available on the JSE.
South Africans often already have significant local exposure through:
Offshore investments help balance this naturally concentrated risk.
South African residents can legally invest offshore using two allowances:
These allowances reset annually and can be combined if required.
This is the wrong question.
The more useful question is: how should local and offshore investments work together?
| Local investing | Offshore investing |
|---|---|
| Familiar environment | Broader opportunity set |
| Rand-based | Foreign currency |
| SA economic exposure | Global diversification |
| Regulatory certainty | Structural complexity |
Most well-constructed portfolios include both, with the balance depending on:
This is where many investors go wrong — not because of poor investments, but because of poor structure.
Investing in rand-denominated funds that hold offshore assets.
Pros
Cons
Sending money offshore and investing directly in foreign assets.
Pros
Cons
Specialised offshore structures designed to hold investments efficiently. Begin to make sense for investments above $100,000.
Pros
Cons
This is often where professional advice adds the most value. ** Offshore trusts only really make sense now for amounts above $2 million due to higher costs and fees.
Opening a foreign brokerage account, buying US shares, or investing in global ETFs can now be done in minutes. Costs look low, platforms are slick, and access feels empowering.
But this ease has created a new problem: many South Africans are unknowingly exposing themselves to risks they don’t fully understand, particularly around estate and tax planning.
When you invest directly in certain foreign securities, those assets may fall under the estate or inheritance tax rules of that country, regardless of where you live.
This most commonly affects South Africans holding:
The key point:
“You can be fully tax-compliant in South Africa and still face estate taxes offshore if your investments are structured incorrectly.”
Even relatively modest offshore portfolios can be affected.
| Country | Typical assets | Key risk |
|---|---|---|
| United States | US shares, US listed ETFs | Exposure to US estate tax (40% over $60,000) |
| United Kingdom | UK shares | UK inheritance tax (over GBP 325,000) |
| Other jurisdictions | Local securities | Country-specific estate rules |
This doesn’t mean investors should avoid US or UK markets — it means how you access those markets matters.
Rand-based offshore funds are convenient and perfectly suitable in some cases … but they introduce an extra layer of currency and structural friction.
With rand-based offshore investing:
With direct offshore investing:
| Rand-based offshore | Direct offshore |
|---|---|
| FX exposure is indirect | FX exposure is explicit |
| Returns translated repeatedly | Returns compound cleanly |
| More FX noise | Cleaner long-term structure |
The goal isn’t to speculate on currencies — it’s to remove unnecessary layers of risk.
Another growing risk is index concentration.
Many investors assume that by investing in broad indices like the S&P 500, Nasdaq, or MSCI World, they are automatically well diversified.
That assumption is increasingly flawed.
Over the past decade, a large portion of index returns has been driven by a small number of very large companies, particularly in US technology.
This means:
ETFs remain powerful tools … but diversification today is less about how many stocks you own and more about:
Portfolio construction matters more than product choice.
The image shows how dominant the same handful of companies have become across most major global equity indices. Names like Nvidia, Microsoft, Apple, Alphabet, Amazon, Broadcom, and Tesla now feature prominently in the S&P 500, Nasdaq, MSCI World and MSCI ACWI indices. While the MSCI World Index as an example holds roughly 1,300 constituents, close to 30% of its total exposure is driven by many of the same mega-cap US companies. The S&P 500 is even more concentrated, where the (mostly the same) top 10 stocks account for around 40% of the index’s total weighting. In other words, owning a “global” or “diversified” ETF does not necessarily mean your portfolio is broadly diversified — much of the outcome may still hinge on a very small group of companies.
It can be — but only if structured correctly.
Key considerations include:
The objective is not to avoid tax, but to avoid unnecessary tax.
This is one of the most searched questions — and the most misleading.
There is no single “best” offshore investment in isolation.
Looking backward, the some of the strongest stock returns over the past decade came from US companies such as:
**These are approximate total cumulative price returns as at 07/01/2026
But investing is not about buying yesterday’s winners.
“The best offshore investment is a portfolio that matches your goals, time horizon, and risk capacity — not a single fund or stock.”
Two investors can invest offshore using the same markets and end up with very different outcomes.
Offshore investing generally makes sense if you:
It may be less appropriate if:
Offshore investing is one area where small mistakes compound over time.
Good advice helps:
Offshore investing should never be treated in isolation … it should form part of a broader, evidence-based financial plan.
Offshore investing becomes significantly more complex once portfolios reach a certain size — particularly when tax efficiency, estate planning, and global structuring come into play.
We typically work with individuals and families who have offshore portfolios of $250,000 or more, or total investable assets in excess of R10 million, where getting the structure right can have a meaningful long-term impact.
At this level, the biggest risks are no longer market-related — they’re structural.
Offshore investing isn’t about predicting currencies or chasing the next global winner.
It’s about building resilience, flexibility, and long-term financial security in a world that is increasingly uncertain … economically, politically, and financially.
Done well, offshore investing strengthens your overall plan and reduces dependence on any single country or currency. Done poorly, it can introduce unnecessary tax, estate, and structural risks that quietly erode value over time.
As portfolios grow, the biggest risks are no longer market-related — they’re structural. And those risks are often the hardest (and most expensive) to fix later.
That’s why offshore investing works best when it’s treated not as a product decision, but as part of a considered, long-term financial strategy.
Carl-Peter is a Certified Financial Planner (CFP®) and director at Henceforward, an independent wealth management and financial planning firm based in South Africa. With over 20 years’ experience — including time spent working in offshore financial centres — he specialises in global investing, retirement planning, and helping clients structure their wealth efficiently across borders. Carl-Peter works primarily with high-net-worth individuals and families, focusing on evidence-based advice and long-term outcomes rather than product selection.
