Piet Viljoen: Rand v Dollar. The most important chart you’ll see in a long time

Everyone "knows" you protect your money by sending it offshore. Piet Viljoen's chart says otherwise. Rand cash in a local money market account beat a US dollar money market account by almost 50% over the past decade, once converted back to dollars. A local government bond did three times better than staying offshore — with the added satisfaction of the state actually paying you back for once. Viljoen's point isn't that South Africa is safe. It's that the risk comes priced in, and the fear-mongers selling offshore diversification rarely mention what it's cost their clients. Worth a hard look at that chart..By Piet Viljoen*.This is one of the most important charts you will see in a long time. Please study it carefully:.The red line shows how much US$ you would have if you had kept your money offshore in, say, a JPMorgan money market account for the past 10 years. The answer is around $124, if you started with $100.On the other hand, if you had taken your $100, converted it into ZAR at the prevailing exchange rate of about R14 to the US$, and then invested it in, e.g. a FirstRand Money Market account, before converting the proceeds back into US$ at today's exchange rate, you would have had $172. That's the white line.Yes, you read that correctly. You would have had almost 50% more US$ by keeping your money here in South Africa rather than sending it offshore.But - as they say in the classics - that's not all.The blue line in the above graph shows what would have happened if you had really pushed the boat out and bought a South African government bond 10 years ago. If you had, you would have 3 times as much US$ today as if you had taken your money offshore. Plus, you would have had the enormous psychological revenge of actually getting something from the government for all the tax you pay..Read more:.R1.25 trillion and counting: Magnus Heystek on the decade SA moved its money offshore.My take: Yes, South Africa is a risky place to invest. But risk always has a price, and in South Africa you get well compensated for taking the risk of investing here. So, stop lending your ears to the fear-mongers, who are simply lining their own pockets by playing on your emotions..*Piet Viljoen is the founder of Re:CM. This is from his weekly newsletter. To subscribe for your own copy, click here. .Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Piet Viljoen: Rand v Dollar. The most important chart you’ll see in a long time

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