Five things you should know before investing offshore

Before investing offshore, consider some tips from Ian Beere – award-winning independent financial adviser based in Cape Town, with Netto Invest – and Malcolm Lobban, Johannesburg-based specialist on property investments in Portugal. Beere and Lobban shared some tips on how to get started at a BizNews Finance Friday webinar. – Bernice Maune.Find the right opportunity .If you want to invest in an asset like property, identify which country you would like to invest in and conduct your research on the economy, social conditions and the property buying market of the country. Lobban says having funds available before approaching a property broker is imperative.."So the first step, obviously, is to find the right opportunity to invest in. And then I think there are so many ways one can kick start the process, which would normally be making sure you've got the funds available to commence with the acquisition of the underlying property.".___STEADY_PAYWALL___.Setting up a bank account, choosing a currency.A big question, when buying a property overseas, is how to choose a bank elsewhere. Beere suggests looking at the banks that are available in the country you want to invest in – for Lobban's project it is Portugal – then take steps to get an account.."I mean, a very simple option is one of the banks has an app. You can download the app; you can register with them directly online…. you just hit the knob and you can buy dollars.".You can buy pounds, euros, you can buy whatever you want and it sits in your wallet overseas. So that's a very quick and simple way to actually get access to pounds and dollars. And if you don't want to do that, you can order a physical or virtual card on which you can actually go and spend the foreign currency, he suggests..Read also:Magnus Heystek: Invest offshore or die! Even rockstar fund manager gives up on SA."Some banks from overseas are supported in South Africa with an officer to assist. They're not a branch. It's just an office to assist the opening of the account. And you then actually go to your bank in Europe, ask them to transfer the million rands overseas or any amount less than that. So that's another way of physically getting the money out of the country.."There are also a bunch of private client foreign exchange dealers that can assist you with any paperwork in the event you want to invest more than a million overseas," says Beere..Opt for an offshore bank to avoid tax restrictions.Countries like Switzerland, Isle of Man, Ireland, Hungary, Estonia, Scotland, Hong Kong and Mauritius are low-tax tax jurisdictions. Once you have a bank account set up in a tax haven, then you can make payments between that country and a real estate agency, in Portugal, for instance.."A bank…in an offshore centre is used to dealing with people all over the world. And then once you establish that you actually want to know you've found the property, that's the one you're going to buy with Malcolm," says Beere..Choose the right currency to transact and invest in .Depending on where you are in the process to invest offshore, it would be best to make a decision on the right currency for your transaction. According to Beere, if you're going to buy a property in Portugal then purchase euros. However, if you're not sure on which country you want to buy property in, it would be wise to buy dollars and hold that in your bank account or unit trust as it is a widely traded currency."The dollar's the biggest traded currency outside of its own jurisdiction. So there's a lot of dollar price things going around. Then also, if you're going to go and buy any international investments, a lot of the international mutual funds and investments are denominated in dollars," he says.."What they do is: they've got a dollar bank account and their bank, all their new investment money in that dollar bank accounts, and then they go and spread that money around the world. Now, when they do that, they're working with hundreds of millions of dollars and they get a much better exchange rate between the dollar and the pound and the euro and the yen and all the other currencies that you might be invested in."Read also:Investing offshore: Special focus on Portugal, gateway to the EU.Beere continues: "So a lot of those unit trusts have to report in one currency, they've got to give you a unit price. And in that unit prices, often in dollars. That doesn't mean to say you can't get sterling and euro ones. But what they often do is they will do that in dollars."So then what you want to try to avoid is going from dollars to pounds and back to euros and in from euros and redeeming that into dollar bank account, because every time you go from one currency into another, there is a small cost. It's gonna cost you maybe five percent. And if you were an unscrupulous bank or dealer, you'll pay up to three percent. So try and avoid the number of times you change currencies," he notes.* Be aware of the South African Reserve Bank limitations The national banking institution allows a certain amount of money per individual to leave the country. This amount is capped at R1 million a person, a year, and if married, R2 million per couple. "South Africans living abroad and in South Africa, who have not financially emigrated, are entitled to the South African foreign investment allowance of R10 million and the discretionary allowance of R1 million per calendar year," notes Sable International. .Watch the BizNews Finance Friday webinar with independent financial planner Ian Beere, of Netto Financial Services, and South African global property development entrepreneur Malcolm Lobban of Neworld..Sign up to join the weekly BizNews Finance Friday webinar at noon to discuss how to make the most of your money: https://attendee.gotowebinar.com/register/4798730946457764880.

Five things you should know before investing offshore

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