Emigrate your investments, not your lifestyle

*This content is brought to you by Brenthurst Wealth

By Rocco van Zyl* 

A recent surge in emigration has prompted a growing number of SA investors to consider following suit. The quest for greener pastures elsewhere is very appealing to families who, ironically, want a better quality of life.

Rocco van Zyl

It’s ironic, I think, because what better lifestyle is there than what we have in South Africa, with excellent amenities, opportunities, and fantastic weather. Sure, it’s not all a bed of roses, but with planning and foresight you can shield yourself from many of the annoyances.

Moving house is stressful enough without uprooting your family to a promised land that is often foreign and unforgiving.

Most importantly, you have to shoulder the enormous expenses involved, which take on a different complexion when your hard-won rands amount to a fraction of the local currency.

Allow me to paint a picture of how you can get the best of both worlds, without having to relocate. Whether you decide to leave or stay is a very personal decision, however I do believe there’s a strong case to be made for staying, without compromising your future.

Diminished buying power

Say what you will about the rand, but if you’re buying in the local currency you still wield significant buying power.

Leave our shores, however, and your spending power is decimated because the rand is so weak against major currencies. By some estimates, it can take anywhere from five to 15 years to regain the quality of life you enjoy in South Africa because of this diminished buying power.

Take, for example, what R15m can buy you here versus a market like London. In South Africa, that money would buy you a four-bedroom home in a respectable estate that offers a great lifestyle and good security. And you’d still have R6-8m left to invest.

Relocate to London, and your R15m is worth around £750,000 – that buys you a two-bedroom flat with communal garden.

Lifestyle

As you can imagine, there’s no comparison between a lifestyle estate and a two-bed apartment. Yet, those are the realities of emigrating, which, in my opinion, is a huge sacrifice to make when you have alternative options available that allow you to continue enjoying the South African lifestyle, but with fewer financial risks.

This is especially true if your reason to emigrate is for greater financial security.

Given that you can invest up to R1m overseas without exchange control approval, and up to R10m with approval, there’s a strong argument in favour of leveraging global growth for your local benefit. The considerable expense of relocating, plus the pain of the exchange rate, weigh heavily on families who are considering emigrating.

Live here, invest abroad

The best way to hedge against local weakness in the economy and the currency is to look offshore for greater returns and stability.

The options available to South Africans investing offshore have grown exponentially over the years, and there are vastly more investment opportunities available.

Although your fortunes may not be completely divorced from local factors, you can satisfy yourself that your financial outlook is much more stable. The local economy and markets have lagged the global economy for some time, allowing South African’s invested offshore to benefit.

How markets performed from October 2011 to October 2021

ZAR

Source: Bloomberg

USD

Source: Bloomberg

Because of this stronger growth, you can count on your wealth growing in hard currency while spending in rands.

Is this plan right for you? Only you can decide, but I like to offer this alternative to families who live great lifestyles and can afford to buy themselves security and luxury right here in South Africa.

You’ll have to consult financial advisors when planning your move abroad. Why not use this same opportunity to consider a local lifestyle fuelled by a global portfolio?

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