Fränzo Friedrich, Head of Marketing at Momentum Investments
One of the most common questions from clients is: “When is the best time to invest offshore?”
Naturally, the next discussion point is the strength of the rand. Clients should, however, recognise that attempting to time currency movements perfectly is challenging and may not always align with broader investment goals.
Do your clients’ needs include offshore exposure?
There will be periods where the currency is undervalued and likewise periods where it is overvalued. Waiting for the best time to invest offshore is sometimes just a different way of saying that you are trying to time the currency.
To manage currency risks effectively, investment platforms and authorised forex dealers offer various tools. For instance, with the Momentum Wealth International platform investors can phase in their investments over time, thereby reducing exposure to market volatility. Forex providers also offer tools such as forward contracts, which lock in exchange rates for future transactions.
The exchange rate is just one of the considerations to look at when investing offshore but it should never be the sole reason to invest offshore. Things like where the investment will be held, what type of product or structure will be used and how this will influence the client’s tax situation both during their life and at death are far better elements to spend time on getting right. Those are typically the elements advisers and their clients should focus on – those that are in their control and not the currency nor the market.
Clients would be far better off articulating their needs and objectives to a qualified financial adviser and putting the appropriate asset allocation in place to meet those needs. Where that need includes offshore exposure, the focus should be on the most feasible way to implement the plan given the client’s circumstances.
Speak to your Momentum Consultant today
At Momentum Wealth International, we know that investing offshore can seem tricky.
With our true offshore investment platform, more than 20 years of delivering excellence, and the latest technology at your fingertips, we make it a personalised and exciting journey for you and your clients.
Momentum Wealth International Limited is licensed by the Guernsey Financial Services Commission to conduct Investment Business. Momentum Wealth International Limited is an authorised Financial Services Provider pursuant to the Financial Advisory and Intermediary Services Act No. 37 of 2002 in South Africa. Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.
.
Reasons to invest offshore
In general, investors should invest offshore as a means of diversification: international markets offer a much larger opportunity set and exposure to asset classes, industries, companies, and geographies that are less accessible in the local equity market.
This can lead to a better-diversified investment portfolio, leading to a smoother overall return profile.
Investing offshore is also a good idea to maintain offshore currency spending power. If your client is planning to live abroad for a while or permanently, or for their children to study there, it might be sensible to have money there already.
How to invest offshore
People can invest offshore by using either of our investment platforms: Momentum Wealth locally, or directly offshore through Momentum Wealth International, based in Guernsey, by using the yearly foreign currency allowance.
With Momentum Wealth locally, your clients can invest by investing rands into:
• Rand-denominated international funds
• Funds denominated in a foreign currency (when making use of an endowment or a retirement product)
Momentum Wealth International offers a wide range of investment funds designed to cater for varying market conditions and investor needs. Clients have the flexibility to choose from a range of more than 1 200 funds denominated in various foreign currencies.
Yet, while we bring you this plethora of choice, we also make fund selection easier with the help of our investment partners, Curate and Equilibrium. Curate is an independent, global fund manager, that gives investors the simplicity of a range of unit trust funds to meet their requirements. Equilibrium offers financial advisers discretionary fund management services and investment solutions to help your clients achieve their defined investment goals.
Our comprehensive range of products, investment funds and other investment components, places us at the forefront of international investment solutions catering to every client’s offshore investing needs.
Achieve your goals
At Momentum Wealth, your clients’ offshore investment isn’t just another investment. It’s personal to them. We can help you and your client with the offshore investment solutions they need to achieve their goals.
And ultimately, the decision to invest offshore should be based on a comprehensive assessment of individual financial objectives and risk tolerance.
For more information on offshore investing solutions, visit Momentum Wealth International at momentum.co.gg.
Momentum Investments is part of Momentum Metropolitan Life Limited, an authorised financial services (FSP 6406) and registered credit (NCRCP173) provider. Any information in this article is not intended nor does it constitute financial, tax, legal, investment, or other advice.