Investment abroad
Investing your lifelong savings or monthly saving into an economy that is on a slippery slide with all the big infrastructure letting the country down is the question South Africans ask. The answer is not simple.
I am personally a supporter of spreading your wings – you can check my eToro profile on https://www.etoro.com/people/moonwater/portfolio. If you register on eToro you can copy my profile.
My portfolio had the following returns:
2020 42.55%
2021 41.37%
2022 to date -13.35% – The S&P 500 was down 20.6% in the first half of the year, the worst since 1970.
The annualized return of the portfolio to date is 45% which is well above the targeted return of 25%.
You can compare this to the results on local portfolios.
There are however considerations when investing internationally:
- If you are not an experienced trader, you could burn your fingers with any trading and international is no different
- There is a cost in buying and selling dollars to invest and disinvest AND the rate at which the rand trade against the dollar at the time
- It cannot be your only investment. Investments should spread across shares in multiple industries, property, cash and even countries
- Careful of short-term buy and sell
- Consider longer term investment strategies
- Understand the tax implications when de-investing and the tax disclosure requirements when investing
- Consider copying someone’s trade on a social investment platform (e.g., eToro) if you do not have the skill or confidence
- The cost of investing on a social platform is minimal compared to working through a broker
- Make cash part of the international portfolio
- Long term and international investment is not a vehicle for emergency cash needs to avoid having to disinvestment in a bear market or when the ZAR/$ exchange is most unfavorable
Important: No returns on shares are guaranteed. If you copy someone, you do so at your own risk.