Looking offshore to safeguard your retirement in uncertain times

The shifting political landscape in South Africa, highlighted by the ANC's loss of the majority vote in the recent general election, has left many retirees and those nearing retirement feeling anxious about their financial future. The question on everyone's mind is: will my retirement savings survive the potential (and potentially market-related) upheaval ahead?

If you have some or all of your retirement investments in a living annuity which is exposed to fluctuations in the markets, then it's definitely a legitimate concern. After all, you've dedicated your entire working life to building a retirement fund that can support you in your life-after-work. The thought of political instability eroding the value of your hard-earned savings is rightfully unsettling. But there’s a ray of hope: offshore investing.

Why invest offshore?

As Kelin Pottier, a Solution Strategist at 10X Investments, explained in our recent webinar Building Blocks to a Lasting Living Annuity, one of the reasons investors look to offshore investments is to ‘diversify away from country-specific risks.’ By incorporating global investments into your retirement portfolio, you can potentially insulate yourself from the risks associated with any one country's political or economic instability.

The benefits of offshore investing are clear, says Pottier: "To access broader investment opportunities, and to access investments in some of the fastest-growing countries in the world, in sectors and industries and companies that are titans of global industry, and that are not available in South Africa."

While living annuities themselves are not regulated by section 28 of the Pension Act, and can be invested 100% offshore, it's important to note that many investment firms cannot offer this opportunity due to their own overall investment limitations (luckily this is not a problem at 10X).

Thorough research is crucial in finding a provider that can fully support your offshore investment ambitions while still keeping fees low and offering you peace of mind. 

The risks of investing offshore

Navigating the complexities of offshore investing can be daunting, especially when it comes to currency fluctuations. "The Rand is one of the most volatile currencies in the world," Pottier points out, "and the exchange rate can either work for you - if your offshore investments are performing positively and the Rand depreciates, you get a double whammy, and you get strong returns. However, it can work against you the other way around as well." Professional financial guidance can be invaluable in ensuring your offshore income aligns with your anticipated expenses.

How much should one invest offshore?

When it comes to offshore exposure, you need to make sure you are matching your assets and liabilities - if much of your total wealth (house, business etc) is in South Africa, you may want more offshore exposure in your living annuity. But take note of Kelin’s warning about exchange rate fluctuations: the Rand is volatile! Our data suggests between 40% and 60% offshore investment offers a good range for a Rand-based investor.

Despite the risks, the potential advantages of offshore investing should not be overlooked. With meticulous planning and expert advice, diversifying globally can be a robust strategy for safeguarding your retirement, irrespective of the political environment at home.

Always remember, your retirement is yours to shape. You have the power to make informed decisions that can protect and grow your savings, even in the face of uncertainty. Don't allow fear or inertia to jeopardise your golden years.

Arm yourself with knowledge. If you have more questions about the 10X Living Annuity, check out our Living Annuity FAQ page, or read our blog for more helpful information. Finally, seek out the insights of people who have been involved in retirement investing for a long period of time. Our highly-experienced consultants have been helping thousands of South Africans retire for more than a decade, so get in touch. There are no call centres at 10X, just knowledgeable humans ready to help.