The Ultimate Guide to Investing Offshore for South Africans.

 

If you’re a South African wanting to know about investing offshore or in US-listed companies, this blog post is for you. Investing in foreign markets can be a great way to diversify your portfolio and potentially increase your returns. By the end of this post, you’ll have a better understanding of the opportunities available to you as a South African investor looking to invest offshore. Our focus is on US listed companies but it is up to you what markets you want to invest in.

 

4 easy steps to investing in US stocks from South Africa

Investing offshore can be intimidating, but it doesn’t have to be. With Lockstep Investing’s guidance, you can invest in US listed companies in four easy steps. Here’s what you need to do:

 

1) Decide how much you want to invest offshore.

When considering investing offshore as a South African, it is important to determine the amount you are comfortable investing. Two key factors to consider are affordability and compliance with SARS regulations. For an investment to be worthwhile, it is recommended not to draw from it for at least 3 to 5 years. Therefore, choose an amount that you can comfortably invest, knowing that you won’t need access to it for at least a few years. As a South African citizen, you can invest up to R1 million annually without SARS prior approval. If you plan to invest between R1 million and R4 million, you will need a SARS Tax Clearance certificate, and for investments between R4 million and R10 million, a SARS Letter of Compliance is also required. Carefully consider which option works best for you and proceed accordingly.

 

2) Convert ZAR into USD and move it to an offshore bank account.

Transferring funds offshore doesn’t have to be complicated or require you to travel overseas. There are various platforms available locally that can help you invest your money offshore. Here are two options that may work for you as a South African investor:

 

Shyft

If you’re looking to transfer less than R1 million offshore, Standard Bank’s Shyft global money app could be an easy and affordable option. You don’t need to be a Standard Bank customer to open a Shyft account. Here’s how it works:

  • Open a Shyft account and transfer ZAR from your current bank account.
  • Use the ZAR on your Shyft app to buy USD.
  • Standard Bank will then hold the USD in an offshore account in your name.

 

Your Bank
For transfers over R1 million, you can approach your bank for assistance. Most banks can help you with the process, including obtaining a Tax Clearance Certificate, converting your ZAR to USD, and transferring the funds to an offshore bank account. However, it’s important to be aware of the associated costs such as Tax Clearance Certificate fees, Forex rates, transfer fees, and others, which can quickly add up.

 

3) Open an offshore broker account
To invest in US-listed  shares you’ll need a broker account at an offshore bank or broker. It may seem daunting, but it’s not difficult. Many options are available, so the most challenging part is picking an option that suits your needs. We have two recommendations, and once again, we don’t benefit from suggesting their services.

 

Shyft
Shyft offers share trading on its platform, allowing you to instantly buy and sell over 300 global stocks and ETFs via the app. This option is convenient and user-friendly, making it a great choice for beginners.

 

Interactive Brokers
Interactive Brokers gives you access to multiple international exchanges, including US markets. Their transaction costs are very competitive, and opening and funding an account is straightforward. However, the platform’s functionality is vast, so it comes with a learning curve. Fortunately, there is help available to assist you in navigating the platform.

Other options such as EasyEquities, SaxoBank and others are available as well. It’s essential to explore all available options and consider ease of use and costs involved.

 

4) Start Investing

Now it’s time to start investing offshore. While the process is straightforward and can be completed within a few working days, investing can still feel overwhelming and intimidating, especially if you’re new to it. Growing your wealth over the long term requires experience and patience, which is why we’re here to guide you through the process and provide support along the way

 

We are Lockstep Investing

As experienced investors, we invest our own money in high-quality companies listed on the NYSE and NASDAQ stock exchanges. Our investment approach is focused on finding high-quality businesses trading at a discount to their fair values, allowing us to generate wealth over the long term.

At Lockstep, we don’t invest for you, but we provide you with valuable insights and knowledge to help you make informed investment decisions. Our portfolio and investment thinking are shared with you, so you can benefit from our experience and invest alongside us.

As a member of Lockstep, you get exclusive access to our PWA (App) that enables you to create a customisable portfolio and full access to our portfolio plus. You’ll receive updates before we buy or sell shares and the reasons behind our transactions. We also provide company-specific news, our interpretation of the news, and any action we plan to take.

We believe that investing should not be stressful, and we work hard behind the scenes to provide our members with the tools and information they need to make informed decisions. Ultimately, however, the decisions are theirs to make, and we encourage our members to do their own research and seek advice from qualified professionals if needed.

To learn more about Lockstep Investing and how we can help you become a better investor, visit our website.

 

Lockstep is not a money manager nor a financial advisor, please seek professional financial advice before making any financial decisions.

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