Emigration has made news headlines in South Africa for more than a decade and there are no signs of emigration statistics cooling down anytime soon. A failing economy, safety and security concerns, better job opportunities as well as uncertainty about what the future holds for the country, are just a few reasons why people are emigrating in the thousands.
However, many considering emigration are not prepared for the logistics and costs involved with leaving, and in a lot of cases take for granted the lifestyle that they have become accustomed to. Yes, advanced countries such as New Zealand and Australia, and lest us not forget Europe and the UK, do offer the safety and appreciation for law and order, which some view as largely lacking in SA, but only the very wealthy can hope to replicate the lifestyle that we enjoy in SA, elsewhere.
The argument against emigration is that those who can afford it can live a great lifestyle in South Africa. For example, with R15 million, you can buy a four-bedroom home in a respectable estate that offers a great lifestyle and good security, and still have around R6-8 million to invest. Take the R15 million to say London, and once converted to the British pound, the approximate amount of £730 000 can only buy a two-bedroom flat with a communal garden in London in an area like Barbican.
The reality for many, especially for those who have grown up in South Africa and are used to a certain standard of living, is that emigration could possibly set their quality of life up to five to 15 years back. In some instances, they may have to basically start from scratch again.
The good news is that if you fit the above description, it is possible to stay in South Africa and continue this great lifestyle. However, one needs to point out that it is completely irresponsible to have ALL your eggs in the South African basket. To say that the local economy has performed poorly over the last five years and more, is an understatement, and hoping things improve over the next five years simply is not a good strategy either.
Although the latest figures are from last month (as updated on 31 January 2022), with regards to local vs offshore equities, the comparison is made below, with the JSE ALSI (All Share Index) lagging behind the rest of the world, in both rand and USD terms, over the long term of 3+ years.
In addition to further diversification, the main argument for offshore exposure is that it provides a hedge against the South African economy and the rand. Should the economy and rand continue their gradual decline, and you intend on staying in South Africa, offshore exposure provides a very much needed layer of protection for your wealth, as you are essentially earning dollars and spending in rands. This is where the value of having, at least some, offshore exposure to your investments. The good news is that, if you are concerned about your future in South Africa and protecting your financial assets, emigration is not the only choice you have.
It is, of course, advisable to consult with an experienced, qualified financial advisor to best guide you about offshore investing. The investment universe is vast and there are a multitude of funds, investment themes and territories to consider. Advisors research this in great detail and select fund managers that can deliver superior returns for your investments.