When it comes to investing, one of the first lessons learnt by an individual is that diversification is key. When creating a portfolio of shares, any sophisticated investor will remind you not to “put too many eggs in one basket”. You do not want to weight your portfolio too much in one share, as if it declines in value your entire exposure will be negatively impacted. As a result, you want to be in a position where you have a diversified portfolio where the decrease in one share value will not have a large negative impact on your overall portfolio value as you have hedged it against other shares. By diversifying your investments, smoother, more consistent returns can be achieved.
This rule is very much mirrored when it comes to currencies. Too often is it the case that individuals are too exposed to a particular currency, and as a result its fluctuations have a direct impact on their relative wealth. This is almost always because many people lack the insight and the knowledge of global markets and because of this many people are fearful of the unknown or simply don’t have the funds to diversify into multiple currencies. At Equitos Group we believe in diversifying globally across multiple asset classes and currencies. Interestingly South Africans are very Rand Asset based and do not typically invest cross border which represents risk. Hard Currency exposure and diversification is essential in any financial planning and Wealth Building/Creation.
The unfortunate truth is that in a country like South Africa, the currency is volatile and there is a large amount of political uncertainty. On this basis, we always recommend that our clients should certainly maintain their primary residence at home in South Africa and enjoy the high quality of life that many of us enjoy, but at the same time, we advocate a serious look at offshore Real Estate and Investment holdings.
This article will help to first explain the advantages of diversifying your currency exposure, and then how Equitos Group can assist you by providing accessible and attractive real estate backed investment opportunities to South Africans.
1. Minimising of risk loss
As mentioned in the section above, diversifying your exposure to any form of investment will reduce your potential loss of relative wealth in a given time compared to if you were completely invested in one country or asset class.
The same goes for diversification of currencies. If the Rand starts to weaken due to political uncertainty or other economically impacted reasons, investors who have a portion of their funds in an offshore bank account in Sterling will reduce the negative impact on their relative wealth. The same can be applied to any investor anywhere in the world.
2. Preserving capital
As people become more and more educated on how to be money-wise, an increased amount of individuals are starting to save more for their retirement, future, or even their future generations.
As many South Africans are unsure of what their future holds or if they will even remain in the country, there has become an increased demand for taking money offshore and investing in assets that will deliver a solid rental yield as well as capital growth over a period of time. Once investing offshore clients have no intention of repatriating their returns and on this basis prefer their returns to be deposited into an offshore bank account where it remains in hard currency (GBP, USD, EURO).
3. Generating returns
Diversifying your currency exposure with Equitos Group will not only allow for a hedge against the currency fluctuations of the Rand but will also allow an individual to receive returns paid in hard currency and paid into an offshore bank account.
As markets fluctuate, so will returns. Diversifying your exposure to different markets across currencies will allow the investor to achieve greater security and stability through their returns. At Equitos Group we believe in stability and on this basis deliver assured returns where our clients can receive double digit returns year on year.
Equitos Group offers clients an accessible and attractive entry level to its property backed investments at £20 000. On a direct, title-deed property investment, investments start at £50 000. This allows for a greater percentage of South Africans to diversify globally and secure Direct Real Estate and Realty backed investments where their invested capital is ultimately protected by bricks and mortar being the underlying asset.
Not only does the entry level for a property backed investment start at such an accessible level, it also delivers incredibly attractive returns of 12-15% net per annum. On a direct, title-deed property investment, clients can achieve returns of up to 10% net per annum rental assurance.
Equitos Group prides itself in the partnerships that it has formed over its lifespan. This means that we can offer a client the entire end-to-end service by assisting them in opening an offshore bank accounts, tax efficient structures, obtain SARS approval to take funds over your discretionary allowance* outside of the country every year in a very simple manner. Equitos Group clients can rest assured that we will look after you all the way from start to finish; our desires are deep seated in long lasting relationships where the goal is to assist our clients in acquiring, managing and building sustainable investment portfolios over a long period of time. .
Equitos Group ensures that investments done by clients are completed in a simple manner and one which is not tedious and time consuming. We aim to keep the investment process simple and streamlined. Too often are investors deterred from making an investment decision based on the complexity of so many investment processes. Our processes are straight forward and typically an investment with Equitos Group can be completed in as little as a week.
Perhaps the most important corner stone at Equitos Group relates to security. This is a core fundamental of everything that we do. We would all like to earn great returns but what happens in a doomsday scenario, is your capital safe? At Equitos Group all our investments are either direct Real Estate Holdings Realty backed investments where property is the underlying security. This provides peace of mind, couple this with our extensive Due Diligence and core principles of fairness, mutually equitable outcomes and an unwavering desire to serve our clients to the best of our abilities and you can rest assured that you are in good hands.
*Every South African has the legal right to move R1 000 000 outside of the countries borders in a calendar year as their discretionary allowance. If the investor would like to exceed this R1 000 000 level, special SARS clearance is required, which Equitos Group can assist with due to the partnerships it has formed with other reputable companies.