Building global wealth from South Africa #2: Forex & Investing

Welcome to part 2 of my series on how to operate as a global citizen (financially speaking) from South Africa. Part 1 can be found as the previous edition to this newsletter.

Forex & Investing: don't bet it all on ZAR!

Let's be real, the Rand has been on an ever-worsening decline for a very long time. It would be nice to be able to hold something a bit more stable.

Luckily, there are both some local and global options available for both transacting/saving in foreign currencies and investing in foreign companies.

Transacting & Saving

Most major South African banks these days offer a foreign currency account that you can hold EUR, USD, or GBP in. FNB, Nedbank and Standard Bank come to mind here.

These aren't "native" foreign accounts however - so you can't give a sort code for your account to your UK clients, or have US clients wire money in. They work only via SWIFT and with your local bank account directly.

That being said, some banks also have branches/subsidiaries/etc abroad and offer you accounts in those jurisdictions. For example, FNB Channel Islands, or Investec UK, are available to South African clients. However, these are often only available to high net worth individuals. The rest of us are "stuck" on the localised forex options.

Okay, that's now one step forward: locally holding some forex as a Rand hedge for some stability (or travel funds). You can fund these accounts by doing forex conversions from your Rand-based accounts, or via inbound SWIFT transfers.

Investing locally and abroad

Next up we'll look at some investing locally and abroad, to give you the widest reach of options and strategies.

Investing is another area where options for South Africans have greatly improved over the last few years. The most notable platform for investing, not directly tied to a bank offering, is EasyEquities.

You can invest in local companies and funds, as well as in foreign currencies on foreign companies and funds. They also offer products for investing in alternative asset classes like property and crypto.

Importantly, being a South African platform, they'll also provide you with the correct yearly documents for your tax obligations on your investments. Convenient!

You can sign up to EasyEquities over here (Referral link).

Alternatively, many banks offer investing through their online platforms, but beware of the fees and overall user experience with them - it may be subpar compared to a platform purely focused on investing.

Another good option is Clarity, a new platform by Investec. It's not yet fully launched, but I'd keep an eye on it as the potential better option going forward.

However, what happens with your investments if you decide to emigrate, or want broader offshore access?

As far as I'm aware, if you want to emigrate, I don't believe current platforms in South Africa can handle transferring your ownership under your new tax residency.

To solve that, and for the wider offshore reach, you can use a global investment platform like Interactive Brokers (IBKR). There are also others like eToro.

They largely will have the same features described as with EasyEquities and Clarity, but with a broader focus and thus more options for what to invest in.

Most importantly, IBKR has explicit documentation and steps on how to change your account's legal residency. That way, you can keep your investments intact if you financially emigrate!

There's obviously a lot more to investing in terms of strategy, long-term gains, tax, and various platform and trading fees. I leave that research up to you.

Now, transacting & investing abroad is cool and all, but wouldn't it be cool to also get paid from abroad?

That's what we'll investigate in Part 3 on Monday.

Can't wait for the next one to be released on LinkedIn? The complete guide is available on my website, free of charge, in one long post! Check my profile for info.