How Much of a R10 Million Portfolio Should Be Invested Offshore?

Offshore allocation is the share of your total investable wealth that sits in foreign-currency assets outside South Africa’s borders. For most South African investors with a substantial portfolio, the right offshore allocation sits somewhere between 25% and 40% of total investable assets. The exact number depends on your retirement stage, how your wealth is split between retirement funds and discretionary investments, and how much rand exposure you already carry through property or a business.

Two allowances govern how much you can move offshore each year: the single discretionary allowance of R1 million (no SARS approval needed) and the foreign investment allowance of R10 million (which requires a tax compliance status pin from SARS). Together, that gives you R11 million of externalisation capacity per person per calendar year.

Many people conflate offshore banking with offshore investing for South Africans. Keeping foreign currency in an overseas bank account is not the same as investing in offshore unit trusts, ETFs, or multi-asset funds. The allowances apply to both, but the investment and tax treatment differ meaningfully.

Inside retirement funds such as retirement annuities and pension funds, the offshore exposure is capped by Regulation 28 at 45% of fund assets. That constraint changes the whole-portfolio picture, and it is the part most articles overlook.

What Are the Limits on How Much a South African Resident Can Invest Offshore?

You have access to two distinct offshore allowances that together permit up to R11 million per person per calendar year to be externalised. Understanding which allowance applies to your situation is the first practical step before moving any money.

The Single Discretionary Allowance (SDA): R1 million per year

This allowance requires no prior approval from the South African Reserve Bank (SARB) and no tax clearance certificate. Any South African resident aged 18 or older can use it. It covers travel, gifts, maintenance payments, and investment transfers abroad. Once you have used the R1 million, you cannot access additional offshore capacity through this route until the next calendar year.

The Foreign Investment Allowance (FIA): R10 million per year

This allowance requires a tax compliance status (TCS) pin from SARS. It is not a special investigation: SARS simply confirms that your tax affairs are in order before issuing the pin. Your bank or financial institution will request this before processing the transfer. The R10 million is available over and above the SDA, meaning the two allowances stack to R11 million per year.

A common mix-up is equating offshore banking with offshore investing. Holding dollars or euros in a foreign bank account does use your allowance, but it is not the same as being invested in offshore equity or multi-asset funds. Offshore bank balances earn deposit returns, typically low, and carry different currency risks than a diversified offshore portfolio. If building long-term wealth is your goal, the investment structure matters at least as much as the currency.

For offshore investing for South African retirees, the FIA is particularly relevant, since retirees often have investable assets well above R1 million sitting outside retirement funds. Why currency diversification matters for a South African portfolio is covered in more depth elsewhere on this site, but the short version is this: the rand has depreciated significantly against major currencies over long periods, and holding a portion of your wealth offshore provides a natural hedge against that trend.

A note on company offshore allowances

South African companies operate under a separate SARB framework with different limits and conditions. This article focuses on individual investors. If your wealth is held inside a company structure, the rules differ and specialist advice is essential before externalising funds.

How Regulation 28 Constrains Your Offshore Allocation Inside Retirement Funds

If a portion of your wealth sits inside a retirement annuity, pension fund, or provident fund, the maximum offshore exposure within those funds is 45%, set by the investment rules known as Regulation 28. That limit applies to the fund itself, not to your total portfolio, which is an important distinction.

Regulation 28 is the rule under the Pension Funds Act that governs how retirement fund assets must be spread across asset classes. Its purpose is to prevent retirement savings from being concentrated in any single asset class or region, including offshore equities. For offshore assets specifically, the current limit is 45% of fund assets, with an additional 10% permitted for African markets outside South Africa.

Worked example: R6 million inside a retirement annuity

Suppose R6 million of your R10 million portfolio sits inside a retirement annuity. The maximum offshore exposure allowed within that RA is 45%, which equals R2.7 million. The remaining R3 million in RA assets must be held in local instruments, local equities, bonds, property, and cash.

The R4 million outside the RA, say in a discretionary investment account or a tax-free savings account, is not subject to Regulation 28 at all. You can allocate that portion to 100% offshore if you choose, subject only to the annual allowance limits discussed above.

The interaction between these two constraints, the fund-level Regulation 28 cap and the annual externalisation allowances, is exactly the calculation that a whole-portfolio review needs to address. Looking at each pot in isolation will give you the wrong answer.

Shari’ah-compliant offshore portfolios are available within Regulation 28-compliant structures. Several South African fund managers offer globally diversified Shari’ah-screened funds that qualify under both frameworks. The allocation rules are identical; the underlying asset selection simply excludes interest-bearing instruments, conventional financial companies, and other prohibited categories.

For a fuller comparison of the different fund types and how they behave at retirement, see retirement annuity versus provident fund. And if a large portion of your portfolio is concentrated in one fund type or one currency, risk concentration and how to fix it addresses that directly.

How Much Should a R10 Million Portfolio Actually Have Offshore?

For a R10 million portfolio, a reasonable starting range for offshore exposure is 25% to 40% of total investable assets, or R2.5 million to R4 million. Where you land within that range depends on three factors.

Three factors that shift your allocation up or down:

1. Your retirement stage. If you are still accumulating, a higher offshore weighting makes sense for long-term rand-hedge growth. If you are drawing income in rands and your spending is largely local, a very high offshore allocation can introduce short-term volatility that makes income planning harder.

2. The split between retirement funds and discretionary assets. As shown in the Regulation 28 example above, the share of your portfolio locked inside retirement funds caps how much offshore exposure you can achieve across the total portfolio. A person with R8 million inside an RA and R2 million outside faces a structurally different offshore ceiling than someone with the opposite split.

3. Your existing rand exposure through property and business interests. Many clients who are comfortable with a 25% offshore allocation actually carry substantial additional rand exposure through investment property or a business. When you include those assets in the picture, the true offshore share of total wealth may be lower than the portfolio number suggests, arguing for a higher weighting in the investable portfolio.

Worked example: R10 million total portfolio

Suppose R6 million sits in a retirement annuity and R4 million sits in a discretionary investment account. The RA can hold R2.7 million offshore (45% of R6 million). The discretionary account can hold up to R4 million offshore. Total maximum offshore capacity: R6.7 million, or 67% of the portfolio.

A practical, sustainable target might be R3.5 million offshore, which is R2.7 million inside the RA and R800 000 in the discretionary account. That represents 35% of the total portfolio, within the 25% to 40% range, and leaves the discretionary account with meaningful local exposure for rand-denominated income needs.

Holding offshore assets is one of the most effective tools for protecting purchasing power against inflation. South African inflation has historically run higher than that of major developed economies, meaning that rand-denominated assets face a real return headwind that offshore assets in harder currencies often do not. How inflation erodes retirement savings in South Africa covers the mechanics in detail.

No single percentage fits every investor. The right allocation depends on your income needs, your tax position, your beneficiary intentions, and how your other assets are structured. Whether you need a financial adviser at this level of savings is a question worth reading if you are approaching these decisions without professional support.

Offshore Access by Account Type: A Comparison

The vehicle you use to invest offshore matters as much as the amount you invest, because each structure has different limits, approval requirements, and tax treatment.

A short note on TFSAs and feeder funds: many South African investors access offshore markets through rand-denominated feeder funds, which invest into a foreign master fund without you needing to externalise currency yourself. This is legal, accessible, and does not use your SDA or FIA. The trade-off is that the currency conversion happens inside the fund, so you still bear the currency risk but through a different mechanism. Currency diversification ETFs and dividend investing for retirement income explore specific implementation options.

The question of which platform is best cannot be answered by platform ranking alone. The right vehicle depends on your marginal tax rate, your existing fund structure, whether you are pre- or post-retirement, and whether you want income or growth. Shari’ah-compliant equivalents exist for most of these structures, including offshore Shari’ah ETFs accessible through feeder funds and globally diversified Shari’ah funds available via endowments and living annuities.

The Tax Rules You Need to Know Before Moving Money Offshore

Moving money offshore does not trigger a tax event by itself. The tax consequences arise when you earn income or realise a gain on your offshore investment, and they are governed by South African tax law regardless of where the assets are held.

Capital gains tax on offshore assets

South African residents are taxed on their worldwide income and capital gains. When you sell an offshore investment, the gain is calculated in rands, not in the foreign currency. This means a rand depreciation against the dollar increases your rand-denominated gain even if the underlying asset price in dollars has barely moved.

Worked example: You invest R1 million offshore when the exchange rate is R18 to the dollar. You sell when the rate is R22 to the dollar and the dollar value of your investment has grown by 15%. Your rand proceeds are materially higher than your rand cost, partly due to the investment gain and partly due to rand depreciation. Both components form part of your taxable capital gain. The annual exclusion of R40 000 for individuals applies, and only 40% of the net gain is included in taxable income. The effective CGT rate for an individual in the top bracket is therefore 18% (40% of a 45% marginal rate), not 18% flat on the full gain.

Foreign dividend withholding tax

When an offshore fund pays dividends, the source country may withhold tax. South Africa has tax treaties with many major investment destinations that reduce or credit this withholding tax against your South African tax liability. The exact offset depends on the treaty and the structure of the investment. Endowments handle this internally; direct offshore accounts require you to track it.

Estate duty on offshore assets

Offshore assets held in your own name are included in your South African estate for estate duty purposes. This creates an illiquidity risk: your estate may owe duty on assets that cannot easily be liquidated in time. This is a real planning consideration, and it is one of the reasons the structure of offshore holdings matters. For the estate duty detail, the estate planning specialists at GMI are the right people to consult. Smart income choices for South African retirees covers related income planning decisions.

This section is general information. It is not personal tax advice. Your specific position depends on your marginal rate, your fund structures, and your asset mix.

Shari’ah-Compliant Offshore Investing: What Is Available to South African Investors?

Shari’ah-compliant offshore investing is fully accessible to South African investors, and the same allocation framework applies. The percentage targets and allowance structures are identical; what changes is the underlying asset selection and the screening process applied to the portfolio.

Shari’ah screening excludes companies involved in interest-based lending (conventional banking and insurance), alcohol, tobacco, weapons, adult entertainment, and pork products. It also excludes instruments that generate returns from interest, such as conventional bonds. What remains is a universe of global equities, Shari’ah-compliant sukuk (Islamic bonds), and real assets that pass the screening criteria. Diversification is still achievable; the global Shari’ah equity universe covers thousands of listed companies across developed and emerging markets.

South African investors can access this universe in two ways.

The first is through rand-denominated feeder funds offered by local asset managers. Several managers run globally diversified Shari’ah equity and multi-asset funds that invest into offshore master funds. This route does not require you to externalise currency or use your SDA or FIA. It is available inside retirement annuities, TFSAs, and endowments.

The second route is to externalise capital using your allowances and invest directly into offshore Shari’ah-screened ETFs or managed funds denominated in dollars or euros. This route gives greater currency exposure and broader fund choice, but it involves more administration and requires tax tracking.

Both routes work within Regulation 28 constraints for retirement funds. For a fuller picture, the offshore investing guidance for South African retirees is the natural next read, and the Shari’ah-compliant investing in South Africa guide covers the broader local and offshore framework in detail.

Frequently Asked Questions

What are the limits on how much a South African resident can invest offshore?

South African residents can move up to R11 million per person per calendar year offshore. This comprises the R1 million single discretionary allowance, which requires no approval, and the R10 million foreign investment allowance, which requires a tax compliance status pin from SARS. The two allowances stack, so you can use both in the same year.

How does someone begin investing offshore from South Africa?

The most accessible starting point is a rand-denominated feeder fund offered by a South African asset manager. This route requires no currency externalisation and uses no allowances. For larger amounts, the process involves applying for a tax compliance status pin from SARS through your bank or financial institution, then instructing a transfer under the foreign investment allowance. See a practical guide to investing offshore from South Africa for the step-by-step detail.

What are the best unit trust options available to South African investors?

Offshore investing and unit trust investing are not the same strategy, though they can overlap. A unit trust is a structure; offshore is a geographic exposure. You can hold a local unit trust, a rand-denominated offshore feeder fund in unit trust form, or a directly externalised offshore unit trust. The “best” option depends on your tax position, your drawdown needs, and whether the unit trust falls inside or outside a retirement fund wrapper.

What is the minimum amount required to start investing in unit trusts?

Minimums vary by fund manager and platform, but many South African unit trusts accept lump sums from R10 000 and monthly debit orders from R500. This article focuses on portfolio-level offshore allocation for investors with substantial assets rather than on entry-level minimums. For guidance matched to your specific situation, arrange a consultation.

Which investment platform offers the best options for South African investors?

Platform selection should follow structure selection, not the other way around. The right vehicle depends on whether you are pre- or post-retirement, your marginal tax rate, and whether you need the assets inside a retirement fund, an endowment, or your own name. Once those decisions are made, the platform that best supports that structure becomes clear.

What retirement investment options are most suitable for South Africans?

South Africans approaching retirement typically benefit from a combination of a retirement annuity or preservation fund for the tax-deferred growth phase, and a living annuity or life annuity for the income phase. The right mix depends on your income needs, your estate intentions, and your risk tolerance. The South African retirement planning guide covers this framework in full.

How can South Africans access Shari’ah-compliant investment options?

The two main routes are rand-denominated Shari’ah feeder funds (available inside RAs, TFSAs, and endowments, no currency externalisation needed) and directly externalised offshore Shari’ah ETFs and funds using your SDA or FIA allowances. Both routes apply the same allocation framework as conventional offshore investing. The screening criteria exclude interest-based instruments and prohibited industries, but the offshore allocation targets remain the same.

How do South Africans protect their investment capital against inflation?

The most effective inflation hedges over long periods have been diversified equity (local and offshore), real assets, and inflation-linked bonds. Offshore assets in harder currencies provide an additional layer of protection against rand-specific inflation pressures. A sustainable drawdown rate, typically below 5% of portfolio value per year, is also a structural protection against inflation eroding your capital over a long retirement.

The Decision That Cuts Across Every Pot at Once

Deciding how much to invest offshore is not a single-fund decision. It is a whole-portfolio question, and answering it correctly requires looking at every pot at once: your retirement funds, your discretionary investments, your tax-free savings, and your property and business interests.

The 25% to 40% range offered in this article is a starting point. For a R10 million portfolio, that translates to R2.5 million to R4 million in offshore assets. But the split between Regulation 28-constrained retirement funds and free-standing investments will determine how much of that target is achievable, and through which vehicles.

The two allowances, the R1 million single discretionary allowance and the R10 million foreign investment allowance, give you meaningful capacity to externalise capital each year. Using them efficiently, in the right structure, in the right sequence, and with an eye on the tax consequences at every step, is where the real planning value sits.

Shari’ah-compliant options are available across both the local feeder fund route and the directly externalised route. The allocation framework is the same; only the underlying asset selection differs.

This article is general information. It is not personal financial advice, and no example in it should be applied to your situation without understanding your full financial picture.

For more detail on the offshore decision as you approach or enter retirement, read the offshore investing for South African retirees guide. If you would like to work through the numbers for your own portfolio, arrange a private consultation and we can look at the whole picture together.