Dawie Roodt’s advice to people who want to leave South Africa
Renowned economist Dawie Roodt advised that people staying in South Africa should ensure they are safe and acquire the necessary skills to participate in the global economy.
Roodt shared his views during a question-and-answer session at the recent Biznews Conference in Hermanus in the Western Cape.
He said he often gets approached by people who ask whether they should emigrate, considering South Africa’s problems.
Roodt explained that instead of seeing South Africa as their source of income, they should realise that the modern economy is based in the cloud.
If people possess the right skills and have a stable internet connection, they can work and form part of the global economy from anywhere they live.
He gave the example of a friend which works for a bank in Kenya despite the fact that he has never set foot in the country.
Considering this reality, South Africa is a pleasant place to live with many attractive features, including excellent weather, braais, and great wine.
However, Roodt advised people to ensure that they are safe in South Africa, which is a violent country with high levels of crime.
“South Africa is a dangerous place. Make sure that you have all the necessary security measures in place,” he said.
Another important thing is for people to ensure that their kids receive an excellent education, which focuses on the right skills.
The focus should be on developing the right skills, rather than merely obtaining a qualification. “We produce 600,000 matrics every year with a qualification which means nothing,” he said.
Roodt said the future workplace and economy will require continuous learning to ensure you have the needed skills to contribute.
Having a diversified portfolio with international assets
Roodt previously said it was important for South Africans to use the liquid and well-regulated financial markets to diversify their portfolio.
“The obvious thing is to make sure that you are diversified properly to minimise risk and exposure to a single asset class or a particular country,” Roodt said.
“The main thing I have been preaching for a long time is to make sure you have a significant part of your portfolio invested abroad to protect against a weakening currency.”
Investing abroad also ensures you avoid the effects of high inflation and interest rates in South Africa, which limit the real returns generated by local assets.
Roodt warned that South Africans still need to be cautious about investing overseas, as many global stock markets are expensive and may be overvalued, particularly US stocks.
Another way to protect your wealth is to invest in traditional hedges, such as gold or silver, to diversify your holdings.
Roodt explained that some cryptocurrencies are also increasingly becoming stores of wealth and can be used to hedge against inflation and a weakening currency.
“Depending on how much wealth you have, it is important to ensure you have the right structure in place to protect your wealth and invest it efficiently.”
“If you can remove yourself from your assets, like putting them into a company that is registered outside of South Africa or in a trust, it has the potential to be more tax efficient and more protected.”
Another critical part of protecting your wealth is to ensure you have a good financial advisor and invest your money with respected financial institutions.
Roodt also said it is vital to ensure that if someone else is managing your investments, they have a good track record of generating real returns.
He has previously stated that there are still many investable companies on the JSE, but investors should focus on highly liquid stocks that can be sold at short notice if needed.
Furthermore, they should invest in companies that provide a rand hedge to protect them from the depreciation of the rand.
A rand hedge stock is a company that is listed in South Africa while earning a significant portion of its earnings outside of the country in dollars, euros, or pounds.
Examples of these companies include Naspers, Prosus, Richemont, Anglo American, AB InBev, BHP Group, and Glencore, among others.
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