{"id":837407,"date":"2025-09-20T13:00:00","date_gmt":"2025-09-20T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=837407"},"modified":"2025-09-19T17:13:58","modified_gmt":"2025-09-19T15:13:58","slug":"one-way-rich-south-africans-protect-their-wealth-and-pay-less-tax","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/837407\/one-way-rich-south-africans-protect-their-wealth-and-pay-less-tax\/","title":{"rendered":"One way rich South Africans protect their wealth and pay less tax"},"content":{"rendered":"\n

Rich South Africans are increasingly taking advantage of offshore investing to protect their wealth and to pay less tax. <\/p>\n\n\n\n

This is according to Dino Zuccollo, head of investor solutions at Westbrooke Alternative Asset Management, who said that while South Africans have been moving money offshore for years, the urgency has accelerated. <\/p>\n\n\n\n

\u201cOver the course of the last pretty long while now, there have been increasing levels of concern amongst South Africans around the degree to which we are invested locally,\u201d he explained. <\/p>\n\n\n\n

\u201cWe as South Africa are less than 1% of total global market capitalisation, and yet most South Africans have more than 50% of their wealth invested in this country.\u201d<\/p>\n\n\n\n

According to Zuccollo, more money is leaving South Africa each year through allowances that let investors externalise up to R11 million annually. But once offshore, the money often lands in low-yielding accounts. <\/p>\n\n\n\n

\u201cIn a bank account in pounds, you\u2019re earning probably less than 2%. In a fixed deposit account with maybe a 6-month notice, you\u2019re earning 3 to 3.5%, with UK inflation at 3.8%,\u201d he noted. <\/p>\n\n\n\n

\u201cExternalising is great, but once the money goes offshore, you need to invest in such a way as not to lose that money and to keep up with inflation. And that is where South Africans have found it challetanging.\u201d<\/p>\n\n\n\n

Most investors naturally turn to equities, but Zuccollo warned against concentrating entirely in volatile markets. <\/p>\n\n\n\n

\u201cConventional wisdom would suggest that you should never invest 100% of your wealth into high-risk equities that bounce around all the time,\u201d he said. <\/p>\n\n\n\n

\u201cIf you don\u2019t want to run material capital loss risk, but you still want to make a return, your options are limited, especially if you\u2019re on the other side of the world, but you live here in South Africa.\u201d<\/p>\n\n\n\n

\u201cIt\u2019s very difficult to get access, and that\u2019s something Westbrooke is working really hard to change.\u201d One alternative is private debt, where private lenders, rather than banks, make loans. <\/p>\n\n\n\n

Tax benefits <\/h2>\n\n\n\n
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Zuccollo explained that after the 2008 financial crisis, regulations made lending more expensive for banks, pushing them toward larger loans of around R500 million. <\/p>\n\n\n\n

\u201cThat dearth or gap in the market is increasingly being filled by private lenders. A private credit fund takes investors and locks them in for a period of time, but the advantage is that, as a non-bank lender, you can be quicker, better, faster,\u201d he said.<\/p>\n\n\n\n

\u201cYou can provide smaller loans with greater complexity, quicker, and fill a need for entrepreneurs.\u201d<\/p>\n\n\n\n

The trade-off is liquidity. \u201cThey are less liquid, and that is the key drawback to alternative investments,\u201d Zuccollo admitted. <\/p>\n\n\n\n

For instance, Westbrooke\u2019s UK Yield Plus Fund has a seven-year track record and \u00a3180 million under management, but investors must give six months\u2019 notice to withdraw.<\/p>\n\n\n\n

The payoff, however, is higher returns. \u201cWhere in a six-month fixed deposit you\u2019d be getting 3 to 3.5%, in Yield Plus you\u2019re getting 7 to 8, he said. <\/p>\n\n\n\n

And because we are private market managers, he added that you can get cleverer with things like taxes. <\/p>\n\n\n\n

\u201cWhen you incorporate tax, we can generate for a client a return that is up to three times the post-tax amount that you\u2019d be getting in the more traditional structures.\u201d<\/p>\n\n\n\n

Zuccollo stressed the importance of financial advice, saying the old 60\/40 split between equities and bonds is outdated. <\/p>\n\n\n\n

\u201cIt doesn\u2019t work anymore, and that\u2019s because the correlation between equities and bonds has become very strongly positive,\u201d he said. <\/p>\n\n\n\n

Instead, more advisors are advocating for allocations that include alternatives, such as 30%. <\/p>\n\n\n\n

\u201cAlternatives come with more complexity, more risk, and liquidity as a downside, but if you have a really high-quality wealth advisor, they\u2019ll already be talking to us and will be well equipped to give you the advice you need to future-proof your portfolio.\u201d<\/p>\n\n\n\n

The appeal of alternatives is that they are less exposed to global shocks. \u201cYou might be invested in a property stock in the United States, and a war breaks out in the Middle East, and suddenly, the valuation of your investment moves,\u201d he explained. <\/p>\n\n\n\n

\u201cThat may or may not have anything to do with the fundamentals. One of the beauties of alternatives is that your return is much more closely linked to the fortunes of that investment or that property on that street, in that area.\u201d<\/p>\n\n\n\n

Ultimately, he argued that wealthy South Africans can reduce tax burdens and improve post-tax returns by using offshore private market strategies. <\/p>\n\n\n\n

\u201cIf you can find a good asset manager who ticks all the boxes\u2014financially aligned, with a long track record, who you can trust\u2014you can take away some of the systemic risk and get a return profile much more linked to the quality of your asset manager,\u201d Zuccollo said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Rich South Africans are increasingly taking their money outside the country to protect their wealth and to pay less tax.\u00a0<\/p>\n","protected":false},"author":92,"featured_media":823129,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[21092,853,2887,23047],"class_list":["post-837407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-offshore-investment","tag-south-africa","tag-tax","tag-westbrooke-alternative-asset-management"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=837407"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837407\/revisions"}],"predecessor-version":[{"id":837815,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/837407\/revisions\/837815"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/823129"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=837407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=837407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=837407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}