It was challenging to “forget the noise” this week. This is why I spent a whole chapter on Risk in my book. Instead of share price volatility, I discussed risks such as inflation, confiscation and devastation. State Capture in South Africa is a risk. With this risk comes possible confiscation of land/property. I think it is an unlikely risk as I hope the rule of law triumphs and those who break the law end up in prison and those who are trying to build a better future do not end up in court. That is all I will say about that. More importantly, what should an investor do?
I believe you should have an “insurance policy” in place. Not a real insurance policy but have hard currency investments/cash (think GBP and/or USD). Every few months send some money offshore to an offshore bank account. Ensure you have enough cash on hand to pay a deposit to rent a flat and a few months rent while you look for a job. You should also have some hard cash on hand to pay for food and day-to-day expenses. Any excess cash should be invested. You can use a trading solution like Interactive Brokers. The important thing is to make sure the money “lives” offshore. There is no point in investing in SA-based investments linked to offshore markets (unless cost is a real issue for you).
The above strategy does have a couple of roadblocks. One is that it can be costly (I call this your “insurance premium”). The other is you need the right to live overseas somewhere.
Now before you call me a prophet of doom, I think it is unlikely that the above insurance policy will be needed. It is, however, prudent to have one in place. I will also continue to build my SA investment portfolio and focus on dividends (no surprise there!).
Here is your updated table: