Reader Question: I’m 54 and inherited R1.5 million from the sale of a property. I have no debt and no dependants. How should I invest this amount?

Dear reader,

Thank you for your question.

It is always difficult to answer a question like this without knowing more detail. Specifically, I’d need to know more regarding your risk profile, liquidity requirements, income requirements, and tax profile. Once this information has been gathered, providing advice becomes a lot easier.

R1.5 million can mean different things to different people. For example, the recommendations I would make to a client with R1.5 million would differ materially depending on whether they need income from this investment or are simply looking for maximum capital growth.

At 54, your investment strategy should focus on balancing growth potential with risk management, especially considering your retirement might be in sight in the next decade or so.

You mentioned that you have no debt or dependants. I will also assume you do not need income from this investment and are looking for maximum growth over the next decade.

In South Africa, each individual over the age of 18 is allowed to transfer R1 million offshore. This allowance, known as the Single Discretionary Allowance (SDA), is regulated by the South African Reserve Bank and is part of the country’s exchange control regulations. This would be a good place to start, assuming your goal for this investment is maximum capital growth, and you have an investment time horizon of at least seven to 10 years.

Offshore investing offers several benefits to SA citizens, such as access to international markets (where market growth has been stronger over the last decade). Furthermore, offshore investing reduces exposure to SA-specific risks such as political instability, the weakening rand, and inflation.

The majority of SA’s main asset managers and platform providers incorporate offshore funds as part of their value proposition. You can, therefore, gain offshore exposure in this way. I would encourage you to reach out to a financial advisor who will be able to guide you on what vehicles and platforms could best be suited to your needs.

The SDA is a great place to invest R1 million – especially if your ultimate goal is capital growth over the long term.

With the remaining R500 000, a suitable strategy would be to invest in a local unit trust structure with the underlying funds being of a balanced, multi-asset nature. This will allow you to participate in equity market growth (to an extent) but also allow you to create a ‘nest egg’ from which you can access money as and when liquidity needs arise.

I hope this has helped to answer your question. As always, I recommend you get in touch with a qualified financial advisor who can assist you with regard to liquidity, risk analysis, and efficient tax structuring.

Read more from Jono 
  

This article was originally published on Moneyweb on 9 April 2025 as part of the financial advisory view articles. The original can be accessed here