hi Warren. have a question. I recently inherited 10,000 Euro. This is in shares, mainly in a, a single company, so not in an index, which is listed on the DAX in Germany. Now I want to know what should I do with that money or with that, these assets if I plan to, so I plan to stay in South Africa my whole life essentially. And so what, what should I do? Should I liquidate and bring it over? Should I keep it in this what is the most prudent approach?
Thank you very much for your question about your Euro inheritance. I'm obviously very sorry for your loss, but I guess it's leaving you with a positive financial problem that must be addressed. So I take the point that you're not planning to leave South Africa, so you are planning for South Africa to be your home, which does increase your range of options. You know, some people would say, well, I'm inheriting the.
Planning to leave sa one day and, and therefore it becomes a much easier conversation just to leave the money overseas and make sure it's correctly invested. So from a principal point of view making the call to, to leave the money overseas or to bring it back is your, is your first big decision. And, and I think bringing it back would make sense to me.
For example, if you had credit card debt, personal loans, overdrafts, micro loans, something you know, really expensive, where the interest rate is costing you, you know, 15 or 25% interest a year, then, then bringing back the money makes all the sense in the world to give you space to breathe and, and to kind of get your life on, on the rock Financial track.
If you don't have any debt or you've only got something like a home loan or potentially a very cost effective car loan that, that you can comfortably afford, then your decisions become a little bit more complicated because now it's about what proportion of your other investments do you have in South Africa and how much of your investments is already overseas. So, so we have to make some assumptions here, but I, I wanna kind of give you the decisions that, that you can make along the way.
So first, let's assume you've got no debt and, and you've only got investments and, and, and potentially only investments in South Africa. Then, then I think it becomes a bit of a different conversation because I, I, I think at the very least, all of us should have at least 25%, so a quarter of our investment assets directly overseas. It doesn't mean we need to do it immediately. It, it, it's something we can do over time.
but you're in the position where you've now got this this lump sum of money. And even if it's a bit bigger than 25%, and, and, and, and my range there just to explain is 25% to to 50% of your investments should be overseas dependent on your financial position, where you spend your money, how are you gonna spend in the future, et cetera. But, but let's just say you've got nothing overseas except this money, and you've got some in local investments then, then I think le leave the money overseas.
And, and then consider with monthly savings, building up your, your South African exposure to make sure you keep that balance right. I, I, I think most of us would be very comfortable over the next 20, 30, 40 years to, to have an even split. In other words, half of our investments or maybe even just half of all of our assets in South Africa and half of our assets overseas.
So, so if that's a good principle that you're happy to live with, then, then, then let, let's make the call and let's make the assumption that you are leading the money o. The next question is, is it right to leave it in Germany specifically? And and more importantly if you, if it is right to leave it in Germany, is it right to leave it invested in one share on, on the stock exchange there?
And, and, and I, I guess you, if you're a listener to honest, man, you, you're not gonna be surprised that I, I'm, I'm not convinced that's your best idea. I, I, I think diversification of investments is a key point when you, when you're making long-term investment decisions. So as a start all of your money in one share, that doesn't make sense to me. Even if it's a great share, even if it's a fantastic business, you don't know what will happen to that business in the future.
And, and you only have to look at the, the share price of Tesla over the last 18 months to give an example. What a great business with a great future could do as a share. It can shoot up, you feel like a hero, and then it loses 60% of its value and, and life becomes much more traumatic. So I, I, I think spreading your, your, your risks and your potential growth opportunities a lot wider than that makes sense.
So the solution is you're looking for something like a global a global equity unitrust, which then invests in, in a bunch of different shares right around the world. That, that makes a lot more sense to me. Or a, a global equity et t f, you know, something that tracks the world Stock market index. I prefer those to, to one share in, in one country and, and then specifically to Germany. I. Very sure. What happens with taxes in Germany when you're not resident in Germany?
I'm not sure what happens to death duties in Amer in, in Germany. If you were to die in South Africa and you've got this, this investment in one share in Germany, would they want to, to tax you at more than the, the, the, the. De the death duties in South Africa. And secondly, will they accept a South African wool and South African letters of Executorship?
I'm not sure that they will, in, in which case your, your beneficiaries of your estate are, are in for a long and, and very tiresome experience that's probably gonna cost them a lot of money. So I think the answer is that, that I would want to move the money out of Germany. If you've just inherited the money, then, then there is probably no tax implication to you because the, the, the, the money's just been received in your name. That means you had no growth.
What whatever taxes have been levied have been levied on the estate and not on you. Which means you can probably move it quite quickly without paying any death, or, sorry, not death duties, any new taxes or new capital gains. And then my preference would be to, to house that money in a place like Switzerland, Ireland Luxembourg, or the Channel Islands, which are Jersey Gonzi Olive Man.
One of those jurisdictions would suit you from the point of view that they will recognize the South African Woo. They will recognize South African leaders of Executorship, which are very good. Equally, then any growth that you get in future will only be p be taxed in South Africa and not be taxed o in that jurisdiction as well. So, so I think, look at look at a, a unitrust or an exchange traded fund.
You, you're often looking for the, the, the, the letters s. I C A V. So c a after the name of the untrust or, or the exchange traded fund, that will tell you that it's listed in a jurisdiction that's not gonna tax you. Twice. You, you only wanna be taxed once and, and then invest the money accordingly. And I think that that's a very good principle for anybody looking to invest overseas. Don't go and invest all of your.
You know whether it's inheritance or new money that you're sending overseas in one jurisdiction, spread it around. You know, don't go and invest in one, share in one country. It, it's fine if the money's living and, and, and, or the, the jargon is domiciled in a place like Ireland, as, let's just use that for, for now. But then you need a global portfolio with lots of investments right around the world.
And, and to me, you know, diversification is key in a, in a situation like this, you just don't know what country or what company is going to perform well over the next 5, 10, 15, 30 years. And, and when you're investing in shares, your time horizon should be at least kind of eight to 30 years. It, it shouldn't be the next three weeks or three months, or three years. So I, I hope that helps. Good luck with your.
Your investment decision and, and, and be sure to kind of stay focused on the long-term. Don't worry about what's gonna happen in the, in the next few days and months. What I do know is if you're investing at the start of 2023, share prices around the world are offering very good value. So, so don't be scared to, to kind of commit that money to your investments as soon as possible.