#49: Offshore ETFs and currency moves

Back in the bad old cabinet reshuffle days, I made some money trading my tax-free savings account. In that account, I was invested in the DBXWD and CSP500. The cabinet reshuffle led to a nauseating drop in the rand. The currency drop, in turn, resulted in an elating increase in the value of my dollar-denominated investments. It was an emotionally confusing but financially lucrative time. I'd been down this road before. Considering how little my investments have done for me, seeing some life in my offshore investments is basically the only thing giving me hope. This time, instead of just being a spectator, I cashed in on the currency move. While nothing of great significance happened in any of the markets I was invested in, I could take profit because of the currency move. How does this work? In this episode of The Fat Wallet Show, Simon and I discuss the impact of currency moves on offshore ETFs. There are two elements to keep in mind - the market you're tracking and the currency in which your ETF is denominated. Our feedback this week is all about tax. There must be something in the water. We clear up some confusion around capital gains tax from the previous episode. The penny finally drops for me. I'm going to write it down here just to be 100% sure I have it. Each person gets a R40 000 tax-free capital gains allocation per year. 40% of any profit over R40 000 gets taxed at your marginal rate. In that way, capital gains is affected and does affect your income tax. I had this all wrong. I thought you paid 40% on any profit over R40 000. Nope, nope, nope. We are on an unusual recording schedule, but we will get to your questions and feedback eventually. Get in touch with Team Just One Lap at [email protected]. Kris P.S. The Fat Wallet turns one in the next episode!