In finance, what one sees as a threat, another sees as an opportunity. At present, New Zealand's exchange rate threatens exporters and farmers but gives an opportunity for importers and smart investors.

This is an excellent time to make offshore investments.

Exchange rate fluctuations increase the volatility that markets naturally have, so offshore investments are more volatile.

Shifting money offshore when the kiwi is high reduces some downside risk. The kiwi may go higher yet, but against many currencies we are above long-term average levels.

New Zealand investors should have at least 40 per cent of their portfolios offshore because:

1. New Zealand is a small and brittle economy largely dependent on the delicate industries of agriculture and tourism. It is not hard to imagine scenarios which would skittle the economy, such as an outbreak of foot and mouth disease. Offshore assets would be a godsend if New Zealand had an economic crisis.

2. New Zealanders usually have offshore liabilities in the sense that many want to travel and all of us consume offshore goods. You should match any liability with a similar asset, so it makes sense to match your desire to buy foreign goods and to travel with offshore investments.

3. Offshore investments offer opportunities not available here - emerging markets, technology or industries.

Sometimes people want offshore investments but do not think the time is right to buy foreign shares or managed funds. The answer is to buy foreign exchange (FX) but to hold this in cash for the time being.

The easiest way to hold FX is through your bank - nearly all local banks have FX accounts. You can open one in any currency and your money is as secure as the bank you use. You get interest on the account corresponding with prevailing interest rates in the country whose currency you choose. Shop around as fees for FX accounts vary.

* Martin Hawes is a financial adviser. His disclosure statement can be found at