A sensible, durable approach to tax-efficient investing

If you want to do well in investing, start by avoiding the big mistakes. Chasing fads, overcomplicating things, and betting the farm on leverage - those are ways to go broke, not to build wealth.

Section 12BA is gone. That party was always going to end. The people who did best were the ones who understood the rules, moved early, and didn’t lose their heads.

Now we’re looking at Section 12B (without the “A”). The tax benefits are still very attractive, but, as always, the deal only makes sense if the underlying business does.

Here’s how we think about it:

1. Margin of Safety Comes First

With our fund you put in R1 million, but thanks to the tax deduction, only about a quarter of that is really at risk. The rest is protected by an upfront benefit that’s locked in by the South African tax code.

2. Sensible Leverage - Not a High-Wire Act

We use moderate gearing (about 40%) to enhance returns without putting you or the business in jeopardy. We’d rather sleep well than stretch for an extra couple of Rand in tax savings.

3. Real Underlying Value

The tax benefit is nice, but it’s the cash flow from good projects with reliable, creditworthy clients that creates durable wealth. We pick projects the way we’d pick a business: for long-term earning power, not to impress anybody at cocktail parties.

4. Transparency and Skin in the Game

You should know what you own, what you’re paying, and how we get paid. We invest alongside our partners & investors and don’t play games with your trust.

5. What Do You Get?

• 167% deduction on your investment (75% of your capital returned by SARS in the first year provided you are on a 45% tax rate)

• Only 25% of your capital at risk after tax

• A quarter of your money back within five years

• Predictable income for the next fifteen years

If you want a tax break and don’t care about the investment, we’re probably not your guys. If you want something you can understand, with honest risks and honest rewards, let’s have a straightforward conversation.

We’re not here to promise the moon. But we believe a conservative approach to a good opportunity, repeated over time, gets you further than most people ever imagine.

If you want more detail or want to look under the hood, you know where to find us -  we answer our own phones or click here to set up a chat with us.