Section J12 is gone, are there any other alternative investments out there?

What is an alternative investment?

Generally speaking, investments in alternative assets are generally unlisted and less liquid forms of investments, meaning that the investment takes longer to sell at the price you want to sell at given that there are less market participants making that specific market more illiquid. These types of investments can be used to diversify your portfolio and can be more tax efficient over the longer term. It might be worth noting that these investments carry a lot more risk but they also offer quite substantial returns.

Section 12J was only but one of many that are still left out there.

In South Africa the section 12J investment vehicle was one of the most popular in the alternative investment space. It started out in 2008 under South Africa’s Income Tax Act which provided investors with an immediate tax deduction up to 100% of the invested amount. The aim of section 12J was to make investments into smaller businesses more attractive and ultimately create more jobs in the country.

In reality, section 12J was only one of many in the alternative investment ecosystem. Essentially alternative investment assets trade on the private market, simply put, it is like referring to buying a bond on the secondary market but now you are physically making a loan to company directly. The underlying returns are generated in the same way i.e., loan repayments consisting of capital and an interest component, it is just a different way of structuring the investment that you are making. However, please note that there are many ways of structuring alternative investments, the above is merely an example.

Caveat can help you!

Alternative investments have proven to be valuable portfolio diversification tools and offers in some cases very high returns compared to the risk that you take. However, risk is not a one size fits all model and it will be useful to see a qualified and accredited Financial Advisor before jumping down the alternative investment rabbit hole to see if the risk that you are planning on taking is viable and suitable for your financial situation.

If you are investing funds that you have future requirements for, it would always be to your advantage to get an opinion from a professional or from a seasoned person within the industry.

Visit our website to see how we can help you with structuring an efficient, well-suited investment plan that will help you reach your future investment goals!

Who are we?

Caveat Capital Management is a strategic advisory firm based in Cape Town. Caveat Capital Management specializes in structuring tailor-made investment portfolios that serve your needs now and grow with you as your needs change. Caveat works to maximize your gains and minimize the risk.

What we offer

Caveat Capital Management has a competitive fee structure that incentivizes the portfolio manager to perform and the remuneration is highly linked to the performance of the portfolio. Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA). Meaning that we have the required licensing to structure full-discretionary portfolios structured to your needs.

Disclaimer

This report does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

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The information in and content of this publication are provided by Caveat Capital Management as general information about the company and its products and services. Caveat Capital Management does not guarantee the suitability or potential value of any information or particular investment source. The information provided is not intended to, nor does it constitute financial, tax, legal, investment or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified financial adviser. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement or offer by Caveat Capital Management, but is merely an invitation to do business.

Caveat Capital Management has taken and will continue to take care that all information provided, in so far as this is under its control, is true and correct. However, Caveat Capital Management shall not be responsible for and therefore disclaims any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon any information provided. Past performance is not an indication of future performance. Caveat Capital Management does not provide any guarantee regarding capital or performance.

Caveat Capital MGMT (Pty) Ltd is a CATII – Authorized Financial Services Provider (FSP no. 24777) registered at the South African Financial Services Conduct Authority (FSCA).