New-look investments in an era of ‘business unusual’

A variety of new investment opportunities have seen the light of day over the past years. But if the year of living in a global pandemic has taught the world anything, it’s that there is no longer such a thing as “business as usual”. Investors who now find themselves in a highly unusual economic climate are therefore very actively seeking innovative new ways to advance their investments.  

The key is to find those opportunities outside the traditional stocks and bonds scenario, but which will still deliver with a certain degree of certainty in terms of returns, and longevity.

One popular offering over the recent past has existed within Section 12J of the Income Tax Act, which enabled investors to receive a rebate if their investments were made through an approved venture-capital company. 

Introduced in 2008 to encourage investment in small businesses and other riskier ventures, the 12J scheme was set to expire on 30 June 2021. As the investment community lobbied for an extension to this date, and there were high hopes that it would be extended. However, Treasury decided in February this year that this would not be the case, with the 12J initiative ending as planned at the end of June. The only extension on tax breaks are the ones that apply to property developers of buildings in central business districts. Originally scheduled to end in March this year, these have been extended for another two years.

Another innovative investment opportunity has come from The Business Exchange (TBE), a serviced office space provider with seven locations across South Africa and Mauritius. The company has teamed up with Maxcity Properties in Mauritius to offer investors the opportunity to own offshore property in the form of sectional-title serviced office space units.

A dollar-based country with a sound political and economic environment, Mauritius is increasingly being recognised as a prominent investment destination on the African continent. With TBE’s first site in the country achieving full occupancy in record time, housing major international brands such as Samsung, Broll, Expedia and NBA in serviced office environments, the move towards offering sectional title serviced office space became the next logical move for the company.

The investment is also considered to be a hedge against the rand in a country set to see highly stable growth and expansion in the coming years, offering investors the peace of mind they seek as they navigate their way through these new economic waters.

Another potential alternative route for investors lies in Tax-Free Savings Accounts (TFSAs). Introduced in 2015, they allow individuals to invest in various different asset classes without having to pay either income tax, dividends tax, or capital gains tax on the interest received. 

With the annual limit for individuals currently being R36 000 per year (or R3 000 per month), and a lifetime limit of R500 000, these are however best viewed as long-term investments in order to maximise the tax benefits they offer. This is because the returns and tax savings only really become worthwhile after a 10-year investment period.

Then there are stokvels. According to the National Stokvel Association of South Africa (Nasasa), an estimated R50 billion is contributed annually to stokvels, with over 40% of the country’s adult population belonging to around 810 000 stokvels.