Invest the dividends from your small business with 0 % tax and secure your pension

Small businesses in Sweden can take advantage of an annual amount of SEK 171,875 (2019) which can be paid out as dividends with a tax rate of 20 % instead of the regular +50 % that you get charged from the 3:12 regulations. Any amount that you don’t pay out can be saved for the future and also transferred to another family member.

I have given a lot of thought to weather I should keep capital in my company and receive returns there or if I should issue dividends and invest the money privately.

I now think that I have found the solution and it is called unlisted preference shares!

If I invest in unlisted preference shares through my company the received interest will be tax free, the tax has already been paid by the company that issued the preference shares. This means that my actual received interest will be higher than the terms of the shares states.

If I invest in unlisted preference shares that pays 7 % interest it means that my actual return is 8.8 % which has a huge effect for a long term investment.

The frequency of payments also matters a lot, if the issuing company pays out the interest monthly it means that I can re-invest the cash and quickly compound my interest.

In our company, Untie Group, we are launching our own unlisted preference shares in 15 hours which features all of the properties mentioned above.

Let’s say that we invest our SEK 171,875 that we make in profits each year , meaning an investment of SEK 14,323 per month with an interest of 7 % and 0 % tax, what would the result be over a period of 20 years?

After 20 years we have obtained more than SEK 7,500,000 and each month we are going to receive a payment of SEK 43,500 which we can issue in dividends against our saved annual amount or use in another way.

Best regards,

Comparing investments in loans with the stock market

With all types of long term investments the compounding interest effect is the one that determines how value will develop over time. Have a look at the video below.

This is the reason why I have a very hard time finding an investment that generates better returns then investments in loans. The chart below shows the projected return at Kreditborsen (the credit exchange) compared to the Swedish general stock index called OMX during the past 20 years.

The chart above shows the return of 50,000 invested 20 years ago, in 1998, without any additional investments.

Keep your money machine going with minimal exposure to the stock market

The stock market is less attractive

The US stock market continues to make new all time highs and I have continued to lessen my exposure. I have secured profits by selling stocks into the climb. I am now focusing my investment capital on alternative investments like lending to companies and individuals. I am doing this through and I am accumulating cash.

Gold is not a good alternative in a deflationary environment

I have previously made a few investments in physical gold through Goldmoney who offers a service for this. If we would end up in a deflationary period any investments in gold or other commodities will be bad alternatives. All assets except pure cash depreciates in value in a deflationary environment. Because of this risk I have also closed my gold investments.

The risks with investments in loans

I do not recommend that you place all your investable capital in peer to peer loans. Sweden and Finland are however very good alternatives for these activities since they have a functioning government collection agency. If the economy gets worse it will obviously impact a lot of borrowers who will not be able to pay down their loans at the agreed pace. As long as creditors and loan agents have done their homework before approving loans the payment plans will be possible to extend in order to solve the situation. It is very important to use personal guarantees and other form of security when working with corporate lending.

Focus on absolute returns and compound interest

My general reasoning for investments are very similar to the writings of the sound investor Per H Börjesson.

Focus on absolute returns and compound interest over time in order to grow the investment capital exponentially. My goal is a return of 10-15% per year where loan investments are an important building block.

By using a service like Kreditbörsen (The Credit Exchange) where income is paid out to my account daily and automatically invested in new loans I receive great diversification. This is taken care of without me having to do a lot of work like having to evaluate which loans to participate in.

I recently participated in an interview at  Kreditbörsen where I spoke about our history and how the service works which you can read here.

If you save 100 each month for 30 years with a return of 10% per year and you obtain interest at least one time per month your capital will appreciate to 230,000. The chart below shows how quickly this grows in the end with the increased exponential effect.


When your capital is at 230,000 you are making almost 1,900 per month from interest.


It is never too late to start and the more capital you save the quicker the effect.