Those of you that follow Tribal Fi will know I'm a great fan of social side hustling, as in putting my time and money into ventures which not only pay a great return but also make some kind of positive impact on the universe to reach a win win scenario. What could be more perfect than that? I get to use my money to improve somebody or something and still get that money back at some point as well as the additional income I need to fund the things I want to do rather than work the 9 to 5.
If you haven't followed my blog you can read my story here but to give you the turbo version; at 43 I quit my job because I had saved enough money that as long as I make 5% + inflation each year investing or working at things I enjoy, I should hopefully never have to work a "Normal" job again. Having moved from the UK to South Africa to reduce my cost of living to speed things up, the inflation rate here is around 4.5% so as long as all of my savings are put towards things that give a return of 9.5%, I'm able to wake up without an alarm until the morning that I don't wake up.
About 6 months ago I discovered another opportunity to put a chunk of my hard-earned away somewhere that ticks my boxes of returns higher than 9.5%, is diversified from most of my other investments or side hustles and in my opinion (which is built on common sense and life-experience rather than academic qualifications) is a relatively low risk.
It started after I'd discovered Fedgroup which specializes in "Impact farming" which means you buy an asset and a farmer manages it for you and you essentially share the profit. You provide the money, they provide the labour, someone gets a job and you get a small but relevant income from each asset. I bought Bee Hives, Blueberry Bushes and Solar Panels. You can read more about that here.
It was the Solar panels though that got me most interested and this was because they pay the income monthly rather than bi-annually. This appeals to me a lot as my ideal plan is to put all my savings into lots of income generating ventures and effectively offset my entire living costs, think of it like a Money Producing Generator that you buy and then it spits out a wage every month without you really doing anything other than keeping an eye on it and giving it a service every now and again.
So as Fedgroup assets are not always available and sitting waiting for them to become available means your money is sitting doing nothing and therefore not making you anything, I got to some serious Googling looking for other companies that do a similar kind of thing or frankly anything that that pays a monthly income in excess of the target 9.5% (I'll be honest, the social element is a massive bonus but it's not a hard and fast requirement, survival comes first). I found a few but they either looked a bit amateur or just looked a bit too suspect for me to be willing to hand over what needs to be a fair chunk of change to make it really worth while.
Then I found The Sun Exchange, and guess what? It's just down the road from me in Cape Town! What's also a massive bonus is you can invest from anywhere in the world so if we ever decided to leave South Africa or go travelling for a year, no problem, portable side hustle. The concept is pretty simple but is just really well thought through, has a strong social conscience, is community led and the founder and CEO (Abraham Cambridge) is a leading expert in his field. Tick, tick and tick for my personal plan.
To explain what The Sun Exchange is is pretty easy, they are essentially a Solar Energy Leasing Company. If you have a business that has high energy costs, they come and fit Solar Panels on your roof and then you buy the electricity it produces at a cheaper rate than before from The Sun Exchange, they get paid back for their kit with interest. Simple.
The cleverness starts that they don't purchase the equipment, you do. But in small pieces. You buy solar cells via The Sun Exchange and they fit them. You are then the owner of those cells and you lease them to the business on which they are fitted. You receive a monthly rental per cell which you can either buy more cells in the same or other projects or take the money as income. The solar panels of a life of 20 years so you receive a rental payment every month for 20 years for every solar cell you buy. The Sun Exchange, find the locations, broker the deal, do the paperwork, fit the kit and manage the rental, you essentially have to do nothing beyond buying your cells and transferring your rental income to your bank account from your Sun Exchange online wallet.
It's kind of similar to the Buy-To-Let property concept where you buy a house and rent it out (but in my opinion without the hassle). With The Sun Exchange, you are the landlord, The Sun Exchange is the letting agent and the business is your tenant. And much like Buy-To-Let, you have a contract (which in this instance is 20 years) and if there's a problem with the kit the Letting Agent fixes it (and at no cost to you as it's insured or under warranty) and the letting Agent takes a small fee for providing the service from your rental income (and they also own the rest of the Solar equipment like inverter, wiring and batteries so they also receive rental for that). In this instance though, the tenant does have the option to buy the solar equipment at any point and you receive the fair market rate for it and keep any rental you've been paid.
Having learned all of this and before making any kind of purchase, my immediate concerns were three fold; What if the building burns down, a tree falls on it or the solar equipment gets stolen? The answer is that a portion of the rental (about 1%) goes to paying for maintenance and insurance so minimal risk there. Second question was what if the business with the solar panels goes bust or can't pay the rental? The answer is that you still own the equipment so it can be moved to another location. And then the final question was what if The Sun Exchange goes out of business? The answer to that is firstly, you still own the equipment so you could sell it or continue to rent it to the business in your own capacity. Secondly, The Sun Exchange has been around since 2015, Has produced over 2,000,000 kilowatts of Solar Power, has over 700,000 solar cells operating and has over 15,000 members in around 160 countries. Nothing of course is risk free but this left me feeling comfortable enough to buy some solar cells.
As you get to understand The Sun Exchange you start to see why it works, it's well thought through. The locations for the projects are buildings and business that have been around a long time and should continue to be around long after the life-span of your solar panels. These include Schools, Shopping Malls, Retirement Homes, Veterinary Centers and Special Care homes, they even have started supplying Wine Farms in South Africa which are mostly between 200-300 years old. Basically the buildings and business that are least likely to be disrupted.
The second cleverness comes in the location, they've begun in South Africa (despite the fact the CEO is British) as it's one of the best places in the world to harvest the sun. They have just received funding to start expanding across Sub-Saharan Africa which opens up opportunities in places like Namibia which is, I believe, the best place on earth to put a solar panel. The African continent is vast, in need of better energy solutions and as sunny as it gets.
The third thing I was impressed by is that whilst I can purchase my solar cells in South African Rand because I live here, that's not easy if you're in say the UK or the US. To make the Sun Exchange available to literally the entire globe, they accept Bitcoin as a means of purchase and you can choose to have your rental converted to Bitcoin and sent to you to convert to your native currency. This is really clever and although not everyone trusts cryptocurrency, this is where it absolutely shines. You can buy your cells in effectively any currency by purchasing Bitcoin, buy your cells, and the day your rental gets paid into your Sun Exchange Wallet, you can transfer it to yourself and convert back to your currency, or you can leave it in your Sun Exchange wallet to invest when you're ready, it gives you great flexibility and appeals to me because if Mrs H and I decide to move to another country I can just switch my rental to Bitcoin and convert it in whichever country and currency we find ourselves in.
In terms of downsides, there aren't many but you do need to understand what your signing up to. When you buy cells, you have bought a physical asset and the money is tied up in that asset, it's not investing and it's not like a share you can just sell if you need the cash. There is plans for a secondary market but right now if you needed to get your money out quickly for some reason, you need to find a buyer yourself (which is not so difficult as the community has an active group on Telegram) . The other thing to understand is while the returns over a lifetime are great (I'll get to that in a minute) your first few years are just getting your money back, you might not start making a return until maybe year 8 or 9 so you do really need to think long term. However, you do get your monthly income and if you use that to purchase more cells, that income grows. The final thing to be aware of is the monthly payments get bigger as time goes on due to inflation so your initial payments are a small amount of what you originally bought your cells for. This is just the way it works and you make most of your returns in the last 10 years so you should make sure you don't think of it as a flat line payment every month for 20 years. it's small at the start and big at the end. Think of it like putting the rent up for your tenant every year.
So if you've read this far and still have some interest, you're probably gagging to know what the returns are like. Well for me, that was the closer. At the time of writing, I have now purchased 7,670 cells at a rough average cost of around R85 / $5 / £4 per call which means I've spent almost R600,00 / $35,000 / £28,500 on Solar Panels in the last 6 months. The average return on those panels is around 11.6% per year, way in excess of the 9.5% I need. You need to bear in mind you can't predict the weather but I'm please to say overall, my returns are ahead of forecast so it's possible I'll go higher than 11.6% but it's way too early to make that kind of prediction. As long as the sun continues to rise over South Africa, I can expect a decent income from that investment. As any human would, I've calculated how much I should get back in total from my solar side-hustle and that number is a whopping R2,000,000 / $117,500, £95,000. For me, that will work perfectly. I fully intend to re-invest all of my rental income into future projects at this stage and I would really like to have the majority of my pension pot in these kind of social ventures so until similar but diverse options come along, I'll continue to invest in The Sun Exchange as away of reducing my exposure to the stock market.
I'm sure I don't need to explain the Social Impact element of this side-hustle to you, using solar power as opposed to fossil fuels like gas and coal is infinitely better for the planet but also it's worth remembering it's creating jobs and skills in the renewable energy sector as well as reducing costs for those noble institutions like schools, and care homes so I'm pretty sure the money they save from working with The Sun Exchange and by association as the solar panel owner, me, more money will be going to education and quality care. I feel good knowing that.
If you'd like to check The Sun Exchange out, you can find them here, it's free to register and you don't even have to register to view the available and past projects to see what they're all about. In terms of full disclosure and transparency, TribalFi is reader powered and as a Sun Exchange member I may receive a commission if you go on to purchase cells but this has no cost to you in any way. In fact, by linking from Tribal Fi to The Sun Exchange and signing up, you will be given a free solar cell so that you can try before you buy at no-risk to you. You're welcome!
Regardless of any of that, I would not recommend anything to my readers that I wouldn't take part in myself, and as you can see, I liked The Sun Exchange so much I voted with my wallet 600,000 times and I'm still going. However, as everyone's situation is different and I'm not a financial adviser, I suggest you take the appropriate financial advice before spending money on any kind of business opportunity or investment.
Until next time, keep living.