As previously reported here, in the short term, we’ll see plenty of digital token launches this year. In the longer term, the very nature of what we understand by money is changing. Interoperable programmable money, anyone? A think piece in Crowdfundinsider is over this one…
Money is the foundational layer of any economy. It provides a common means for payments, store of value and unit of account. These features allow all manner of transactions to take place and commercial activity to thrive. Money also underpins the ability to have financial instruments and financial services, including payment systems, lending and borrowing, and a fulsome capital stack, as well as insurance and derivatives. The ethos of Fintech is built on making all of these products and services more readily and easily available through technology. Money is the core technology here and it is ready for an upgrade so that it can operate directly on multiple platforms (interoperability) and become automated to a user’s specifications (programmability). As the many recent reports on central bank digital currencies (CBDCs) and stablecoins show, the capability to make interoperable and programmable money exists. There are of course many important issues to sort out, such as who controls the platform and how, what digital financial privacy looks like, whether monetary and fiscal policy will change, and whether to restructure payments and banking architecture. Nevertheless, the time for this evolution of money is now.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.