One of the recurring theme in this News section is the rise if the robots in the world of financial advice. The latest snippet come from Goldman Sachs, whose relaunch of its savings account, Marcus, recently featured here (a relatively attractive rate for a saving accont of 0.5 per cent AER compares to today’s newly released retail price inflation figure of 0.7 per cent).
The automated feature, which is already available to the bank’s American customers, will give users a tailored portfolio of stock and bond ETFs, which will be dependent on the customer’s risk level and timeline.
Marcus will handle the day-to-day handling of the portfolio, monitoring it daily and reworking the account to keep it on track with the individual customer’s goals.
An account can be opened with $1,000 in the US and is charged an annual fee of 0.35 per cent, although it’s not known how much UK customers will need to open an account with the American bank’s fintech arm.
Unlike other popular trading and investment apps, Marcus’ investment product will not let users buy and sell individual stocks, rather they will be able to invest in diversified portfolios.
The news of the new investment-friendly account comes just a week after Marcus reopened its virtual doors to UK savers after it stopped signing up new customers in June 2020 following a surge in demand.
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.