The FinTech sector was originally a grass-roots movement. The people, led by geeks, were doing finance for themselves. We think here of the early days of Lending Club over a decade ago. This was a peer-to-peer lender doing what individuals wanted and small businesses needed. All long before the advent of investment banks and plans for IPOs.
FinTech assets as a retail investment – and again we’re thinking of Lending Club and its IPO – have not worked well for individual investors. Well, maybe things are set to change. Certainly, Eileen Burbidge, the figurehead of the investment vehicle described below is well thought of. Let’s hope it works out for the little people, for once.
An additional tranche worth at least £350,000 will now be made available for retail investors, launching on Seedrs at the end of the month.
“We are throwing our doors open to a much wider range of investors in this unique collaboration with Seedrs as we look to diversify our investor base and increase access for investors who might be interested in partnering with us,” said Burbidge.”
Latest Loan Offer
The latest loan offer on site has an A-rating and an annual rate of interest of 7 per cent. The term of the loan is 12 months. The offer, just launched, is now 13 per cent filled.
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 2020/21 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.