Tomorrow, we’ll be taking a closer look at the pros and cons of investing in equity, specifically start-ups seeking share capital via crowdfunding. We often look at equity crowdfunding, as it’s seen by many as an alternative (though it’s not an either/or alternative) to crowdfunded debt. This site facilitates investment in crowdfunded debt: we bring together individuals seeking excellent returns on capital together with small companies seeking funds to grow.
The latest tranche of property-backed loan on offer is 82 per cent funded at the time of writing and has received an A-rating from Money&Co.’s credit team. The loan offers a fixed-rate gross yield of 8 per cent, and has a duration of five years.
A Process Guide To Innovative Finance ISA Investment
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 2018/19 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.