It’s not just us talking about the Great Savings Robbery, even if others don’t use the same terminology. See this from the Daily Mail.
Thousands of savers are earning a pittance on cash languishing in more than 1,400 closed easy-access accounts.
Banks and building societies routinely launch accounts and withdraw old ones from sale. They then quietly reduce the once top-paying rates, in the hope savers don’t notice.
It means that if you haven’t checked your rate for a year or more, you may well be earning a lousy rate of between 0.3 per cent and 0.1 per cent.
In addition to quietly cutting rates on cash deposit accounts, many Individual Savings Account providers are making it difficult for consumers to transfer out into Innovative Finance ISAs, as we reported just days ago. Is this shockingly bad behaviour? You decide…
Historical Performance And IFISA Process Guide
That figure is the result of over £17 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.