In case you hadn’t noticed, it’s hot out there. And lesson 1.0 in today’s irony course is that the physical heat is a sharp contrast to the nuclear winter that the economy is facing. Rocketing energy bills are precipitating an inflationary and political crisis.
But, pleasingly, there’s a good news story to be told. How long will this good-news situation obtain? Anyone’s guess – meanwhile, our friends at Crowdfundinsider report:
As COVID lingered and the economy stumbled due to rapidly rising prices and geopolitical strife, investment in private UK firms continued unabated, hitting a record amount of £14.9 billion during the first half of 2022. These investments were led by the burgeoning Fintech sector that continues to drive significant capital formation as well as economic growth.
As outlined in a report by Beauhurst, investment in private firms during H1 2022 soared, delivering almost £15 billion in comparison to the prior 6 months (H2 2021) of £12.1 billion or an increase of 23%. In comparison to the first 6 months of 2021, investments rocketed by 37% from £10.9 billion.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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.