One thing guaranteed to drive financial watchdogs mad is unfair investment comparison. It’s simply wrong to compare high-yielding products with inherent risk to bank deposits, which are safer but typically have much lower returns. Nevertheless, some operators do it – knowing that they ought not to – very frequently.
At Money&Co., we offer carefully vetted loans with high yields averaging over 7 per cent gross. Given the risks of lending, we argue that we have a remarkably good track record – see below for our excellent history of low delinquency and default. But bear in mind, our carefully vetted loan offerings carry risk – which must be appraised and understood before investors commit capita. See warnings at the foot of this article and elsewhere on the site.
Bucking the trend towards low interest rate offerings by other banks, digital bank Monument has launched new 12-month, 2-year and 5-year savings products that offer rates of 1.8, 2.05 and 2.4 per cent respectively.
Aimed at the bank’s core client-base of “mass affluent” individuals, the minimum deposit threshold is steep – at £25,000 at any one time – and funds cannot be accessed until the end of the term.
The bank claims its new savings products, which are only open to UK residents, are the highest paying in the market for this selection of fixed-term durations.
The news comes shortly after the bank announced its entry into the savings market and launched its app in December last year.
Having received its full banking licence in November 2021, Monument claims it is the first neo-bank specifically tailored to meeting the demands of the UK’s 4.8m “mass affluent clients”, including entrepreneurs, property investors, and others.
Using cloud and microservices technology, enabling a plug and play approach, Monument helps its clients save and grow their wealth – estimated at £6trn.
Loan Auction Latest
All these loans can be held, up to £20,000, as Innovative Finance Individual Savings Accounts (IFISAs). IFISAs are explained in more detail below. Here’s the latest from the auction room:
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.