P2P Portfolio Account Targets 7% Net Yield - Plus IFISA Process Guide
Hello. As we head into the week end, we thought it appropriate to remind our readers, users and lenders that Money&Co. has launched the Money&Co. Portfolio Innovative Finance Individual Savings Account.The account is managed by Bramdean Asset Management (an FCA-regulated fund management business). This allows investors to commit capital to an ISA and the loans are then selected by Bramdean. Income, of course, is received tax-free. The targeted return is on the portfolio is 8 per cent per annum gross. Our fee is 1 per cent per annum - and so the net target return is 7 per cent per annum."We are seeing a steady flow of transfers from Cash ISA providers as investors seek higher levels of income," says Money&Co. CEO, Nicola Horlick. "The exodus of capital from Cash ISAs reflects the continuing low level of interest rates. We did a survey of all Cash ISAs offered last year and the average rate being offered for 2017/18 was 1.03 per cent, with the large banks only offering 0.5 per cent. The fact is that older investors are struggling to find income-producing investments. They have an opportunity to find that income this year by committing capital to Money&Co.'s carefully vetted loan offerings. But before investing, it's very important that lenders acquaint themselves with the risk inherent in lending (even in property-backed lending). An independent financial adviser should be able to explain the simple mechanics."
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 (ISA), 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:
Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
Step 3: Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you've bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
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.