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.

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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.