First off, there's a lot of money and people in the ISA market generally. HMRC statistics show that 10.8 million adults subscribed for ISAs in 2017/18 against 11.1 million in 2016/17 and 12.7 million in 2015/16.Second, many savers are realising that Cash ISAs are less attractive in yield terms than some alternatives (such as IFISAs). The number of Cash ISAs sold in 2017/18 declined by 697,000, but 246,000 more Stocks & Shares ISAs were sold. Despite the decline in the number of Cash ISAs sold during 2017/18, 72 per cent of subscriptions were made to Cash ISAs. This figure was 77 per cent in 2016/17.A total of £69 billion was subscribed to ISA accounts in 2017/18, a rise of £7 billion on the previous year.The average subscription to an ISA was £6,409, an increase of 15 per cent.
As at 5 April 2018, the value of all adult ISAs was £608 billion, a rise of 4 per cent on 2016/17. Cash ISAs represented 44 per cent of the total, a fall of 2 per cent on the previous year.Third, the IFISA, while still a small proportion of the overall ISA market, is growing rapidly. More than 31,000 IFISAs were sold in 2017/18 against 5,000 the previous year. £290 million was invested in IFISAs against £36 million the previous year. The average amount invested in an IFISA was £9,355 in 2017/18, which is way above the average for all ISAs (£6,409 is the overall average). It's clear that some savers are recognising the yield pick-up that is available.The fall in the number of Cash ISAs opened reflects the continuing low level of interest rates. Money&Co. 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 that older investors are at the forefront of the struggle to find income-producing investments.Some £267.5 billion remains invested in Cash ISAs and while we expect to see a significant increase in new IFISA investment, the peer-to-peer (P2P) industry will continue to focus all year long on persuading Cash ISA holders to transfer to an IFISA. Money&Co.'s IFISA has produced returns of over 7 per cent, net of charges and free of all taxes for our lenders.
A Process Guide To Innovative Finance ISA InvestmentAll 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:
Risk: Security, Access, YieldDo 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.