See one of our many earlier stories on how savers have suffered in recent years (The Great Savings Robbery).
A lot of the attention at the moment is going towards those individuals and families who are worried about making ends meet, and rightly so.
Even with the extension of the furlough scheme until October, and the (eventual) launch of the Self Employment Income Support Scheme, there are nonetheless millions of people across the country in a difficult situation, with yet more uncertainty ahead.
But there are also millions of households who have squirrelled money away over the years to build some savings, who don’t know whether to laugh or cry at the ‘returns’ currently on offer.
Since the start of the year, loveMONEY has polled you, the readers, a handful of times on whether your savings are currently beating inflation.
Really, this should be the minimum expectation for any engaged saver. If you aren’t beating inflation, then the value of the money that you have saved is essentially being eroded over time.
And yet less than one in five readers believes their savings are beating inflation.
Given the Consumer Prices Index measurement of inflation right now is sat at just 1.5%, you wouldn’t think it would be out of the question for most savers to find somewhere to keep their money that pays an inflation-beating rate.
Historical Performance And IFISA Process Guide
That figure is the result of over £23 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 2019/20 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.