Plans, Initiatives And Trillion-Euro Aspirations

We are currently living in a period of many initiatives and ideas, but few executed plans – and even fewer observable outcomes. The latest hope for dealing with the financial blight caused by Coroanvirus is a two trillion-euro ($2.2 trillion) plan for economic recovery, as floated by the European Commission, ahead of leaders’ talks on Thursday.

Bloomberg reports that “the European Union’s 27 heads of government will hold a videoconference to discuss the next steps in tackling the coronavirus pandemic after stringent lockdowns shuttered factories and halted travel, pitching the world’s largest trading bloc into the worst recession in living memory. The EU expects output to contract by as much as 10% this year, according to an official.”

Meanwhile, here’s some on-the-ground data that reveals what’s been going on amongst Eurozone savers, who deposited €43 billion in March 2020, marking the eighth month where net inflows exceeded 40 billion euros since February 2019, according to a report by Hamburg-based Fintech and open banking platform Deposit Solutions. Crowdfundinsider carries the rest of the tale.

The company’s research indicates that French savers deposited the most into their accounts in March 2020, (€19 billion), followed by Italian savers (€17 billion), and Spanish savers (€10 billion).  Deposit Solutions states that a total of €7,800 billion is currently deposited in eurozone banks, of which €750 billion has been added in the past two years.

According to the report, German banks hold the most customer deposits in the Eurozone, as the largest EU economy should come as no surprise. Approximately €2,400 billion was in savings but in March 2020, Germany was one of the few eurozone countries where people held less money in their accounts than the previous month – a decrease of €10 billion or 0.4 percent.

Deposit Solutions said this phenomenon was similar to 2008 following the demise of Lehman when German savers pulled cash out or o.4 percent (€6 billion). At that time, in the following three months Germans transferred many times this amount (€70 billion) back into their accounts.

In other eurozone countries, however, there are differences between 2008 and 2020. In September 2008, there were also cash outflows from deposit accounts in the Netherlands, France, and Spain. In March 2020, however, all three countries were among the largest net contributors.

The report states that the COVID-19 crisis, as indicated in March 2020, is not a repetition.

Net deposits into deposit accounts fell steadily in the months before September 2008 and reached their lowest point with the Lehman bankruptcy. In 2020 during the Coronavirus pandemic, deposit growth has remained stable both before the crisis and at the time of its outbreak.

Historical Performance And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). 

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.

  • Money&Co. has been lending for over 5 years and has facilitated over £23 million – with only two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.

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:

  • 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 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.


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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.