Regular visitors to this News site and its related blogs will know we take a keen interest in cryptocurrencies and their digital currencies (which are not cryptocurrencies) Central Bank Digital Currencies (CBDCs). Here’s a recent blog on what we think CBDCs are a coming thing, like them or not.
So we were interested in what looked like an early move by the Swedish central bank, The Riksbank, to launch its own CBDC, the eKrona. But the news reports we read didn’t stack up. First off, CBDCs are not decentralised currencies as described in the report – they’re controlled by a central bank, not an independent algorithm – a key identifier for any cryptocurrency. Moreover, the website links didn’t stack up – though they looked OK. And then the report we read said it used journalists to test the purchase process. That’s not what journalists do.
Finally, we searched ‘eKrona scam” and came up with many warnings. The simple truth is, that while crytpos and digital tokens may be an important component of money’s future, there are lots of scams out there.
We’re not even going to reproduce the scam text – it’s misleading and dangerous. Caveat emptor hardly comes into it.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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 2020/21 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.