Today, we offer a view of the industry from our cousins across the Atlantic. Hedge-fund database, Hedgeco, runs a blog suggesting that Fintech is both disruptive and collaborative.
"Instead of alternative finance trying to replace bank loans and venture capital, there is an emerging collaborative model where digital platforms are working alongside conventional investors.
"Several developments in the industry are pointing to this direction. First, there is an increasing number of investor platforms where the individual investors follow an accredited investor. This shows how alternative financing and traditional financing work together in harmony.
"Second, the presence of secondary markets for shares in private companies is paving the way for institutions to engage in the space. Media sources such as the Financial Times say that conventional businesses regulated like mutual funds have started investing in private companies like Pinterest and Uber.
Third, big institutions are also beginning to make use of peer-to-peer lending. For instance, the MetroBank in the UK announced that it would begin lending customer deposits via Zopa, a peer-to-peer platform. Goldman Sachs, an institution that is widely viewed as a pinnacle of conventional investment banking, announced that it will start lending via a consumer-driven, digital platform."
The last part of this blog incites us to comment. Yes, institutional participation in the P2P crowdfunding space is certain to increase. But we stick to the long-stated principle that the crowd - ie, individuals seeking a good return on capital from carefully vetted borrowing companies - should be kept in crowdfunding.
Current IFISA Offerings
All loans on the Money&Co. site can be held in an IFISA. We currently have two offerings – an A+ and an A-rated loan – with yields of 8 per cent. The ISA allowance for 2017/18 is increased from last tax year to £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. This return has been typical of our recent stream of A+ rated property-backed loans.
P2P & Risk
See this from a recent blog by our CEO, Nicola Horlick: "As with any investment, there are risks involved. We always take security for our loans, but it is still possible to lose money. Some of our loans carry more risk than others and we give them ratings of A+, A, B+, B and C+ to reflect how risky we believe that an individual loan is. The new loans that are currently on the site are rated A+ or A reflecting the quality of the security that has been given by the borrowers."
If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment.