It's Individual Savings Account (ISA) season. Invest £20,000 before 5th April, and that money earns you income tax-free. If you invest in an equity fund, capital gain is also tax-free. In the world of saving and investing, it's an unmissable, open fiscal goal.
But what income will you get if you invest in a Cash ISA? The answer is disappointing.
The average return on Cash ISAs 1.03 per cent, according to research carried out by Money&Co. across the 233 ISA-investable cash accounts in the UK. The current rate of retail price inflation in the UK stands at 3 per cent.
The highest-yielding account required cash to be locked up for five years at a rate of 2.11 per cent. See a spread sheet of the top ten accounts, below.
The yields on offer fall even further once you move away from the top end of niche players and certain building societies. See below.
Nicola Horlick, CEO of Money&Co., comments: "If you take out the smaller building societies and just look at what the major banks are offering, it is a pitiful 0.5 per cent. The Money&Co. ISA yields 7 per cent after our fee of 1per cent, so if you have Cash ISAs sitting around, transfer them to us. A tax-free return of 7 per cent per annum is worth having."
We currently have one A-rated, fixed-term loan on site, with a fixed rate of 8 per cent and a term of three years; it is presently 21 per cent bid – and will close when filled. Other loans, including an A-rated loan from Seascape (five-year term, yield of 9 per cent) are expected on site soon.
In addition to new loan offerings, our secondary loan market, offering existing loans for sale by lenders, is available to registered Money&Co. users.
All loans can be held, tax-free, in an Innovative Finance Individual Savings Account, or Innovative Finance ISA.
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 an earlier article on security, access and yield.
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. Capital is at risk, once loaned.
Money Matters Cryptocurrency Podcast
Our communications director, Martin Baker, chairs a new Money Matters podcast discussion on cryptocurrencies – click here to listen to the 15-minute discussion. The panellists are Money&Co. CEO Nicola Horlick, Lib Dem House of Lords finance spokesman, Baroness Susan Kramer, and David Buik of investment Bank, Panmure Gordon.