Good Risk-Rated Returns In Today's Market - Plus 'How-To' ISA Guide


Outlook

What is a good investment in today's market? How do you judge the value of an asset? A high yield often means a high level of risk. The best investment is difficult to find and appraise.

The crowdfunding market is young, and like many infants, quite unruly. But the problems are being addressed – and the information essential to making an informed decision is rapidly becoming more and more reliable.

The yield on a loan varies according to the degree of risk assessed by our credit-analysis process. The algorithm and the oversight of the credit-analysis committee produce a fast-moving yet very efficient form of credit analysis that grades and processes loans in a short time frame. Money&Co. may not rate a borrower sufficiently highly to allow it to come to the platform – but the decision is made quickly. Broadly speaking, the higher the credit rating, the lower the yield.

The average gross return achieved by Money&Co. lenders in over three-and-half years is over 8 per cent.

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A Process Guide To Innovative Finance ISA Investment

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.

We currently have one offering on site - an A-rated loan with a fixed-rate yield of 8 per cent, 43 per cent filled. As we say above, more are due on site soon.

The ISA allowance for 2018/19 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 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.



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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.