We’re heading for the mainstream. Here’s one reason why: Our lenders, in the four years we have been facilitating peer-to-peer (P2P) loans, have achieved returns of over 8 per cent. Inflation in the UK is running near the 3 per cent mark. Set that against the fact that cash deposits that qualify for Individual Savings Accounts offer an average return of 1.03 per cent, according to research carried out by Money&Co., and it’s possible to see why more and more savers and investors are turning to peer-to-peer (P2P) loans. Money&Co.’s P2P loans bring individuals looking for excellent returns on capital together with carefully vetted small companies seeking funds for growth.
For institutions, which emerged and contributed to capital inflows in recent years, the promise of yield was a strong proposition. While this primary benefit similarly holds true for self-directed retail investors, we are seeing a shift towards investors seeking stable yield and diversifying away from asset classes exposed to volatility. Aside from these core benefits, we explore other motivations and investment behaviours exhibited by retail investors in P2P.
We currently have two loan offerings available on site, with more in the pipeline. The two current offers are detailed below:
Webuyanyhome is 85 per cent funded, risk-rated A+ and UK property-backed. It has a fixed-interest yield over three years of 8 per cent.
Project Seascape is 22 per cent funded, risk-rated A, and secured against German property. It offers a fixed-interest yield of 9 per cent over a five-year term.
Don’t miss the Future of Fintech breakfast in London next month. Money&Co. CEO, Nicola Horlick, will headline the event, which will be hosted by Business Cloud editor, Chris Maguire.
A Process Guide To Innovative Finance ISA Investment
All loans on our site can be held, tax-free, via an Innovative Finance ISA (IFISA).
So here’s our guide to the process of getting hold of that tax break:
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 one of several earlier articles on security, access and yield.