With a new loan waiting in the wings, our latest loan offering is A-rated and property-backed with a fixed-rate yield of 8 per cent, and a term of five years. It’s proving popular, and is currently 61 per cent filled. More news soon…
Meanwhile, the recent news of a base rate rise of 0.25 per cent to 0.75 per cent offers little comfort to income-hungry savers. The uplift will take time to trickle through to savings accounts – if it ever does. This Is Money puts it this way:
It is no secret that Britain’s army of savers have had a rough time of it in recent years, with decent returns becoming increasingly difficult to obtain.
The rate rise today gives a small nugget of hope for those who are facing up to a best buy easy-access account paying just 1.4 per cent and top two-year fix of 2.2 per cent – below inflation of 2.4 per cent.
James Blower, of independent website Savings Guru, said: ‘Sadly, we expect the rate rise to make little difference to savers. It is competition and demand from new savings providers – there have been almost 40 new entrants since 2009 – which is driving savings interest rates.
‘We see little reason why this will change, regardless of the base rate rise, as it has been completely out of sync with it for several years.’
Money&Co. Lenders’ 8 Per Cent Yield
Our lenders have achieved average returns of over 8 per cent on the more than £12 million facilitated by Money&Co. in the past four years.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (ISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income.
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:
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.