Why The IFISA Holds The Key To Investor Returns In A Low Interest Environment

The Innovative Finance ISA (IFISA) is a tax efficient investment product which allows individual retail investors to grow returns by investing directly into growing British businesses on peer-to-peer lending and crowdfunding sites.

Crowd2Fund is one of just a handful of platforms which has received full approval from the Government, direct certification from the FCA before launching their IFISA product.

Current market volatility, record low interest rates and a generally low return investor environment has seen the IFISA become increasingly popular as savers and investors now more than ever look to be more savvy with their investments, and make their money do more for them. The recent interest rate cut to 0.25%, and the pound’s depreciation against a number of different currencies have led to traditional savings products not being the safe havens that they once were.
Additionally, whilst there are riskier investments on the market which can sometimes still offer decent returns, investors cannot always be so sure about their position on these opportunities due to a lack of transparency plaguing the wider investment market.

What Is The IFISA?

The IFISA is a new financial product introduced by the Government in the current tax year.

It allows UK individuals to invest up to £15,240 (in the tax year 2016/17) into qualifying debt based crowdfunding platforms.

Debt based crowdfunding platforms, like Crowd2Fund, allow for individuals to lend money directly to businesses seeking loan finance. Typically, the returns offered by debt crowdfunding are significantly higher than those offered by savings accounts and cash ISAs. Even more so via the handful of platforms like Crowd2Fund, whereby investing direct into businesses, disintermediating the banks and third party institutions, frees up more returns for the end investor – so everyone’s better off.

The average APR on Crowd2Fund is currently 8.7%. Conversely, the most recent best buy tables show the highest interest rates offered by savings accounts as being around 1.4%, with the top ethical cash ISAs being 1.1%

The IFISA is fast becoming a more attractive option as it enables investors to invest tax efficiently, with the interest accrued being tax free. This means that over time returns will increase even further due to your portfolio benefiting from compounding interest.

Potential For Large Returns If Risks Are Managed Effectively 

Crowd2Fund has been trading for over two years, and in this time no business has defaulted on their interest and capital repayments.

One of the reasons for this success rate is a result of compliance being at the core of Crowd2Fund’s model. The platform offers a best in class service, and performs thorough due diligence and credit checks on any businesses seeking to raise finance on the platform.

This sharp focus on compliance has allowed Crowd2Fund to become fully, directly FCA regulated upon launch, and is a key reason why they are one of a very select number of platforms to have been given the green light for the IFISA.

However, investors should be warned that investing into P2P and the IFISA can put their capital at risk. However, for any investor, the best way to manage risk is to diversify your portfolio and spread risk across a number of different asset classes. The ability to do so is inherent within Crowd2Fund’s model, which allows investors to invest in a range of different businesses, of different sizes and across different sectors – from ethically, socially led enterprises and retail, to media, advertising, hospitality and entertainment.

Ethical Investments

Crowd2Fund also provide investors with the chance to invest into a number of ethical businesses, as well as offering the chance of high returns to investors. Investing directly into businesses such as these gives investors ethical investors assurance and transparency around their investments.

Two recent examples of ethical investments include Silo, the UK’s first zero waste restaurant, and Tosh Products, creators of the world’s first biodegradable coffee cup.

Since its listing on Crowd2Fund, Silo has received substantial media coverage including appearances on television, alongside being featured in the Guardian and the Independent and Vice.

Open Your IFISA Today

Opening your free IFISA on Crowd2Fund is as easy as filling in a short form on the website – and it’s possible to transfer existing ISAs. Having launched their very own iOS powered app, you can even open your IFISA and manage your portfolio on the go from the click of a button.