Tag: ISA

ArchOver launches Innovative Finance ISA to UK investors

Author
Angus Dent
Date

The ArchOver IFISA provides tax-free P2P lending service to increase investor ROI

London, UK – 25 May 2018 – ArchOver, the peer-to-peer (P2P) business lending platform, is helping British investors make the most of their annual tax-free allowance with the launch of its Innovative Finance ISA (IFISA). ArchOver’s IFISA service offers investors premium credit control and security, proven by ArchOver’s no-loss rate. It allows investors to invest directly in successful businesses, earning tax-free interest of up to 10% p.a. – far more than the average return on a cash ISA.

“We are excited to be launching our IFISA, a significant new string to our bow which will help our Lenders to really make the most of the attractive rates we have on offer”, said Ian Anderson, COO of ArchOver. “Our goal is always to work to our lenders’ and borrowers’ needs and provide them with the best service possible. Existing lenders will be able to plug straight into the IFISA without needing to re-register, and new lenders will find the platform simple and easy to use.

“This launch is an important part of the ArchOver story, as we continue to build an industry-leading investment platform that combines the best security with highly competitive interest rates.”

The UK government introduced the IFISA in April 2016. It allows investors to earn interest on peer-to-peer investments without having to pay tax on their earnings. According to recent research by ArchOver, the service is proving popular: over half (54%) of UK investors would put their cash into an IFISA if they had the money available, with nearly two thirds (63%) recognising that it would offer a higher return on their savings.

CEO Angus Dent commented: “There’s a strong market out there for the IFISA, and we’re excited to get stuck in. Potential investors do need to be aware that the IFISA doesn’t work like a cash ISA, – investment capital is always at risk – so it is essential that you work with a trusted and established partner.

“With our proven history of strong credit analysis and managing loans with extremely low default rates, we’re well placed to help people invest wisely and get the yield that they want on their cash.”

The ArchOver IFISA is now available to all existing and new lenders. Users will be able to invest their ISA allowance in all of the projects on the ArchOver platform, earning tax-free interest with a minimum investment of £1,000. Investors can choose from a range of security types depending on their needs, including investment models that provide protection measures like credit insurance, dispute resolution, controlled accounts and all-assets charges with Companies House.

The launch of the ArchOver IFISA comes after a strong twelve months for the company, including the launch of the P2P industry’s first R&D Advance loan for claims greater than £100,000. ArchOver is backed by the Hampden Group, and recently celebrated the milestone of £65 million total funding facilitated. The new service broadens its lender offering, cementing its position as the leading choice for investor security and control.

Seven in 10 savers want strong ROI but majority fooled by low-return ‘safe’ options  

Author
Angus Dent
Date

Majority of UK savers risk losing money in real terms, warns ArchOver.

According to a study by peer-to-peer (P2P) business lending platform ArchOver, UK savers are seeing their hard-earned cash depreciate at the hands of high inflation and low interest, despite 71% claiming that interest and ROI are top-of-mind.

The Next Gen: Investors and Savers report explores consumer attitudes towards risk and investment. The survey of 2,000 UK adults revealed that two thirds (67%) would call themselves ‘savers’ rather than ‘investors’, preferring a cautious approach to money and putting aside £191 a month on average.

Most are saving for a specific reason, like the reassurance of having a ‘rainy day fund’ (66%), financing a new car or a holiday (29%) or paying for retirement (27%). But in a high-inflation, low-interest economy, those goals will stay out of reach if savers leave their cash languishing in savings. They must find other avenues to make their cash work harder at the same time.

“People like to go with the status quo, and they’re attracted by the protection you get with traditional savings accounts,” said Angus Dent, CEO of ArchOver. “However, leaving your money lying around in a savings account for years on end is not going to help people reach their goals in the long-term. In reality, savers need to diversify their portfolios and look for alternative ways of making their money grow that balance security and opportunity.”

More than half (57%) of savers still associate savings with “security” and the majority (83%) are relying on traditional savings accounts to help them build their nest eggs, followed by ISAs (43%) and pension funds (33%). They show a preference for services where there is a level of financial protection, even if it comes with a minimal level of interest. As a result, their return over a period of years could end up being negative in real terms as inflation continues to outstrip interest.

A cautious mindset is also dominating people’s financial decisions. If they inherited a large sum of money, the majority (46%) would deposit it into a savings account and three in 10 (30%) would put it in an ISA. Less than one in 10 (9%) would consider using a large sum of money to invest in stocks and shares. Meanwhile, only 4% are currently using peer-to-peer (P2P) lending or crowdfunding, despite typical annual returns of 7-8%.

“Savers like knowing that the service they are saving into is fully regulated. Many take comfort in knowing their money is protected by official bodies and that they’ll be contacted if there’s a significant risk to their cash,” added Dent. “But that cautiousness is at odds with what savers claim to be thinking about, which is seeing their money grow. If savers are to achieve their goals, there needs to be more education available on the options that could help them achieve higher returns with a relatively low amount of risk. That means helping them better understand how to identify which services are being transparent about potential risk factors, prioritise security and allow savers to control how their money is being used.”

 

 

Telegraph Hub: Eleven Top Trends In Managing Your Money

Author
Angus Dent
Date

ArchOver has teamed up with The Telegraph to produce a series of articles to help educate investors on the UK Peer-to-Peer Lending sector. In a brave new economic and financial world, understanding different ways of managing your money is key to success. Peer-to-Peer Lending can help both individuals and businesses navigate a post-Brexit world, with the reassurance that it is a secured and effective method of protecting and growing your money.

From chatbot banking to peer-to-peer lending, this year has seen some major shifts in the way people are taking care of their money.

Thanks to landmark events such as the Brexit vote and an interest rate cut, as well as the constant evolution of new technology, 2016 has already seen some major changes in how we manage our money. Here are 10 of the top trends.

Power to the people

The disintermediation revolution that swept through media and publishing has come to financial services. More people are taking control of their money and their investments, and, in a few years, we’ll look back on paying fund managers, independent financial advisers and the like as simply ludicrous. This of course, is a technology-based revolution – one led, incidentally, by a 300-plus-year-old institution, the Bank of England. “Where music and publishing have led, finance could follow,” Andy Haldane, the Bank of England’s chief economist, has said.

Smartphone money management

Apps for banking and paying continue to grow in popularity. Barclays mobile payment service Pingit hit its millionth business transaction in January this year. Furthermore, according to the Centre for Economic and Business Research, some 20 million adults will use their mobiles to pay for goods and services by the end of the decade, according to the Centre for Economic and Business Research. At the other end of the scale, traditional bank branches have continued to close – there have been 546 announced in this year alone.[1]

Peer-to-peer lending and crowdfunding

The launch of the Innovative Finance Isa, which allows some crowdfunding and P2P investments to be held in the tax-free wrapper, puts this form of investing firmly in the spotlight – although because of delays in processing authorisation applications by the FCA, it may take longer than originally anticipated before many crowdfunding and lending platforms are actually available as ISAs.

Add to this the cut in Bank Rate and it’s clear that more people may be considering this as a way of earning income from their savings. Always check the security provided and how liquid this security is; the best platforms are clear on this and provide security on highly liquid assets – although unlike putting money in the bank it is not risk-free, so you may want to seek advice.

Global investment

Post-Brexit, the UK stock market has become a less popular place to be. The latest figures from the Investment Association[2] show that £1bn came out of UK equity funds in July – whereas global funds saw an increase in sales, suggesting that investors are looking further afield for returns.

Premium bonds

Sometimes the old ones are the best. The Government’s National Savings & Investments (NS&I) hiked the maximum amount of premium bonds that savers can hold from £40,000 to £50,000 in June 2015.

The result? A £14bn increase in premium bond investments to £61.8bn in the 12 months to March. The average return on the bonds is just 1.25pc, but with rates for bank savings at record lows, many savers are hoping to get lucky.

Glistening gold

Uncertain times encourage many to buy gold, which is seen as the ultimate safe haven. Economic events including the Brexit vote saw gold investors nearly double their money in the first seven months of 2016.[3]

Biometric security[4]

Fed up remembering all of those passwords and PIN numbers? They’re already becoming a thing of the past as banks take a more personal approach. Barclays has become the first bank in the UK to use voice- recognition software to verify identity for telephone banking, with HSBC and First Direct expected to follow.

New bank Atom is also offering facial-recognition software for customers, with RBS and NatWest allowing customers to log in to their banking apps with fingerprints.

Fixed-income funds

With the Brexit vote leading to uncertainty over the future, many are turning to fixed-income funds over equities for perceived security. The Investment Association said that corporate bonds, strategic bonds and global bonds were three of the five most popular sectors in July.

Tax-efficient lodgers

Sites such as AirBnB, which allow you to rent out rooms or your home as part of the ‘sharing economy’, have continued to grow in popularity after an increase in the Rent a Room scheme from April allowed all taxpayers to rent out a room for up to £7,500 a year free of tax.

Chatbot banking

With Facebook Messenger opened up to third parties, many banks are already trialling chatbots across the world who will communicate with you through your messaging platform. By the end of the year you might be able to pay your friends and check your balance through a chatbot on Messenger.

Negative savings rates

Are you paying to bank on the high street? Perhaps not yet, but the 2016 interest rate cut to 0.25 per cent means many of us are no longer receiving any interest on our current accounts. With Royal Bank of Scotland already charging some business customers for holding cash on deposit, the spectre of us all paying to bank is perilously close.

[1] thisismoney.co.uk
[2]theinvestmentassociation.org
[3] ft.com
[4] telegraph.co.uk/personal-banking

Perilous Times For Pension Pots… Not Necessarily

Author
Angus Dent
Date

A choir formed of politicians, journalists and disgruntled employees continue to call for Sir Phillip Green to get his cheque book out to plug the £700m pension deficit at BHS. The once well regarded retail magnate sold the now bust British department store for £1, but not before he and his shareholders paid themselves more than £400m in dividends. It is unlikely that Green – worth an estimated US$5.7 Billion – will sort out this mess; and so blameless pensioners who can ill afford to lose a pound will be left out of pocket. Sadly, this tragic story is no anomaly; 130,000 Tata Steel employees stand to lose a quarter of their retirement income. The devastation that this will inflict on families, from Tyneside to Port Talbot, is huge and will last at least a generation.

Corporate irresponsibility can cripple pension funds, however it is the Bank of England’s latest move – cutting interest rates and beginning a new £70bn quantitative easing programme – that will cause pensioners considerable pain. By buying gilts – instruments pension schemes use to value their liabilities –  the BoE is forcing yields down. “The UK’s benchmark 10-year borrowing rates touched a new low of 0.51% last week; while short-dated gilts due in March 2019 and March 2020 briefly traded below zero” (The Financial Times, 2016). As a result, we are now running a £1.3trn deficit on private pension funding, with 56 FTSE-100 firms in arrears with their defined-benefit pension schemes (MoneyWeek, 2016).

 

bond yield plunge

(Source: The Financial Times, Aug-10, 2016)

 

According to David Blake from London’s Cass Business School, “The Bank of England clearly believes that the effect [of low interest rates] on our pension system is acceptable long-term collateral damage”. Indeed, until monetary conditions normalise, the outlook for retirees will remain gruesome. There is, however, a faint glimmer of hope. A beacon around which pensioners and savers alike can rally to make impressive returns. P2P.

pension pot

Thanks to the ‘freedom and choice’ introduced to Britain’s pension systems, you can invest in P2P through a Self-Invested Personal Pension (SIPP) and soon via ISAs. If you’d like to take control of your pension pot, earn above average interest, and enjoy substantial tax benefits – all the while helping great British businesses grow – investing through a SIPP one of the P2P platforms could be for you. Rates of interest vary as do levels of security, careful research will indicate which platform and it could easily be more than one best suits your needs. Next week ArchOver will release a step-by-step guide, detailing how SIPPs work, who can set one up (anyone), and how you can use this flexible investment product to invest in P2P.