As ISA season looms, John Goodall pitches the Innovative Finance ISA as a source of inflation-busting returns.
ISA season is upon us, and it is likely to be the most significant one yet for the newest iteration of the wrapper: the Innovative Finance ISA.
The majority of the UK’s biggest peer-to-peer lenders are now authorised, freeing them up to roll out ISA offerings to the mass market. Supply-demand imbalances precluded some from doing so for a while, but firms such as Zopa are now at last opening up their IFISAs to new customers.
Buy-to-let mortgage lender Landbay first launched its ISA just in time for ISA season last year. Now, one year on, CEO John Goodall (pictured) has put forward five reasons for investing in the wrapper.
Those reasons are: it's tax-free, it offers high interest rates, it offers an alternative means of investing, it offers access to a variety of asset classes, and it's a source of regular income.
While mostly self-explanatory, the “alternative way of investing” is worth highlighting. Goodall reminds us that peer-to-peer lending firms (the primary drivers of the IFISA) are opening up an entirely new asset class.
“The IFISA allows investors to put their money behind something that they may not have the capital to do outright. For example, the underlying fundamentals of the property market are supportive of strong returns, but the sector is hard to access for those who can’t afford to buy a property,” he wrote.
Research commissioned by AltFi in the run up to Christmas revealed that a “wall of ignorance” stands between the IFISA and mass adoption. While that research also revealed some cause for optimism, there is a great deal still to be done to raise awareness of the new tax wrapper to mainstream heights.
Find out more about the Innovative Finance ISA with our first IFISA Special Report.
The UK's oldest and best-loved conference for fintech and alternative finance insiders returns for its sixth iteration at etc.venues. We'll showcase the best of the UK's digital banking, online lending and digital wealth sectors through a series of uniquely in-depth discussions and presentations. Open Banking will be in full flight, just over a year on from its launch, and will be a central theme at the event.