10th July 2024
As the tax year approaches its end, many investors are considering how best to optimise their savings and investment strategies. For those looking for higher returns and the chance to support UK businesses, an Innovative Finance ISA (IFISA) is a standout option. But what exactly makes IFISAs so different from traditional ISAs? The answer lies in the Five ‘I’s: Investment, Interest, Illiquid, Involved, and Interactive.
1. Investment – Not Savings
Unlike a Cash ISA, which functions as a savings account, an IFISA is an investment product. By investing your money directly into UK businesses through peer-to-peer lending platforms like Crowd2Fund, you have the potential to earn higher returns—often between 12% and 18%, depending on the investment grade.
IFISAs also eliminate the “middleman,” allowing investors to connect directly with borrowers. While this model offers higher returns, it’s important to note that it carries more risk than savings accounts.
2. Interest – Not Equity
In a Stocks and Shares ISA, returns are generated from equity investments, which are highly dependent on market performance. By contrast, an IFISA generates returns through interest on loans.
This structure allows investors to lend directly to businesses and receive monthly repayments with interest, making it a predictable and stable income stream for those who diversify their portfolios effectively.
3. Illiquid – Not Liquid
One of the key differences with IFISAs is that they are less liquid than other ISAs. Investments are typically locked in for a fixed term, and early access to funds may depend on selling your loan to another investor.
Platforms like Crowd2Fund offer tools such as The Exchange, where loans can be bought and sold between investors. While this provides some flexibility, access to your capital is not guaranteed.
4. Involved – Not Passive
With an IFISA, you take control of where your money goes. Unlike pooled investments, where decisions are made for you, IFISAs allow you to select the businesses you back.
This hands-on approach means you can align your investments with your values—whether that’s supporting green technology, social enterprises, or innovative startups. Crowd2Fund even allows direct interaction with businesses, so you can ask questions and track their progress.
5. Interactive – Not Stagnant
IFISAs are powered by FinTech platforms designed for accessibility and transparency. With tools like Crowd2Fund’s mobile app, you can manage your investments, monitor performance, and reinvest repayments at your convenience.
This level of interactivity makes IFISAs ideal for entrepreneurial investors who value flexibility and a modern investing experience.
Why Act Now?
The current tax year ends on 5th April, and any unused ISA allowance of £20,000 cannot be carried forward. By subscribing to an IFISA or transferring funds from underperforming ISAs, you can:
- Secure tax-free returns.
- Diversify your portfolio with investments in UK businesses.
- Align your money with causes and industries you believe in.
Take the First Step
The Five ‘I’s of IFISAs highlight the unique benefits of this innovative investment option. If you’re ready to make the most of your ISA allowance and start earning tax-free interest, there’s no better time to act.
Register with Crowd2Fund today and explore the possibilities of an IFISA. Support British businesses, grow your wealth, and make an impact—all before the tax year deadline.
Capital at risk. Tax Treatment may vary.
