LandlordInvest finds IFISA returns 6 times more than cash ISA

LandlordInvest research has found that an Innovative Finance ISA (IFISA) yielding 10 per cent will return six times more than cash ISAs over a five-year period.

The peer-to-peer property lender said that its investors have, on average, earned in excess of 10 per cent every year. For the simplicity of its research, it cited an average cash ISA return of two per cent over the five-year period.

If someone invested the full annual ISA allowance of £20,000 for five years, LandlordInvest found that the cash ISA balance would be £22,082 and the IFISA balance would be £32,210.

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“The IFISA closing balance in year five is over £10,000 larger than the cash ISA,” said LandlordInvest in a blog post on its website. “IFISA’s return is 61.05 per cent over the five-year period whilst the cash ISA’s return is 10.41 per cent over the same period.”

The P2P lending platform also compared returns if someone invested a new £20,000 into their ISA each year of the five-year period – totalling £100,000 – alongside the compounded interest.

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In this case, LandlordInvest found that the IFISA closing balance in year five, of £134,312, is over £28,000 larger than the cash ISA at £106,162. The IFISA’s return is 34.31 per cent over the five-year period whilst the cash ISA’s return is 6.16 per cent over the same period.

“Many investors are not comfortable with the volatility of the stock market and will opt for the contractual cash ISA rates or relative predictability of an IFISA,” LandlordInvest said. “But the returns from these can differ greatly, particularly for the longer term saver or investor.”

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