How to invest in an IFISA with less than £1,000
Each year, retail investors can shield up to £20,000 within an Innovative Finance ISA (IFISA). However, according to the most recent statistics from money.co.uk, the average person in the UK has just £17,365 in their savings and investment accounts, while 34 per cent of UK adults have less than £1,000 saved.
In order to maintain a diversified portfolio of savings and investments, it is generally recommended that investors place no more than 10 per cent of their money into peer-to-peer lending and crowdfunding platforms. This means that the average retail investor can only really afford to invest approximately £1,700 into an IFISA wrapper each financial year.
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According to the latest IFISA research by Peer2Peer Finance News, there are 41 IFISAs currently open to retail investors for the 2022/23 tax year. But 10 of these platforms require a minimum IFISA investment of between £2,500 and £20,000, placing them out of reach of the average investor.
However, that also means that the vast majority of IFISAs are available to investors who can meet the £1,000 investment threshold.
Our research has found that there are 11 platforms which have a minimum IFISA investment threshold of £1,000; five which have a £500 minimum; five with a £100 investment minimum; three with a £50 minimum; one with a £25 minimum; three which are available for investments of £10 and above; one with a £5 threshold and two with a £1 minimum.
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For the average investor seeking to earn IFISA-quality returns within a diversified investment portfolio, there are plenty of options.
For investments of £1,000 or more…
If you have £1,000 or more to invest in an IFISA this year, there are 31 platforms to chose from, 11 of which have a minimum investment requirement of £1,000. These include a selection of property-backed lenders and consumer lending platforms, with target returns of between four and 15 per cent.
Consumer lenders include Fund Ourselves, which offers short term loans to UK borrowers at competitive rates. Investors can earn up to 15 per cent via the platform’s IFISA. Meanwhile, Lendwise is unusual in the consumer lending space in that it helps to fund post-graduate student programmes. It is targeting up to nine per cent in investor returns this year.
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Sourced Capital – winner of the 2022 Peer2Peer Finance Award for IFISA Provider of the Year – is targeting 12 per cent in IFISA returns by matching investors with property-backed loans.
Several other property lending platforms fall into the £1,000 minimum investment bracket. Proplend is targeting five to 12 per cent for investors on commercial property loans. LandlordInvest is targeting up to 12 per cent on property development and bridging loans. CapitalRise is advertising investor returns of up to 11 per cent on its prime central London property loans. British Pearl offers 4.3 per cent investor returns on its property-backed loans. Carlton Bonds lists fixed-term bonds backed by UK properties, with target investor returns of up to 9.25 per cent. And London House Exchange is targeting returns of more than 10 per cent on its fractional property investment platform.
Money & Co and Bramdean Asset Management share the same management, and both platforms target up to seven per cent on IFISA investments across diverse areas such as business loans, music licensing and litigation loans. Bramdean also offers a bespoke IFISA-wrapped investment portfolio service with similar target returns.
For investments of £500 or more…
There are five P2P lending platforms offering access to their IFISAs for £500 or more. They include CrowdProperty – one of the largest P2P lenders in the country, which has funded more than £650m of UK properties since it was founded in 2014. It is targeting returns of up to 8.5 per cent for the 2022/23 financial year.
Relendex also offers property-backed loans with a minimum investment of £500. It is targeting returns of up to 11 per cent this year. Simple Crowdfunding offers property-backed investments with a minimum of £500. It is targeting returns of up to 8.5 per cent.
Meanwhile, Downing Crowd funds bonds with an environmental or social focus. It is targeting returns of between 2.25 and 7 per cent, depending on the bond chosen.
Finally, investment platform Tifosy has an IFISA which allows retail investors to back sports clubs, with the promise of eight per cent returns.
For investments of £100 or more…
Crowd2Fund, Crowdstacker, Elfin Market, easyMoney and Kuflink are the five platforms which offer access to their IFISA for as little as £100.
Kuflink and easyMoney are two of the largest P2P lending platforms in the UK, and both specialise in property-backed loans. However, easyMoney offers a tiered IFISA structure, which is aimed largely at high-net-worth investors. For £100, easyMoney’s IFISA investors can earn returns of 4.53 per cent per annum. If investors can add £20,000 to their portfolio they can access higher returns of 5.52 per cent; and investors with £100,000 to invest can earn 6.51 per cent per year.
Kuflink is one of the few platforms which invests alongside its retail lenders, and it has maintained a track record of zero losses since it was founded in 2014. It recently increased its target returns to 9.73 per cent.
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Crowd2Fund and Crowdstacker are both business lending platforms, which offer a range of potential returns depending on the level of risk involved. Crowd2Fund has some of the highest target returns on the market, advertising rates of between eight and 15 per cent. Crowdstacker is targeting returns of between four and 7.25 per cent in the current tax year.
Elfin Market is a unique consumer lender which allows P2P lenders to fund digital credit cards which borrowers can use as needed. It targets investor returns of approximately 10 per cent.
For investments of £50 or more…
Three IFISAs come with a minimum investment threshold of £50. They are Leap Lending – a consumer lending platform which only launched in 2020. It is targeting returns of approximately seven per cent.
Lendahand Ethex (also known as Energise Africa) invites investors to support green energy and social mobility projects in Africa, with a minimum entry investment of £50. Target returns are up to six per cent, depending on the project chosen.
Triodos Bank’s crowdfunding branch also comes with a minimum investment of £50. Investors can choose from a range of IFISA-wrapped crowd bonds which finance a range of clean energy businesses and other social causes. Target returns depend on the bond chosen, but generally range between four and six per cent.
For investments of £25 or more…
Crowd for Angels is the only platform offering access to its IFISA for a minimum of £25. One of the first platforms to win an IFISA licence, Crowd for Angels specialises in IFISA-wrapped crowd bonds which fund British businesses. It is targeting returns of up to seven per cent for the 2022/23 tax year.
For investments of £10 or more…
The three platforms available to investors with £10 or more are Rebuildingsociety, Loanpad, and Share Credit.
These three platforms have very different remits. Rebuildingsociety is a business lender with more than a decade of experience connecting P2P lenders and borrowers. It is targeting returns of 6.1 per cent.
Meanwhile, Loanpad is a property-backed lender which offers fixed returns of four or five per cent. And Share Credit is a London-based business and property lender, which reported a weighted average annual return of 8.27 per cent for 2022.
For investments of £5 or more…
Ethical investment platform Abundance Investments is the only IFISA manager offering access for as little as £5. Founded by one of the co-founders of former P2P giant Zopa, Abundance has an ESG focus, and works with local councils to fund social projects, as well as offering IFISA investors the opportunity to finance the green energy transition. It is currently advertising target returns of up to eight per cent per annum.
For investments of £1 or more…
Just two P2P lending platforms offer IFISA access for as little as £1. They are the social housing lender Assetz Exchange, and the P2P pawnbroking platform Unbolted.
For the 2022/23 financial year, the four-year old Assetz Exchange was targeting IFISA returns of six per cent. Meanwhile, Unbolted, which has been a pioneer in the P2P pawnbroking space since 2014, is aiming for returns of eight per cent.
