The chief executive of easyMoney has heralded the benefits of Innovative Finance ISAs (IFISAs) in an uncertain economic climate and noted the year-on-year increase in inflows into the product.
Jason Ferrando, who heads up the peer-to-peer property lending platform, said that “portfolio flexibility is key” in challenging times, “as keeping all of your eggs in one basket can be risky”.
“As such, investors are spreading their money across a number of different avenues and IFISAs are seeing strong growth as a result,” he said. “Investors are attracted to the idea of not having to rely on central finance infrastructure, and the flexible terms attached to P2P lending.”
The total number of IFISA accounts ticked up to 17,000 from 16,000 while the average amount put into an IFISA grew from £5,750 to £8,520.
However, it should be noted that IFISA volumes are substantially down from their 2019/20 peak, when £995m was invested into the product.
Swathes of stricter regulation have made it harder for platforms to market themselves to restricted retail investors and prompted many to focus on sophisticated, high-net-worth and institutional investors instead, who are less likely to put money into ISAs.
easyMoney also highlighted the decline in cash ISA subscriptions in the 2021/22 tax year.
This may be surprising to some, given the high-interest-rate environment, but Ferrando suggests that it is due to consumers cashing out their savings due to the cost-of-living crisis.
“As for the fall in cash ISAs, this will be because the cost-of-living crisis is hitting people hard, and lots of everyday people – amateur investors – are cashing out or choosing not to open new accounts because they need access to their money,” Ferrando said. “When life’s expenses are so high, one can rarely afford to have money stowed away.”
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