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    • Oliver1191
    • By Oliver1191 13th Oct 18, 7:22 AM
    • 62Posts
    • 25Thanks
    Oliver1191
    Which IFISA would you recommend?
    • #1
    • 13th Oct 18, 7:22 AM
    Which IFISA would you recommend? 13th Oct 18 at 7:22 AM
    Hi all,

    I'm looking to set-up an IFISA.

    I would like to know your recommendations / experiences with IFISAs.

    I had some experience with Funcding Circle before they set-up their IFISA (and lost more than I made).

    I like the idea of a high rate of return and like the idea of a contingency fund (which a lot of IFISA seem to have now).

    I'm looking to build an income stream. This is for the medium to long term.

    Thanks for your help!
Page 1
    • Alexland
    • By Alexland 13th Oct 18, 7:34 AM
    • 3,811 Posts
    • 3,123 Thanks
    Alexland
    • #2
    • 13th Oct 18, 7:34 AM
    • #2
    • 13th Oct 18, 7:34 AM
    I wouldn't want any more than the minimum amount of money to earn an introductory bonus in P2P platforms as the return is generally unsatisfactory for the risk. I have not suffered any loss but am closing our accounts down when they reach their term.

    For medium to long term income I would suggest you consider an S&S ISA with appropriate asset allocation - they're running a 10% off 'bloodbath' promotion at the moment!

    Alex
    Last edited by Alexland; 13-10-2018 at 8:13 AM.
    • msallen
    • By msallen 13th Oct 18, 8:25 AM
    • 925 Posts
    • 1,074 Thanks
    msallen
    • #3
    • 13th Oct 18, 8:25 AM
    • #3
    • 13th Oct 18, 8:25 AM
    Selecting an IFISA has to be a personal judgement call really ...

    If you are going to invest in P2P then diversification is important, not just across loans, but across platforms as well. This allows you to swallow the occasional loss amongst all the performing loans on all the platforms you use, and to write the loss off against tax. However any loss that you suffer inside an IFISA cannot be written off against tax in this way.

    This leads to a dilema... given that the loans paying the highest rate of interest are also the most likely to default, do you use an IFISA on the platform with the highest potential profits, thus sheltering them from tax, but also removing the ability to write losses off against tax, or do you IFISA-ise a platform with a low rate of return and appropriately lower risk, meaning that you are sheltering less income from tax, but leaving you high risk loans tax-relief eligible?

    If you run the numbers you'll see that tweaking the anticipated default rate even slightly can completely reverse which option is best for your net return.

    This issue disappears if all your different P2P platforms are IFISA-ed, so the long term plan has to be to get all your lending, i.e. all your P2P platforms, inside an IFISA, but you aren't going to be able to manage that straight away (although it can be sped up fairly well depending on your total pot by opening a Cash ISA just before the end of the tax year and then transferring portions of it to separate IFISAs in the new tax year).
    • Oliver1191
    • By Oliver1191 13th Oct 18, 9:06 AM
    • 62 Posts
    • 25 Thanks
    Oliver1191
    • #4
    • 13th Oct 18, 9:06 AM
    • #4
    • 13th Oct 18, 9:06 AM
    For medium to long term income I would suggest you consider an S&S ISA with appropriate asset allocation
    Thanks Alexland. Would you suggest using the stocks and shares isa to, say, invest in this income fund would be better?

    https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/e/edentree-higher-income-class-b-income

    I know the Eden Tree fund aims for income and growth?

    Or is there a better fund for income?

    One of the reasons I was initially thinking IFISA as it would add to my emergency funds.

    So if an emergency happened, I would access my money in the following order:

    1. Raid the instant access savings (1.2%)
    2. Then resort to fixed term savings (5% for 1 year)
    3. Then pull on my premium bonds.
    4. Finally, if desperate, access the IFISA.
    • ColdIron
    • By ColdIron 13th Oct 18, 9:26 AM
    • 4,838 Posts
    • 6,402 Thanks
    ColdIron
    • #5
    • 13th Oct 18, 9:26 AM
    • #5
    • 13th Oct 18, 9:26 AM
    That Edentree fund is OK so far as it goes, it's a multi asset fund but invests mainly in UK large caps. It's meant to be used as part of a wider portfolio of investments, eggs and baskets and all that. You could get 1.5% easy access with Marcus, premium bonds are easy access, your fixed term savings aren't much use in an emergency and where are you getting 5% for one year?
    • dunstonh
    • By dunstonh 13th Oct 18, 10:45 AM
    • 96,058 Posts
    • 63,874 Thanks
    dunstonh
    • #6
    • 13th Oct 18, 10:45 AM
    • #6
    • 13th Oct 18, 10:45 AM
    IFISA is still a bit wild west and suffering poor regulation. Many of the options are far higher in risk than people are being told.

    It is an option to supplement conventional options. Not to replace them. That may change once the FCA gets stuck in (which historically means they will wait for it to go wrong and then change it). There are some valid options now but only for partial amounts of your overall holdings.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Wildsound
    • By Wildsound 13th Oct 18, 10:47 AM
    • 229 Posts
    • 167 Thanks
    Wildsound
    • #7
    • 13th Oct 18, 10:47 AM
    • #7
    • 13th Oct 18, 10:47 AM
    I really wouldn't categorise an IFISA as part of your emergency funds. A lot of the time, they are relatively illiquid meaning you can't get instant access to it. There can be withdrawal penalties if you're taking anything before it's maturity. You can get back less than you invested etc...

    P2P in my opinion is a high risk investment with liquidity issues, glossed over with a low risk marketing brush and made to look like it's on par with a savings account... It is not!
    • Albermarle
    • By Albermarle 13th Oct 18, 12:13 PM
    • 237 Posts
    • 121 Thanks
    Albermarle
    • #8
    • 13th Oct 18, 12:13 PM
    • #8
    • 13th Oct 18, 12:13 PM
    Some P2P offerings ( but for sure not all ) are normally liquid , Lending Works, Assetz instant access accounts for example.
    The issue could be that in a big financial crisis this liquidity could disappear .
    In any case as already said P2P is probably OK for a small part of your overall investments . My own experience of P2P is quite good and I think if you diversify across platforms and then diversify the loans in each platform , I would say it is medium rather than high risk .
    • eskbanker
    • By eskbanker 13th Oct 18, 12:17 PM
    • 8,683 Posts
    • 9,894 Thanks
    eskbanker
    • #9
    • 13th Oct 18, 12:17 PM
    • #9
    • 13th Oct 18, 12:17 PM
    I'm looking to build an income stream. This is for the medium to long term.
    Originally posted by Oliver1191
    Are you starting with a large lump sum, or do you mean that you want to build up a pot from which you can (later) draw income?

    If it's the former, then how much money do you have in each of your various pots?

    If the latter, then surely you should be aiming for growth rather than income at this stage, rather than compromising growth by taking income already?
    • bxboards
    • By bxboards 13th Oct 18, 12:26 PM
    • 1,629 Posts
    • 1,269 Thanks
    bxboards
    Last time I looked Ratesetter was around 6.5%-ish for the 5 year income offering - you need to divide this by 2 (rather like with a regular saver) for the amount of interest you'll get at the end of 5 years, unless you reinvest the income each month.

    IFISA is a bit of a broad brush but assuming you mean P2P I consider Octopus Choice, Landbay, Ratesetter and Assetz Capital the best for income vs. risk right now. All importantly offer good liquidity / exit in 'normal market conditions'. I'd normally add Growth Street, but they don't have an ISA.

    I use a IFISA (Assetz Capital) generating a very nice ISA wrapped income but I also have stocks and shares and cash ISA. Just my opinion, but now is not the time to be buying an S&S ISA right now, there is a much bigger correction needed, the one last week wasn't it. Whatever you do, diversify!
    • Alexland
    • By Alexland 13th Oct 18, 12:41 PM
    • 3,811 Posts
    • 3,123 Thanks
    Alexland
    Thanks Alexland. Would you suggest using the stocks and shares isa to, say, invest in this income fund would be better?
    Originally posted by Oliver1191
    Generally I would seek total return above an income investment strategy. Is consistency of income important for you (as you will be drawing out regularly) or do you just like the sound of compounding reinvested income?

    Alex
    • keyboardworrier
    • By keyboardworrier 13th Oct 18, 2:13 PM
    • 123 Posts
    • 132 Thanks
    keyboardworrier
    For income VHYL (https://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-plc-ftse-world-high-div-yld) maybe worth considering, it's well diversified worldwide and the yield is 3.35% currently. Ongoing charge 0.29%. I am considering investing in this fund using IWEB.


    For P2P Assetz Capital may be worth putting a small amount in, currently they are running a bonus offer details here https://www.assetzcapital.co.uk/promo/christmas-cracker-summer-holiday-cashback/tscs
    • Alexland
    • By Alexland 13th Oct 18, 5:23 PM
    • 3,811 Posts
    • 3,123 Thanks
    Alexland
    For income VHYL (https://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-plc-ftse-world-high-div-yld) maybe worth considering, it's well diversified worldwide and the yield is 3.35% currently. Ongoing charge 0.29%. I am considering investing in this fund using IWEB
    Originally posted by keyboardworrier
    Are you not put off by the lacklustre total return? That yield has been at the expense of capital growth.

    Alex
    • bxboards
    • By bxboards 13th Oct 18, 5:52 PM
    • 1,629 Posts
    • 1,269 Thanks
    bxboards
    Are you not put off by the lacklustre total return? That yield has been at the expense of capital growth.

    Alex
    Originally posted by Alexland
    The thing with looking at capital growth, is that this is only paper only profit unless you cash in.

    So if you are looking at income, then yield needs to be a factor too.

    As a general point, I've seen a lot of capital growth in many of my H-L holdings in my SIPP. Some by over 100% in the space of 2 years. That concerns me, as its unrealistic growth - nothing fundamental has changed in that period to warrant it, I suspect most 'growth' was due to money piling in due to record low interest rates and magic money tree money. Growth is good if it's genuine growth, but I don't think much of it over the last few years is.
    • keyboardworrier
    • By keyboardworrier 13th Oct 18, 6:56 PM
    • 123 Posts
    • 132 Thanks
    keyboardworrier
    Are you not put off by the lacklustre total return? That yield has been at the expense of capital growth.

    Alex
    Originally posted by Alexland
    I would be quite comfortable holding it for yield (especially considering the low OCF when held with a platform such as Iweb) , for capital growth potential it may be better to invest elsewhere
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