The Innovative Finance ISA (IFISA)

The Innovative Finance ISA (IFISA)

Individual Savings Account (ISA) offers savers and investors a tax-efficient method to invest or save. An IFISA is a kind of savings account that enables you to include investments you have made through peer to peer loans. Just like other ISAs, you can receive interest returns tax-free. 

IFISA is a low maintenance form of investing

If you want to get more out of your savings but can’t take out time to micromanage your investment funds, then an Innovative Finance ISA account might be an ideal solution for you. This kind of investment doesn’t require too much of your time. 

Generally, you have an auto-investment option where the p2p platform invests your money in the loans based on your pre-requisites. All you essentially need to make a deposit of your funds into the IFSIA account, and your peer to peer firm will take care of everything else for you. 

You can also pick whether you want to re-invest the returns or draw a regular income from your overall investments. However, all of this can be automated, so it all can happen without investing too much time. You can still be invested by checking every once in a while to check on how things are going, and some IFISA providers may allow you to withdraw your funds early without paying any fee. However, this type of investment should not take a lot of your time.

How Innovative Finance ISA works?

You can read the eligibility criteria of an IFISA account online on the platform. Once you know you fit in the requirements, you can continue to open an Innovative Finance ISA. You can open the IFISA account online and your investment funds will be included within it. Also, you will have the choice to include any future investment made through the p2p platform. 

Annual ISA allowance 

An individual’s annual savings allowance is £20,000, which they can invest in cash ISA, stocks & shares ISA or an IFISA. They can also split the investment among different kinds of ISA, which allows them to stay within the limit of £20,000.

  • Transferring an Individual Savings Allowance

If you want to invest your funds in another ISA then you first have to request for an ISA transfer. This can be done before you start your investment application. 

  • Innovative Finance ISA setup cost

Usually, there is no setup fee for an IFISA account. 

  • Investment limit for IFISA

The limit for investment into Innovative Finance ISA is around £20,000 for each tax-year. Moreover, you can transfer your existing ISA into an IFISA account if you wish to invest more than your current annual allowance.

You can transfer your existing ISAs over.

 While your annual individual savings allowance is £20,000, if you have accumulated money in different ISAs over past financial years, you can transfer these funds into a new Innovative Finance ISA, and there is no upper limit. This makes IFISA a great way to make your money work harder for you. 

This means if you have saved around £100,000 into cash ISA over time, then you can transfer some or all of the funds into one or more Innovative Finance ISAs. These can also be spread over multiple p2p firms if you want. This is a great way to make maximum returns, since it enables you to invest most of your money in peer to peer lending

So, if you have funds that you have put away in an ISA that you are not planning to use for a while and you are currently earning a minimal level of interest, this way, your money can grow faster. If you want to invest in a low maintenance and low-risk investment solution, then Innovative ISAs can be the perfect choice for you. It is also a good idea if you have savings that you can get a better return on, with a low-interest rate. 

The returns beat interest

The interest rate for IFISA is notoriously low. This means if you have money put away in cash ISA and everyday savings account, then the interest accumulating in these will be minimal. While the return rates on Innovative Finance ISA can differ significantly depending on the platform’s elements, when you are willing to lend out your money, most investors can expect a 4-7% return rate.With Innovative Finance ISA, you can grow your funds more quickly if you can take a relatively small risk. However, before you decide to commit to this type of investment you need to do your own research. Ensure that the platform is experienced, have a transparent policy and a good track record. Just make you understand all the things that are required by the platform and every policy that they have. Once you understand everything IFISA can be the right type of investment for you.

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