Wondering what connects your ISA and a cheese toastie? Read on to find out more.
In 2018 investors were reminded of the reality of risk versus reward in a big way. After years of impressive gains, those chasing better returns using a Stocks and Shares ISA were hit by the worst performance in a decade. The FTSE 100 dropped a whopping 12.5% over the year, the biggest fall since the 2008 crash. If you went for the safe option of a Cash ISA then returns were also way below the inflation rate of 2.3% with an average of just 0.77% in 2018.
So what options do you have if you’re chasing gains this year? Maybe it’s time to look to the middle ground, balancing risk and reward to deliver solid returns. We crunched the numbers and found that if someone put £5,000 into a Cash ISA, an exchange traded fund tracking the FTSE 100 or a Zopa Plus Innovative Finance ISA (IFISA), then the Zopa account would have performed best.
In fact, by investing in Zopa ISA Plus, they could have grown their £5,000 investment by up to 5.2% or £2601. That’s 13.5% more than if they invested in the stock market, keeping in mind that past performance isn’t always a reliable indicator of future results
As most investors should be looking to the medium term, peer-to-peer lending has also delivered more consistent returns than the stock market over a longer period.
Our Innovative Finance ISA (IFISA) lets you invest in peer-to-peer lending with your returns being tax free. It will give you targeted returns of 4.5% in ISA Core, and 5.2% in ISA Plus, plus you can even transfer from an existing ISA without impacting this year’s allowance.
Andrew Lawson, Zopa’s Chief Product Officer explained that investors in the markets could be in for another difficult year, “One option to mitigate against market volatility is to look at diversifying portfolios across a broader set of asset classes, including peer-to-peer lending.”
In 2019, being in the middle with a Zopa IFISA could be the most rewarding choice for you.
That’s because we believe the best things happen in the middle, like in the warm, gooey centre of a cheese toastie. The Godfather Part II. Or the adrenaline that only comes from running around the middle of the pitch.
Our Innovative Finance ISA (IFISA) is nestled in the middle between low risk, low yielding cash ISAs and volatile, high return stocks and shares ISAs.
When you invest your money, your capital is at risk and is not protected by the Financial Services Compensation Scheme (FSCS).
Tax treatment depends on individual circumstances and may be subject to change in the future. Our risk statement has all of the details.
1A 1% fee applies when selling loans