How To Get The Most Out Of Your IFISA
21st February 2018
As one of earliest platforms to introduce the IFISA, we’ve listed our top tips to help savers maximise their tax-free allowance while also supporting the growth of British businesses. With the end of the tax year now under two months away, investors should take stock of their IFISA strategy and their utilisation of it over the last 12 months. Whilst users of Crowd2Fund’s IFISA are likely to already be well-versed with the benefits of the product, follow our guide below to make sure that you are using it to its utmost potential and not missing out on any opportunities for additional returns.
Use It Or Lose It
The £20,000 IFISA allowance has to be used up in fully by 5th April. It is not possible to retrospectively use this once the tax year has ended. In order to get the full benefits of both tax saved and future growth, investors should check to see whether they have utilised their allowance in full, and if not, consider whether doing so fits in with their investment strategy.
Don’t Forget To Reinvest Expired Loans
The length of Crowd2Fund loans tend to last on average a few years. If you have been investing on the platform for a couple of years, it may be possible that some of these may have fully matured. If these were investments made within the IFISA wrapper, they will still be able to be reinvested into qualifying IFISA campaigns without losing their tax benefits.
Take the time to log into your account and check to see whether funds need to be deployed into new investments to maximise returns.
Transfer Historic Lower Yield ISAs Into The IFISA
With the best performing easy access cash ISAs now generating little over a 1% return, and a volatile stock market making stocks and shares ISAs risky, you should consider transferring historic ISAs into the IFISA by filling in our IFISA transfer form.
It shouldn’t take more than a couple of weeks for funds to be fully transferred, and doing so will allow them to retain their tax wrapper. With our IFISA generating an average APR before fees and bad debts of 8.7%, a fully invested £20,000 allowance would yield £1740, in comparison to a 1% cash ISA, which would return just £200.
Diversify Your Portfolio To Match Your Investment Goals And Risk Appetite
Take the time to reduce the chance of risks defaulting by spreading funds across a range of different investment opportunities to match your goals and risk appetite. From a diversification perspective, it is generally good practice to invest in a variety of different industries and companies.
If you are not seeking to access your funds for the medium term (i.e. five years), you may wish to choose to lend to venture debt campaigns which tend to carry a double digit return.
On the other hand, if you are more risk averse, you may have a preference for lending to opportunities which are securitised with property.
Review Your Portfolio On A Regularly Basis
Every quarter you should review the performance of your portfolio to assess whether it has performed in line with your expectations and risk appetite.
If you have not reached your desire overall return from interest, you may want to consider deploying a greater concentration of funds into higher risk, higher return campaigns.
A simple way to track performance is with an Excel sheet which forecasts your expected annual return, and breaks this down into a quarterly basis; this can then be updated with actual performance as a comparison.
Trade On The Exchange
Access our secondary market, The Exchange, to pick from the widest range of IFISA opportunities available.
This can be a useful measure to diversify your portfolio and pick investments better tailored to your overall strategy— for example, you may wish to pick opportunities in sectors which you have a specific interest or expertise in.
It may be possible for you to sell primary IFISA investments to buyers and bank a profit. To maximise returns these funds can then be redeployed back into your IFISA.
Utilise Smart-Invest if Pressed for Time
Whilst the majority of investments made on the platform are facilitated by investors directly choosing the companies they lend to, it is also possible to take a passive investment approach to the IFISA. Our Smart-Invest tool allows IFISA users to define their investment criteria, and savings plans. Smart-Invest will then automatically invest funds into opportunities which match this.
Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.