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Post by samford71 on Sept 2, 2018 11:01:17 GMT
The short Alt Fi article spins this as a positive (see link). I'm shocked though at the dismal take up of IFISAs for P2P lending. Around £70bn in new money was subscribed to ISAs last year and over £600bn is now held in ISA wrappers. So P2P only captured a 0.4% market share of new money and just 0.05% of the total amount. When IFISAs were first mooted, P2P platforms saw them as a huge potential funding source and expected to capture many percentage points of the market immediately. Personally, I wouldn't waste my S&S ISA allowance on P2P. If you'd asked me 3 years ago, however, I would have predicated a decent take up from those who use cash ISAs given the very low rates on those products and the fact that P2P really markets to that audience rather the stock/bond investor. I would have expected new subscriptions and transfers in the billions. I have to wonder how this is impacting the plans of some P2P lenders. For some of them it was going to be a huge, cheap, sticky source of capital. I've noted that a few P2P platforms have started to ask for underwriting funds again this year (I've moved back to direct lending so have no interest). It seems that they might need to replace a shortfall in capital from a poor take up in their ISA products. |
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macq
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Post by macq on Sept 2, 2018 12:30:49 GMT
P2P platforms may have been hoping for big inflows to their ISA's but probably in reality the people who invest in cash ISA's only at low rates rather then funds etc may find the thought of P2P even more of a worry
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benaj
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Post by benaj on Sept 2, 2018 12:44:51 GMT
I suppose the IFISA is a good thing, at least it keeps these platforms growing and sustainable in the future. Like HL, AJ Bell, they both benefit from the increase of ISA allowance, and LISA, etc.
I don't have IFISA, but I do like other people support them.
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hazellend
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Post by hazellend on Sept 2, 2018 13:18:48 GMT
P2P is not suitable for ISAs for me and I will never open an IFISA.
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Post by albermarle on Sept 2, 2018 15:30:12 GMT
P2P platforms may have been hoping for big inflows to their ISA's but probably in reality the people who invest in cash ISA's only at low rates rather then funds etc may find the thought of P2P even more of a worry When there has been articles in the Papers about IFISAs, and the possibilities of earning good interest rates , it is interesting to read the on line comments if they have them. Nine out of Ten are negative and assume its a scam; ponzi scheme, linked to evil bankers etc . Generally all very cynical, although also mainly very badly informed and that is in the 'quality press' To be honest most of my friends and colleagues think it sounds dodgy, without really looking into it . So you are right that a typical regular investor is generally very risk averse, and has little concept of risk vs reward, so they shy away from anything like P2P/IFISA.
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macq
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Post by macq on Sept 2, 2018 16:08:27 GMT
P2P platforms may have been hoping for big inflows to their ISA's but probably in reality the people who invest in cash ISA's only at low rates rather then funds etc may find the thought of P2P even more of a worry When there has been articles in the Papers about IFISAs, and the possibilities of earning good interest rates , it is interesting to read the on line comments if they have them. Nine out of Ten are negative and assume its a scam; ponzi scheme, linked to evil bankers etc . Generally all very cynical, although also mainly very badly informed and that is in the 'quality press' To be honest most of my friends and colleagues think it sounds dodgy, without really looking into it . So you are right that a typical regular investor is generally very risk averse, and has little concept of risk vs reward, so they shy away from anything like P2P/IFISA. Think your Nine out of Ten comment pretty much covers replies on the MSE forum over the last few years as to peoples thinking on there as well.Its possible that in general that the only positive comments on there are for the likes of RS etc who offer lower rates but don't think the general public are going to be looking at 12% - 15% property loans any time soon with as you say the sentiment expressed about them.
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IFISAcava
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Post by IFISAcava on Sept 2, 2018 16:18:38 GMT
P2P is not suitable for ISAs for me and I will never open an IFISA. whereas for me, 45% tax means IFISAs are the only way I'll invest in P2P to make it worthwhile. All non-IFISA P2P has been sold where possible or is drawing down as terms end due to the lack of a SM (Archover, Kuflink, Unbolted). (slight exception is that some of the spare funds in my limited company are being put in instant/short access P2P like AC/Growth Street)
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Post by bobthebuilder on Sept 4, 2018 5:00:09 GMT
In my view what's killed the potential IFISA boom is rising default rates and property valuations that bear no relation to realistic realisable values. A couple of years ago I'd anticipated moving all of my cash ISA money into P2P but I've now scrapped those plans and this year used my ISA allowance to bed and ISA some equity tracker funds to ensure my dividend income stayed within the new reduced tax free dividend allowance.
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ceejay
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Post by ceejay on Sept 4, 2018 8:55:01 GMT
In my view what's killed the potential IFISA boom is rising default rates and property valuations that bear no relation to realistic realisable values. A couple of years ago I'd anticipated moving all of my cash ISA money into P2P but I've now scrapped those plans and this year used my ISA allowance to bed and ISA some equity tracker funds to ensure my dividend income stayed within the new reduced tax free dividend allowance. I think this is close to the mark...
It seems to me that wondering about whether people are investing in Cash ISAs or P2P ISAs is conflating two different questions. The first question - and it really should be first - is asset allocation. How much of my dosh do I want to be in Cash/Shares/Bonds/P2P/etc? Only then should one come to the tax efficiency question of how to use one's ISA allowance.
So are we asking why more people aren't putting their money in P2P vs Cash? If so, it's not hard - for many people P2P would be absolutely the wrong thing to do, with relatively high risk for only a moderate return. If your savings are only equal to a few months of income - which is the case for the majority of the population, I'd say - then anything other than cash would be bonkers.
Of course, for these same people, the new savings allowance means that the ISA wrapper is pretty irrelevant, and they'd often be better off not even trying to use it because of the complexity it adds.
Which then leads me to wonder whether Cash ISAs are a good idea for anyone, except perhaps as a parking lot from time to time. If you don't have a lot of cash they're irrelevant, and if you do then you probably have better places to use your ISA allowance.
In my case I am using quite a lot of my ISA allowance on P2P this year, but that's simply because all of my S&S holdings are already covered and my P2P isn't. Next year may be very different.
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macq
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Post by macq on Sept 4, 2018 10:28:46 GMT
While Banks & BS are not helping the cash ISA with their rates the thinking from the money sites/press etc is that there is a use for cash ISA's.Even for people with larger amounts the thinking is that once the money is tax free future govts may change tax rules but are unlikely to hit ISA's that have built up.The same could also be true for S&S i.e CGT could change or even dividends as they were recently so for many it could be worth taking the offer in case its withdrawn
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Post by ratrace on Sept 4, 2018 10:37:15 GMT
For a low income earner like me then its not really worth putting my P2P lending into an ISA. Because with the Personal Saving Allowance and the 0% starting rate for savings, that will more then cover my earnings from P2P. Much better use for my ISA is to put my stock market investments into it, now that the dividend allowance as gone down to £2000 and there is talk that it maybe removed in the future.
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IFISAcava
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Post by IFISAcava on Sept 4, 2018 11:41:02 GMT
In my view what's killed the potential IFISA boom is rising default rates and property valuations that bear no relation to realistic realisable values. A couple of years ago I'd anticipated moving all of my cash ISA money into P2P but I've now scrapped those plans and this year used my ISA allowance to bed and ISA some equity tracker funds to ensure my dividend income stayed within the new reduced tax free dividend allowance. I think this is close to the mark...
It seems to me that wondering about whether people are investing in Cash ISAs or P2P ISAs is conflating two different questions. The first question - and it really should be first - is asset allocation. How much of my dosh do I want to be in Cash/Shares/Bonds/P2P/etc? Only then should one come to the tax efficiency question of how to use one's ISA allowance.
So are we asking why more people aren't putting their money in P2P vs Cash? If so, it's not hard - for many people P2P would be absolutely the wrong thing to do, with relatively high risk for only a moderate return. If your savings are only equal to a few months of income - which is the case for the majority of the population, I'd say - then anything other than cash would be bonkers.
Of course, for these same people, the new savings allowance means that the ISA wrapper is pretty irrelevant, and they'd often be better off not even trying to use it because of the complexity it adds.
Which then leads me to wonder whether Cash ISAs are a good idea for anyone, except perhaps as a parking lot from time to time. If you don't have a lot of cash they're irrelevant, and if you do then you probably have better places to use your ISA allowance.
In my case I am using quite a lot of my ISA allowance on P2P this year, but that's simply because all of my S&S holdings are already covered and my P2P isn't. Next year may be very different.
My S&S portfolio yields around 3% max, my P2P portfolio 8%. ISA tax break much more tax efficient for the latter at the moment as I can take a £12K capital gain tax free pa on the S&S outside the ISA. Even if I eventually break this limit, cap gains only 28% tax v P2P income 45%. So have 90% of my total ISA investment in P2P (and 30-odd percent of overall investments pot - excluding house/pension - in P2P at the mo, though decreasing gradually as I rebalance back towards S&S having taken some S&S profits over last year or two).
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IFISAcava
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Post by IFISAcava on Sept 9, 2018 9:30:46 GMT
Hmm
just worked out this means that I personally have about £1 out of every £750 invested in IFISAs in the UK.
not sure what that means.
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IFISAcava
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Post by IFISAcava on Sept 9, 2018 17:08:08 GMT
Hmm just worked out this means that I personally have about £1 out of every £750 invested in IFISAs in the UK. not sure what that means. You have £400,000 invested in IFISA's? You are wealthy and/or a high risk taker or nuts.  all three are options I grant you.
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