The barriers to investment
November saw bank interest rates held once again, meaning that savings rates continue to be some of the lowest on record. This trend isn’t going to change overnight, and even if rates begin to increase – as expected in 2016 – savers and investors aren’t going to see a significant uplift anytime soon.
And although researching and finding the right investment product has always been vital, the added complexity of the poor savings and investment market has made it even more challenging to navigate and understand.
Finding investment opportunities
Since the well documented financial crash eight years ago, investment opportunities have not only been harder to come by, but have also required significantly more research.
In the aftermath of the financial crash, the peer-to-peer lending market rose - an alternative to the tried and tested ways of investment. Early adaptors and hardened investors watched with interest as rates seemed too good to be true - at first.
The model was simple:
- An investor wanted a higher return on their investment pot.
- While SMEs or individuals required loans that were either harder to come by, or they didn’t trust the banks to process their application efficiently, and effectively.
- The peer-to-peer platform would ultimately take a cut in the middle for helping to join the dots, and of course, carry out all the legal documentation and underwriting processes.
Five years since the market really began to mature, rates have stabilised to a point whereby investors know where they stand, and how the model works.
In Assetz Capital’s case, we were very keen to incorporate security and tangible assets in loan agreements with SMEs, right from the off. This is what stands us apart from other lenders. We believe that having good security in place against a loan will ultimately deliver the desired return for investors, and only when required, help to regain money invested in loans that may have defaulted.
Having found peer-to-peer to be a true, accepted new way of investing as part of a balanced portfolio, it has successfully matured and developed in the past few years. There is some settlement, but further advances in products and services will be inevitable. It’s all part of attracting people back to investment as a vital aspect of their future – no matter how old they are and how much they have to invest.
The age-old problem of investing
Traditional forms of investment will continue, as they should, but each has barriers or elements that have prevented the mass-market investor from benefiting.
Thankfully, the ISA was introduced on 6 April 1999 and a new population of investor was born. Some 16 years later, and the Individual Savings Account is holding firm. In fact, the past 12 months have seen further refinement to the product that have allowed for even more flexibility. And as a peer-to-peer platform, we’re excited by the prospect of a new ISA product – the Innovative Finance ISA – benefiting from tax-free higher returns from peer-to-peer lending.
Although that’s a huge breakthrough and it will inevitably aid millions of people in their financial planning, you’ll have to wait until April 2016 to benefit, at the earliest.
Right now, peer-to-peer remains an unexplored jungle for many. And yes, you do need to hack through the finer details of how each and every platform works. It became so complex, with hundreds of platforms offering a very similar proposition, that we decided to redefine the front end of peer-to-peer and make it much easier to understand – whether you are an experienced investor, or somebody taking their first steps along the investment path.
Assetz Capital’s investment accounts
The word ‘account’ is an important one. It resonates with every saver and investor across the land. That’s why we’ve remodeled Assetz Capital to take on a more formulaic approach.
We now offer three investment accounts:
Within just 20 hours of launch, and without any fanfare, the QAA investment product was full - reaching its maximum allocation of £1 million. Why? Because people got it.
The QAA offers 3.75% pa gross rate – in normal market conditions – with the unique option for investors to withdraw funds at any point, almost instantly. It also has a Provision Fund that will cover any losses if a default loan occurs.
The account has inevitably attracted interest from experienced investors as part of a wider portfolio – some in other Assetz Capital accounts – but also the younger, first time investor generation.
This only goes to show that age isn’t a barrier to invest, it’s the products and the financial sectors that need to adapt.
And don’t go saying you’ve not got enough to start investing. The entry level for QAA investment is £1! Think of your financial future.
- December 11, 2015