The UK’s decision to vote for Brexit on 23 June was unexpected. In the interim, the pound has fallen to a thirty-year low, the UK has been downgraded by two different credit ratings agencies, and the FTSE 250 has suffered. It is unclear what the repercussions are and whether they will be long or term.
This uncertainty calls for a new investment strategy. In order to counter any bumps and unexpected turns the markets take families are encouraged to diversify their investments in order to have a balanced portfolio to counter any potential risks.
The current economic outlook makes it look likely that interest rates will be slashed even lower than the historic 0.5% rate, which they have been set at since 2009. In order to beat inflation, approximately 3%, families will need to take their cash out of banks, and many high savings bank accounts, in order for their assets to not deteriorate in value.
Additionally, the cost of living is increasing as are many essentials for families such as school fees. The Good Schools Guide recently revealed that it now costs £16,500 a year to send a child to a private school in London. This is an increase of more than 20% over the last five years, and easily outstrips inflation and the minimal growth of the average salaries.
One effective way to counter against this perfect storm is through the implementation of the Government’s new innovative finance ISA, or IFISA. Introduced in April of this year, it differs to the standard ISA product as it allows savers to invest money on P2P platforms which are then lent out to third party businesses.
In simple terms, this allows investors to lend money to credit worthy businesses seeking debt funds. Crowd2Fund, one of only a handful of IFISA products on the market allows savers to enjoy gross returns of up to around 8%. Within Crowd2Fund’s IFISA investors are able to invest in a number of growing and exciting British businesses, with the addition of enjoying tax free returns.
In order to diversify, and spread the chance of risk, families are encouraged to invest in a number of different sectors. Current opportunities on the platform include Genpower, an award winning distributor of power equipment, and Genie9, an innovative provider of cloud data storage backup services.
Crowd2Fund also have an ios and Android app, which means you can even review opportunities and invest on your phone whilst you are on the school run.
As well as utilising the current year’s ISA allowance, currently £15,240, investors are able to move historic holdings in third party providers into Crowd2Fund’s IFISA. This is a very easy process, and families would be wise to do this if funds are held in cash ISA’s due to low returns which they currently offer.
When doing this it is important that you do not fall foul of losing your tax wrapper. For simple instructions how to do this securely read the instructions on Crowd2Fund’s website.
Taking action now will help counter against future uncertainty and risk from Brexit, and will help you prepare and safeguard for your family’s future.
* Written by Crowd2Fund *