Boost Your Income The Modern Way - But Be Careful!

Boost Your Income The Modern Way – But Be Careful!
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Crowdfunding And Peer-To-Peer For SIPP And SSAS

This article is part of a series. To view all the articles in the series, click the button below.

Crowdfunding And Peer-To-Peer For SIPP And SSAS

With peer-to-peer lending delivering increased income for thousands of people, read the Income Investor Report on Peer-To-Peer, but don't miss the warning at the bottom of this article showing what can happen when a platform fails

Income Investor’s Peer-To-Peer Lending Special

Boost Your Income With The Major Funds And Platforms

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In the recent edition of Citywire’s Income Investor, editor Daniel Grote looks at the boom in peer-to-peer lending. 

He writes that the sector has been growing at breakneck speed in recent years, fuelled by income-hungry investors and borrowers denied lending by the banks.  At it’s set to get even bigger, thanks to chancellor George Osborne’s plans to allow the investments to be held in ISAs from April 2016. 

In the Income Investor Report, Jennifer Hill takes a look at the prospects for the sector, and some of the reasons behind its strong growth.  Fund managers have been among the most enthusiastic backers, and the reasons for this are covered, along with some of the risks involved.

If you are keen to take part in the peer-to-peer boom, getting involved can be far from straightforward. There are a plethora of different platforms on the market, and picking the right one may appear a daunting task.  Citywire has reviewed some of the major players, and it reveals more differences than you may expect in the type of borrowers lent to, rates offered, and the way in which loans are repaid.  Crucially for some investors, not all platforms make it easy to take your interest while leaving your capital untouched.

An alternative to doing it yourself can be to find a fund to pick P2P loans for you.  In the last year, a number of investments trusts have been launched, focusing on the sector with some more to come.  Robert St George has reviewed what’s on offer, though it has to be said this isn't peer-to-peer in the true sense, where lenders grant loans directly to borrowers, cutting out the banks.  It seems the institutions want a slice of the action, so beware of their charges if you invest in these funds, and watch out for price volatility.

Read the Income Investor Report on Peer-To-Peer Lending.

Listen To Crowdfunders Discussing Income And Lots More

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In episode 6 of Crowdfunders, a shareradio production, Ed Bowsher talks with Neil Faulkner of 4th Way, John Goodall of Landbay and Angus Dent of Archover on a variety of subjects around peer-to-peer income. Hit the grey arrow on the black bar below to listen.

 

This series of podcasts are well worth checking out.  Listen to previous episodes of Crowdfunders to get some great tips on how to grow your money and increase your income.

Warning About Peer-To-Peer Income

There's no doubt peer-to-peer is here to stay.  But sometimes thing go wrong and many in the industry have been expecting a disaster.  Well, it's just happened.  If you're earning income from lending your money on peer-to-peer platforms or you're considering it, see how a platform failure could affect your income.

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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets

That's our opinion.  Not just because AJ Bell was the first company to offer an online SIPP.  Nor that it's received many prestigious awards.  And not even because the wife of SIPPclub's Founder has an AJ Bell SIPP.  It's because it's one of the most competitive stockmarket SIPPs on the market. 

Over time, charges can wipe out a huge part of your fund.  We like AJ Bell because there are no set-up costs.  If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund.  And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment).  However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.

Visit AJ Bell

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As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk.  Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.

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Crowdfunding And Peer-To-Peer Risk Warning

When a platform has been assessed and approved by a SIPP or SSAS operator, this does not imply that any loan or investment opportunity is endorsed in any way. A SIPP or SSAS operator's due diligence review is limited to ensuring the processes and procedures of the platform are in line with both FCA and HMRC principles.  It's entirely your responsibility for carrying out your own due diligence on any loan or investment opportunity before agreeing to lend or invest your pension money on a platform. As a SIPP or SSAS operator will continually review platforms from a regulatory perspective, it's possible for a platform to become 'unapproved' if something changes.

With peer-to-peer lending, your capital is at risk if you lend to individuals and businesses.  You may lose some or all of the capital lent if the borrower defaults and is unable to meet its liabilities. Historic loan default rates are not necessarily indicative of future default rates.  In addition, lending is an illiquid investment, which means you may not be able to access the capital you lend for the duration of the loan period, even if the platform offers a secondary market.  Investing in any business involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdfunding is generally targeted at investors who are sufficiently sophisticated to understand the risks and make their own investment decisions, based on their knowledge, experience and financial capacity. Neither crowdfunding nor peer-to-peer lending is covered by the Financial Services Compensation Scheme. The tax treatment of your investment is dependent on your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of crowdfunding investment or peer-to-peer lending, you should consult a suitably qualified independent financial adviser.