Tax-free savings with a difference
by Matt Taylor
If you’ve been saving for a long time, you probably have at least one ISA. In fact, many experienced investors have lots of them. ISAs are a great way to shield your returns from tax, due to the £20,000 annual personal ISA allowance which renews each year in April.
Many investors don’t know about the Innovative Finance ISA, known as the IFISA. In fact, government ISA statistics often overlook it. Yet, as the only route to tax-free investment in private debt, the IFISA really stands out. And for investors who are aware of the many attractions of private debt, IFISAs should be irresistible.
There’s one problem though, and that is getting diversity. Diversity is a vital tool in managing risk, and since private debt involves higher risk than traditional stock market investing, spreading investments across different opportunities is crucial .
However, when looking at IFISA providers, there’s not much diversity. Almost everyone is lending against property or renewables. As far as I know, only one IFISA offers access to private debt in management buyouts across a wide range of sectors: the Rockpool IFISA.
Management buyouts arguably involve higher risk than property lending, but the potential returns are also significantly higher. My experience suggests that management buyouts can deliver returns of more than 15%, compared to 5-7% for property lending. Capital is at risk and there is no guarantee of any return. Above all, adding this extra leg to an ISA portfolio can enhance diversification and offer attractive growth potential.
About The Rockpool IFISA
Since its launch in 2018, over 230 investors have opened a Rockpool IFISA. Most had already grown to like the Rockpool model, with its transparency and track record. Adding an IFISA was the natural next step. Yet, there are still many experienced investors who haven’t explored this opportunity. Given the current climate, where interest rates on traditional savings are declining and inflation remains a concern, now may be the right time to take a closer look.
Want to learn more about opening a Rockpool IFISA? Reach out to your Relationship Manager, email us at team@rockpoolinvestments.co.uk, or call us on 020 3854 8100.
Private company loans do not provide a reliable source of income and are not readily realisable. It is important to hold a number of loans in order to achieve diversification. Investment losses could offset profits within your IFISA, in which case the amount of your tax-free savings would be reduced.
