March 30, 2020

Ratesetter: My Review of This P2P Lending Platform

Nick Making Money, Investing crowdfunding 1 Comment

Updated 11th June 2020

Around two years ago I invested some money in the Ratesetter P2P lending platform, partly – I admit – to take advantage of their welcome offer (the current welcome offer is discussed below). So today I thought I would share my thoughts about it.

Ratesetter is a P2P platform that puts would-be lenders and borrowers together, obviously taking fees for doing so. It is one of the longest-running P2P lending platforms, having launched in 2010. They are one of the ‘Big Three’ P2P lending platforms, which also include Zopa and Funding Circle.

In this post I am looking at Ratesetter from a lender’s (or investor’s) point of view, but of course anyone can apply to borrow via Ratesetter too.

Types of Investment

Although investors lend money to borrowers via RateSetter, the actual lending is done behind the scenes. So from an investor’s point of view, RateSetter looks and works much like a bank or building society. Importantly, though, investors with RateSetter don’t benefit from the protection bank and building society savers receive by law in the UK via the Financial Services Compensation Scheme. More about this shortly.

There are three main investment products available on RateSetter. They are named Access, Plus and Max.

The Access product, as the name indicates, aims to offer quick access to your funds without any fee. The Plus and Max products pay more interest but you have to pay a ‘release fee’ of 30 or 90 days’ interest respectively if you wish to withdraw from them.

The terms and conditions for each account are summed up in the screen capture below.

Note that the interest rates on Ratesetter can vary, and the rates on offer when you read this may be different from those shown above.

The Access product is the closest equivalent to an ordinary savings account. You can ask to withdraw some or all of your money at any time without penalty. It’s important, however, to note that this is NOT the same as an instant saver account with a bank or building society. Withdrawing does depend on there being other investors willing to take over your lending on the platform. Ratesetter say that to date investors have received their withdrawn investments within 24 hours on average, which does offer some reassurance.

There is also a ‘fair usage’ clause, which prevents investors from lending new money for 14 days after a withdrawal.

With the Plus and Max products you can also request withdrawals at any time. As stated above, however, in these cases a release fee is applied.

Provision Fund

As with all P2P lending, your money does not enjoy the same level of protection as bank and building society accounts, which are covered (up to £85,000) by the Financial Services Compensation Scheme.

Ratesetter does, however, have a provision fund which provides a safety net in the event of a borrower defaulting. In the ten years since it was launched no investor has lost money from defaults on RateSetter, which is pretty impressive (although obviously it doesn’t guarantee it couldn’t happen in future). The provision fund is paid for by a ‘credit rate fee’ which is paid by all new borrowers.

It’s worth mentioning also that provision fund protection extends equally across all loans. There is therefore no particular need to diversify your investments on Ratesetter, although you should of course diversify across other platforms and investment types.

The IFISA Option

You can also invest in Ratesetter through an IFISA (Innovative Finance ISA). This type of ISA for P2P lending gives you the same tax advantages as a cash or stocks and shares ISA, i.e. you don’t have to pay any tax on the profits you make.

Everyone has a generous annual ISA allowance of £20,000 (in the current 2019/20 tax year). This can be divided any way you like among the three types of ISA. So if you open a Ratesetter IFISA, you can still have cash and stocks and shares ISAs with other providers as well, so long as you don’t invest more than £20,000 in total. You can also only invest money in one of each type of ISA in any one financial year.

If you have maxed out your ISA allowance – or have invested in another IFISA in the current tax year – you still have the option of opening an Everyday Account. You can invest any amount in this, but of course the profits you make will be taxable.

2020 Interest Rate Cut

Due to the coronavirus crisis and the current febrile economic environment, RateSetter announced on 4th May 2020 that there would be a temporary reduction in interest rates for the remainder of 2020. During this time, investors will receive only 50% of their interest, with the other 50% going to the Provision Fund, for the protection of all investors. At current rates. that means the actual interest rates paid during this time will be 1.5% for Access accounts, 1.75% for Plus accounts, and 2% for Max accounts.

I have also heard (and confirmed with Ratesetter) that currently repayment requests are taking three to six months to process. If that changes I will update the information here.

Ratesetter Pros and Cons

Based on my experiences so far – and the results of some online research – here is my list of pros and cons for the Ratesetter P2P lending platform.

Pros

1. Fast, easy sign-up.

2. Low (£10) minimum investment.

3. Choice of investment terms

4. Quick and simple investment process.

5. Tax-free IFISA option available.

6. Provision fund protects lenders against loss (no investor losses at all to date).

7. Ability to access your money at any time (though with a fee when exiting the Plus and Max products)..

8. Customer service (in my experience anyway) is fast and helpful.

9. NEW! A free £100 added to your account for new users who invest £1,000 and keep this invested for a year (see below).

Cons

1. Rates paid aren’t the highest in P2P lending.

2. Website isn’t always as intuitive to use as it should be.

3. Withdrawals are taking longer than usual to process due to increased demand following the coronavirus outbreak.

4. Temporary interest rate reduction by half to help boost the Provision Fund (see above)

Conclusion

Overall, my experiences with Ratesetter so far have been good. My initial deposit was matched within 24 hours and has been generating the promised returns ever since. I reinvested my bonus payment into the platform and this is earning interest as well.

As mentioned earlier, P2P lending does not enjoy the same level of protection as bank and building society savings, which are covered (up to £85,000) by the Financial Services Compensation Scheme. Nonetheless, the rates on offer at Ratesetter are significantly better than those from most banks and building societies. And the existence of a substantial provision fund with a strong record of protecting investors from losses clearly offers reassurance. Based on its past record and the protections in place, Ratesetter appears to be one of the safer P2P lending platforms.

It’s also reassuring that you can access your money any time – this can be an issue with property crowdfunding platforms in particular, as liquidity in these platforms can be limited. With the Plus and Max products you will be charged for exiting early, though, so invest in these only if you are pretty confident you won’t be needing the money within the next few months.

On the negative side, the current three to six month delay in withdrawals, and the halving of the rate paid to investors, is clearly disappointing. I understand that RateSetter are doing this to protect the business in the longer term, but it obviously it reduces the attraction of investing with them currently (though see Welcome Offer, below)

Clearly, no-one should put all their spare cash into Ratesetter (or any other P2P lending platform). Nonetheless, it is worth considering as part of a diversified portfolio. Not only are the rates of return higher than those offered by banks and building societies, they are relatively unaffected by ups and downs in the stock market. P2P lending isn’t a way of hedging your equity-based investments directly, but it does help spread the risk.

Welcome Offer

Currently if you are new to RateSetter you can get £100 added to your account for free just by signing up and depositing £1,000. Full terms of the offer are reproduced below, and you can also find them on the RateSetter website.

You can take advantage of this offer so long as you

have not previously registered with RateSetter
deposit a minimum of £1,000 through the RateSetter ISA or Everyday account and this is matched within 56 calendar days of opening an account
keep a minimum of £1,000 invested for 1 year

Your bonus will be credited to your Everyday Account and invested in Ratesetter’s Access product within 30 working days of qualifying. You can ask to withdraw your money at any time, but you must keep a minimum of £1,000 invested for 1 year to qualify for your £100 bonus.

My Thoughts: This is a great offer from RateSetter if you are new to the platform. If you invest £1,000 and keep it there for a year, then including the £100 welcome bonus you will get a total return of at least 12 percent for the first year, even allowing for the temporary 50% rate cut. As a matter of interest, this is the same welcome offer I took advantage of when I signed up with RateSetter two years ago, and my bonus £100 was credited without any issues (or prompting from me) twelve months later.

Clearly, this is a generous promotional offer by RateSetter and I assume it won’t be available forever. If you want to take advantage, therefore, don’t wait too long. I will remove this information if/when I hear the offer is no longer valid.

As always, if you have any questions or comments about this post, please do leave them below.

Note: This is a fully revised and updated relist of my original (2018) RateSetter review.

Disclosure: this post includes affiliate links. If you click through and make an investment at the website in question, I may receive a commission for introducing you. This has no effect on the terms or benefits you will receive.

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March 27, 2020

So Why Does a Money Blogger Need a Personal Financial Adviser?

Nick Pensions & Benefits, Investing pensions, benefits, retirement 6 Comments

…that’s the question I was asked recently by a Pounds and Sense reader after I mentioned in this blog post that I had a financial adviser.

Of course I replied to her directly at the time, but on reflection I thought it would be good to provide a more in-depth answer to this question on the blog.

To recap, my financial adviser is called Mike and he works for a company called Integrity Wealth Solutions. I was recommended to Mike by my accountant, and he has been advising me for over three years now.

Mike actually looks after about half of my portfolio. He advised me about this initially and set up the recommended investments on my behalf, making maximum use of my tax-free allowances. He continues to monitor my investments and makes any recommendations for adjustments as required. I see Mike once a year in person to review how things are going (both with the investments and me personally). But of course, I can also speak to him by phone (or email) any time if required.

The other half of my portfolio I look after myself, and it is fair to say it is well diversified! As regular readers of PAS will know, I have investments in property crowdfunding, P2P lending, the robo advisory platform Nutmeg, and various others.

Why then do I need Mike? Here are just some of the reasons…

1. Mike is a trained and experienced independent financial adviser/planner who works full-time in this field. I am a money blogger and obviously have a special interest in financial matters, but I have no professional training or direct work experience in this field. I can ask Mike for his professional opinion on any investment-related matters, and while I am not obliged to follow his advice I do of course take it very seriously.

2. Mike has a backup team in his office and access to specialist investment research services and software. He uses these resources to inform his advice, and also to provide in-depth reports (with snazzy-looking charts and spreadsheets!) regarding how my investments are performing.

3. As a regulated financial adviser, Mike has to follow all the correct protocols and ensure that all advice he gives follows best professional practice and is appropriate for my needs and circumstances. He cannot cut corners, invest on a whim or hunch, or let himself be distracted by the latest ‘bright shiny object’ in the investment world. I have to admit that I have been guilty of all of these things myself in the past!

4. As a professional financial adviser Mike also has access to certain investment opportunities or platforms that are not easily accessible to the general public. I won’t go into detail about this here, but it is certainly something I have had occasion to be grateful for in the current coronavirus outbreak.

5. Mike is able to provide personalized but objective advice about my finances, based on information I give him. Money and investment can be emotive subjects, and it’s great to have a sympathetic – but at the same time sensible and detached – professional advising you. I am sure Mike sometimes sighs inwardly at some of my more exotic investments, but he is always interested in what I have been doing with ‘my’ half of my portfolio and happy to offer his thoughts as appropriate.

Are there any drawbacks to having an adviser? Well, of course, you have to pay them! In the case of Mike I paid an up-front fee initially and now pay a small monthly commission. Hand on heart I can say that Mike is well worth his fee, and even in the current exceptional circumstances his charges have been more than covered by the amount by which my investments have grown.

So that is why I have a personal financial adviser. If you are fortunate enough to have money to invest, I strongly recommend you consider engaging one too.

If you would like to find out more about the service offered by Mike and his colleagues at Integrity Wealth Solutions, you can check out their website and contact them on 02476 388 911, or email them at advice@integritywealth.co.uk. They are friendly and not at all pushy, and will be delighted to talk you through the service they offer without obligation. If you do get in touch, please mention that you were recommended by Nick Daws of Pounds and Sense blog. If you end up becoming a client they have said that they will pay me a small fee to say thanks. This will help to cover my costs and ensure I am able to go on sharing tips and advice to Pounds and Sense readers.

As always, if you have any comments or questions about this post, just let me know.

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March 23, 2020

Download My Kindle Ebooks Free This Week!

Nick Everything Else writing, events 0 Comments

I’m a bit off-topic today, I know. But these are – to put it mildly – exceptional times, and we all have to respond as best we can.

I know many people are having to self-isolate right now, or at least spend a lot more time at home. So I thought I would make a small contribution towards making life more bearable by offering both of my Kindle ebooks free of charge.

My ebook The Festival on Lyris Five is a tongue-in-cheek science fiction novella featuring illustrations by the talented Louise Tolentino. You can download it free (until Thursday 26 March) by clicking here or on the ad below. I hope you enjoy reading it. If you do, a review would be appreciated (though certainly not a requirement!).

My other ebook is called Three Great Techniques for Plotting Your Novel or Screenplay. As you’ll gather, this is aimed at writers and aspiring writers. If you are in that group, I hope you will find the tips and advice it contains helpful. Again, here is a link or you can click on the display ad below.

As you may know, you don’t need a Kindle device to read Kindle e-books. You can also read them on your mobile phone, tablet or PC using the free Kindle app available via Amazon at https://www.amazon.co.uk/kindle-dbs/fd/kcp

And since one of these titles is aimed at writers, I thought I would also include a plug here for Best Writing Forum, which I helped set up a couple of years ago. BWF is free to join and has members all over the world. If you are looking for support or feedback with your writing, you will find it here. Equally, if you are just seeking online companionship from fellow writers during these most stressful of times, you can find that here as well.

As ever, if you have any comments or questions about this post, please do leave them below.

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March 18, 2020

AdviceBridge: A Personalized, Affordable Retirement Planning Service

Nick Pensions & Benefits reviews, sponsored post, pensions, retirement 4 Comments

Today I’m spotlighting a pension advisory service called AdviceBridge that may be of interest to any Pounds and Sense readers who are planning for their retirement.

There is no doubt that in recent years retirement planning has become more challenging. The pension reforms introduced by George Osborne in 2015 gave people much more freedom over how and when they can access their retirement savings. There are many benefits to those reforms – and I’m a fan of them myself – but it does mean most people now have big decisions to make over how to finance their retirement.

A further factor is the decline of ‘defined benefit’ pensions. These guaranteed a certain pension usually based on how long you had worked for an employer and how much you earned during your career. The great majority of working age people nowadays have ‘defined contribution’ pensions, where you build up a pension pot over the course of your working life. This then provides you with an income (alongside the state pension and any other investments) when you retire. Anyone with a pension of this type will have important choices to make over how, when and where to save for their pension, and what to do with it once they reach retirement age. Many people who are not financial services professionals understandably struggle with this and need some expert help (I did myself).

Getting professional financial advice can be expensive – typically pension advisers in the UK charge £2,000-£3,000 up front and then 0.5% a year. But a new service called AdviceBridge promises a personalized, affordable retirement planning service. Indeed, they say they can do this for as little as a tenth of the average adviser fee, partly by running the service online and over the phone (no face-to-face meetings required).

Although it is a low-cost service, AdviceBridge is staffed by fully trained and regulated financial advisers, and the company is authorized and regulated by the Financial Conduct Authority (FCA). AdviceBridge never holds investors’ money, even when they assist in the implementation of a retirement plan. The advice they give is though covered by the Financial Services Compensation Scheme (FSCS), which means clients can claim compensation of up to £85,000 if they receive bad advice.

Who Is AdviceBridge For?

In order to keep their charges low, AdviceBridge say that at the moment they are only able to help clients who meet the following criteria:

You are resident and domiciled in the UK.
You are generally in good health.
You do not have any unsecured loans.
You are not currently contributing to pensions with safeguarded benefits such as a final salary pension.
You do not own any buy-to-let property or any non-standard investments.
You do not receive any means-tested benefits.
You would like to plan individually, not as a couple.

How Does It Work?

Assuming you meet the criteria above, you start by filling in an online questionnaire and completing some electronically-signed compliance documents.

As well as the usual contact information, the questionnaire covers such matters as:

your age
your employment status
your annual income
any existing private or company pensions
whether you will qualify for a full state pension
other savings and investments
your target retirement age
how much income you hope to have in retirement
any major outgoings in future you need to plan for
and so on

Once you have entered this information, you can create and log in to your account to see an overview of your financial situation. You can adjust the parameters in order to achieve a realistic and sustainable level of retirement income. Here is a screen capture showing part of this (an example account, not mine personally!).

Personalized Plan

Naturally, the above is just the first stage of the process. Once you have provided this information and set up your account, the AdviceBridge advisers will crunch the numbers and (with the aid of their specialist software) produce a personalized plan for you.

This is obviously a key document. The sample plan I saw came to 39 pages in PDF form. It was divided into three sections: About You, Our Recommendations and Advice, and Appendices.

About You sums up the information you have provided to AdviceBridge via the questionnaire. It covers your personal circumstances, your retirement savings and investments, and your progress so far towards achieving your retirement goals.

Our Recommendations and Advice is the longest section of the plan. It presents recommendations on every aspect of managing your finances for retirement, including restructuring your investment portfolio if required (with specific recommendations for low-cost personal pensions and ISAs). It also examines the likely outcome of following the recommendations, including both average and conservative projections. A sample page from this section of the plan is shown below.

Finally, the Appendices section includes a range of supplementary information, including more detail about the UK state pension, rules about annual pension allowances and taxation, your options for accessing your pension (drawdown, annuities, etc), and more.

It doesn’t end there, though. Once you have had a chance to read and digest your plan, you can arrange a call with a personal financial adviser from AdviceBridge to talk through the advice and recommendations and help you decide how to proceed. The advisers are not paid commission on product sales, so they are able to give unbiased advice about what investments may be best for you based on your specific circumstances.

So What Does It Cost?

For the basic AdviceBridge service as described above, there is a one-off fee of £300 with no recurring charges. This service will suit people who are happy to arrange their own investments based on the advice given and the telephone call with an adviser.

If you want AdviceBridge to set up the recommended investments for you – to implement your financial plan, in other words – they will do this as well for an inclusive fee of £500, again with no recurring charges.

Finally, if you opt for the Plan+Implementation service and want ongoing support and assistance too, including dynamic risk adjustment, an annual telephone review, ongoing telephone support, assistance putting your pension into drawdown, and the opportunity to monitor your portfolio online using a dedicated app, AdviceBridge offer all this for an additional £100 a year or £10 a month.

All of the above is summed up in the table below which I have copied from the AdviceBridge website.

My Thoughts

Overall, I have been very impressed by AdviceBridge, both in terms of what they are offering and the prompt and friendly support they provided while I was writing this article. Here are some of the main things I like about their service:

much lower fees than traditional financial advisers
all fees quoted include any taxes due – what you see is what you pay
range of options according to how much (or little) work you want to take on yourself
non-commission-based advisers, so unbiased advice on what investments will suit you best
advisers are free to recommend across the entire range of investment opportunities
all digital process – no need for personal visits or face-to-face meetings
fully FCA authorized company and advisers
advice is covered up to £85,000 under the Financial Services Compensation Scheme (FSCS)
all personal information is securely encrypted
in-depth written advice and recommendations on your retirement finances backed up by telephone support

Any negatives? Well, the only real one I could find is that various groups are currently excluded from the service, e.g. buy-to-let landlords and holders of ‘non-standard investments’. I guess the latter might include me, as I have a proportion of my portfolio in P2P lending and property crowdfunding.

I do of course appreciate that to keep their service so inexpensive AdviceBridge have to streamline their service, but it is a pity if this excludes a significant proportion of people who could benefit from it. I understand that this is something that AdviceBridge keep under review and in future they may remove some of these restrictions. In the mean time, if you aren’t sure whether you are eligible, it is well worth giving them a ring or contacting them via the website to ask (without obligation).

In my opinion, if your circumstances match their criteria, AdviceBridge are well worth checking out. I particularly like their £500 Plan+Implementation service, which covers not only researching and producing a retirement plan for you but implementing it as well. I would also seriously consider paying the extra £100 a year (or £10 a month) for the ongoing service. Obviously that brings the price up a bit further, but it is still far less than you would pay a traditional financial adviser for a similar service.

As always, if you have any comments or questions about this post, please do leave them below.

Disclaimer: This is a sponsored post for which I am receiving a fixed fee (but no commission). Please note also that I am not a professional financial adviser and nothing in this post should be construed as individual financial advice. Everyone should do their own ‘due diligence’ before investing and take professional advice as appropriate. All investment carries a risk of loss.

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March 16, 2020

Win an M&S Easter Hamper in the UKMB Spring Giveaway!

Nick Everything Else events, competitions 0 Comments

I’ve joined forces today with some of my fellow UK Money Bloggers to put together a giveaway of FIVE M&S Easter Family Hampers. That means five lucky winners will receive a hamper in time for Easter 2020 🙂

These hampers sell for £50 apiece on the M&S website. The full contents are as follows:

Gold label teabags (250g/ 80 bags)
Caramel eggs (120g)
Hide and seek egg hunt bag (135g)
Simnel cake bar (460g)
Chicky choccy speckled eggs (90g)
8 Spiced Easter biscuits (200g)
Bubbly bunny (23g) x 4
British strawberry soft set jam (113g)
Easter fried eggs whips (180g)
4 golden hot cross buns (260g/pack of 4)
Presented in a dark stained basket with brown faux leather strap

In the event of supply difficulties, or with discontinued products, M&S say they reserve the right to offer alternative goods or packaging of equal quality and value. Full information about the hamper and its contents can be found on the M&S website.

Here then are all the details you need to enter, provided by my colleague Emma Drew (who is co-ordinating this event). Good luck! It would be great if a Pounds and Sense reader wins one (or more) of the prizes 🙂

Meet the Bloggers Taking Part

The bloggers taking part in this fantastic giveaway are as follows…

The Prizes

There are five M&S Easter Hampers up for grabs, worth £50 each.

If the hamper is no longer available when the winners are drawn then the winners will be offered an alternative hamper from M&S worth £50 each.

Enter to Win

To enter simply complete any or all of the Rafflecopter entry widget options below.

The competition closes at midnight on 29th March 2020. If the hamper selected is sold out then we will offer an alternative M&S hamper worth £50. You can see the widget for the full terms and conditions of this giveaway.

a Rafflecopter giveaway

One final small point is that if a winning entry comes from following someone on social media, Emma will check before awarding the prize that the winner is still following the account in question. If they aren’t, they will be disqualified and a new winner drawn. So, please, don’t follow and immediately unfollow, as your entry won’t then count.

Good luck, and I really do hope you win a hamper!

As always, if you have any comments or questions about this post, please do leave them below.

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March 10, 2020

The House Crowd: My Review of this Property Crowdfunding Platform

Nick Investing property, crowdfunding 2 Comments

Regular readers will know that I am something of an enthusiast for property investment (and specifically property crowdfunding). Among other things, I like the fact that you can make money from both rental income and capital growth. And investing in property can be a good way of spreading risk when you have equity-based investments.

The House Crowd was actually the first property crowdfunding company I invested with, starting in 2014. So I thought I would say a few words today about my experiences with the company and the investment opportunities they offer.

History

When I started investing with The House Crowd, they were offering mainly shares in specific properties. Investors pooled their money to buy a property and received a share of the rental income (distributed annually) with their money back – and hopefully a good profit – when the property concerned was sold. Typically a five-year timescale was specified, with investors then able to vote on whether to sell and take their profits or continue for another year (or more).

I still have shares in seven House Crowd properties. There haven’t been any disasters, though in certain cases rental income has been lower than forecast. This was typically due to voids (tenants leaving and not being replaced). There were also a few cases of tenants failing to pay their rent and absconding. And there was one ‘tenant from hell’, who apparently threatened other tenants with a knife so they all left, caused serious damage to the property, and left owing six months’ rent. Reading about this made me glad I invest via property crowdfunding platforms (and REITs) and am not a landlord myself.

One drawback of this type of investment is that it is quite illiquid. If you want your money back before a property is sold, The House Crowd will try to sell your share to another investor. There is no guarantee a buyer will be found, however, and even if one is you will only get the price you paid for your share. There is currently no formal secondary market, as on some other platforms such as Property Partner.

On the plus side, this sort of investment has its attractions from a tax perspective. Rental distributions are paid as dividends. There is currently a £2,000 annual tax-free dividend allowance which many people don’t otherwise use. And even if your dividend income exceeds £2,000, as a basic rate taxpayer you will only pay 7.5% tax on the balance above this. Gains when selling are – of course – treated as capital gains, and again there is a generous annual tax-free CGT allowance (£12,000 in 2019/20).

New Types of Investment

In recent years, recognizing that some investors were being deterred by the lack of liquidity, The House Crowd have introduced other types of investment. One of these is secured loans. Here money is lent to developers (or THC’s sister company, House Crowd Developments) for short- to medium-term projects, typically between 6 and 18 months.

Obviously you don’t get rental income with these, but you get your money back with interest once the loan is paid off. Interest rates vary, but are typically in the region of 7 to 12% per year. The rate paid generally depends on the LTV (loan to value). The higher the LTV (the loan amount compared with the property value), the riskier the loan, and the higher the interest rate on offer as a result. Some example projects open for investment at the time of writing can be seen in the cover image at the top of this post.

I have invested in loans with The House Crowd as well. The majority have gone well. For example, I invested £5,000 in a development loan for a Welsh property called Croesyceiliog Farm. I got this back with £461.99 interest ten months later.

Other loan investments haven’t gone as smoothly. For example, in 2016 I invested £1,000 in a loan for a property called Caverswall Castle. This was meant to be 12-month loan, but the borrower defaulted and legal action is now being taken to sell the property and repay investors. I still expect to get my money back eventually, but legal proceedings move at a glacial pace. How much interest I will get after all costs are covered I don’t know. At this stage, if I just get my £1,000 back, I will be more than happy.

Secured loans have various attractions for investors, and many property crowdfunding platforms as well as The House Crowd are now offering more opportunities of this nature. They have the advantage of shorter timescales than direct investment and decent rates of return (assuming the borrower doesn’t default). One drawback is that the interest paid when the loan is redeemed is treated as income, so you will have to pay tax on it at your highest marginal rate.

Auto-Invest and IFISA

In recent years The House Crowd have introduced an Auto-Invest product which you can (optionally) hold as an Innovative Finance ISA (IFISA).

As you may know, IFISAs offer the opportunity to invest in P2P lending and get tax-free returns. Everyone has a generous annual ISA allowance of £20,000 (in the current 2019/20 tax year). This can be divided any way you like among the three types of ISA. So if you open a House Crowd IFISA, you can still have cash and stocks and shares ISAs with other providers as well, so long as you don’t invest more than £20,000 in total. Note that you can also only invest in one ISA of each type per financial year.

The House Crowd Auto-Invest product allows you to invest in one of three investment portfolios: Cautious, Balanced or Bold. Each of these comprises a basket of bridging and development loans, providing automatic diversification. The Cautious product has a target return of 5%, the Balanced 6%, and the Bold 7%. Note that these are target rates and they are not guaranteed. I have copied a summary table about the three products from the House Crowd website below .

As you can see, the more ‘adventurous’ the product, the higher the average LTV and the higher the maximum LTV. As mentioned earlier, the higher the LTV (other things being equal) the riskier the loan, and the higher the interest rate on offer as a result.

There is a minimum investment of £1,000 and a minimum 12-month term. After that you can withdraw by giving 30 days’ notice. Your money is protected by a legal charge secured against the borrower’s land/property, which can be possessed and sold in the event of the borrower not repaying.

It is possible to transfer another ISA to the House Crowd IFISA free of charge if it is over £5,000 (there is a £50 transfer fee for ISAs valued from £1,000 to £4,999).

Pros and Cons

As usual, here is my list of pros and cons for The House Crowd.

Pros

1. Well-established property crowdfunding platform with a good track record.

2. Customer service is fast, friendly and helpful.

3. Choice of investment types.

4. Tax-free IFISA option available.

5. Competitive rates of interest.

6. Attractive, user-friendly website.

7. Detailed information provided about loans and investments.

Cons

1. Limited liquidity with no formal secondary market.

2. Rental income (where applicable) only distributed annually.

2. Minimum £1,000 investment.

3. Some loans are currently in default.

4. Can’t open an IFISA if you have already put money in another IFISA this year.

Conclusion

For the most part I have been happy with my experiences with The House Crowd to date. Although (as mentioned above) there have been ups and downs, overall I have still made a good net return from my investments with them.

I like the new Auto-Invest/IFISA option, which is automatically diversified across a range of loans (thus reducing volatility and risk). The minimum 12 month term and withdrawal on 30 days’ notice thereafter is attractive as well. It is, however, important to be aware that the target rates of return quoted are not guaranteed.

You should also bear in mind that investments with The House Crowd do not enjoy the same level of protection as bank and building society savings, which are covered (up to £85,000) by the Financial Services Compensation Scheme. All investments are though secured against bricks and mortar, so in the event of a borrower defaulting you should still get your money (or most of it) back once the property has been sold. But obviously, this may take a while.

The lack of liquidity with property investments generally – and the absence of a formal secondary market with The House Crowd – means you should only invest money you are unlikely to need at short notice. This should be regarded as a medium- to long-term investment, therefore.

Clearly, no-one should put all their spare cash into The House Crowd (or any other investment platform). Nonetheless, it is worth considering as part of a diversified portfolio. Not only are the rates of return significantly higher than those offered by banks and building societies, they are relatively unaffected by fluctuations in the stock market. Property investments aren’t a way of hedging your equity-based investments directly, but they do help spread the risk

A further consideration is that with world stock markets in chaos at the moment due to the coronavirus outbreak, now is probably not an ideal time for the average individual to be investing in stocks and shares. P2P lending of the type offered by The House Crowd represents an alternative investment approach that may be less susceptible to the wild ups and downs (mostly downs) on stocks and shares right now..

Welcome Offer

Unfortunately at present there is no welcome offer (or referral scheme) for new investors with The House Crowd. If a welcome offer is launched in future, I will of course post full details here.

If you plan to open an account with The House Crowd after reading this review, I’d still be grateful if you could let me know by sending a message via my contact form or leaving a comment on this post. This may help me persuade THC to set up a referral scheme and/or welcome offer in future 🙂

And of course, if you have any comments or questions about this review, as always, please do leave them below.

Note: This is a fully revised and updated version of my original 2017 review.

Disclosure: I am not a professional financial adviser and nothing in this post should be construed as personal financial advice. You should do your own ‘due diligence’ before making any investment, and seek professional advice from a qualified financial adviser if in any doubt how best to proceed. All investments carry a risk of loss. Finally, in the interests of full disclosure, I should reveal that as well as being an investor with The House Crowd, I also own shares in the company.

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March 3, 2020

When Can You Get a Free Bus Pass?

Nick Pensions & Benefits, Saving Money travel, benefits 2 Comments

For many older people the free bus pass (officially known as the older person’s bus pass) is a valuable concession. It helps them get about and maintain their independence without eating into their often limited income.

Holders typically get free bus travel within their local authority area between 9.30 am and 11 pm on weekdays and all day at weekends.

The rules for when you qualify for a free bus pass vary according to where in the UK you live. In Scotland, Wales and Northern Ireland, it’s straightforward. You qualify once you reach your 60th birthday.

Those living in England are not as fortunate. In this case, you won’t qualify until you reach the current state pension age. This is currently 66 for both men and women. The state pension age will start to increase again from 6 May 2026, and will reach 67 by 6 March 2028.

Once you have reached the qualifying age in whichever country of the UK you live, you can apply via the government’s Apply for an Older Person’s Bus Pass page. You will see a box on this page in which to enter your postcode. Clicking through this should take you to the website for your local authority (though you may have to navigate to the page for travel concessions from there). You can then apply online for your bus pass. Requirements can vary from one local authority to another, but in general you will be required to upload a passport-style photo, proof of identity, and proof of residency in the area concerned (e.g. a council tax bill). For info about how to renew your bus pass online, please click here.

If you don’t want to apply online, most authorities also offer an option to apply in person, e.g. at a public library. Your local authority website should have more information about this.

Some local authorities have their own schemes and concessions for older (and/or disabled) people. Again, your local authority website should tell you if there are any special concessions for older people in your area, or you can ask at your local library.

In London, once you reach the female state pension age you can apply for an Older Person’s Freedom Pass. This entitles you to 24-hour free travel across Transport for London’s networks (except for some river boats where travel is half price). You can check your eligibility for a Freedom Pass and apply here.

Cards and Discounts

Even if you don’t yet qualify for a free bus pass, there may be other ways you can get free or discounted travel.

If you live in London and are 60 or over, you can apply for a 60+ Oyster card. This provides free travel on the London Underground, Overground, trams and buses, as well as some TfL Rail and National Rail services, but you can’t use it outside London. The card has a one-off £20 administration fee. You can apply online from two weeks before your 60th birthday. For more information about the application process see the TfL website.

Also once you are 60 or over, you can apply for a Senior Railcard. This currently costs £30 a year and gets you a third off most rail journeys, local and national. You can get more information and apply here.

Or if you’re 60 or over and make regular use of National Express coaches, you can buy a Senior Coachcard which costs £12.50 (plus 2.50 p&p) and offers a third off travel throughout the year. With this card you can also buy a £15 day-return on Tuesdays, Wednesdays and Thursdays to anywhere in the UK (excluding airports) as long as you book three days in advance. You can apply for a Senior Coachcard via the National Express website.

As always, if you have any comments or questions about this post, please leave them below. Happy travels!

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