Investments | Zopa and ISAs
I’ve been with Zopa (Zone Of Possible Agreement) for two years now and have been getting a better interest rate than with any bank. The interest is taxable, but at over 6% is still better than the so called tax free ISA’s offered by banks. I have had late payers, but because I lend only £10 to each of my borrowers the risks are limited and I have had no one default. I mainly lend to people with good credit ratings of A* or A, but get more interest when I lend to the B market. The return is above inflation and so a real return.
If you put 3,000 in a bank at 3% which is fairly typical, you only get 90 pounds in interest while your money can be going down in value by 5% with inflation. You make 90 pounds and lose 150 because of inflation and the government’s quantitative easing!
Stocks and Shares ISA’s
I have made a few investments in stocks and shares. When I wrote about buying Premier Foods I said I would be happy if they went to 12p and they did; today they are on 17p and went to 18p briefly. Not every investment I make does so well. I have read a lot about ISA’s and they can appear complicated. You can have a stocks and shares ISA so you can get your returns tax free and/or a cash ISA. Cash ISA’s aren’t a good investment, but if you open a stocks and shares ISA then you can put in over 10,000 a year and make tax free returns. You basically open an account, put your cash into it and when you’re ready, start to buy shares or maybe buy into a fund. I’m not too keen on funds as often if you buy into a few funds you lose track of what you have really invested in. If fund number one buys BT and so does fund number 2 and you’ve invested in both then you have bought BT twice. It’s bad enough if you have bought it once! Many people buy shares through their bank and you can have a separate account to your usual current and savings accounts. There are a number of ISA providers, but it’s worth checking to see if your bank does one. The Halifax does share dealing and ISA accounts and offers research for people using share dealing. You can get emails when a share price reaches your target. There are some videos on YouTube by the Halifax about share dealing that explain things like stop losses. It isn’t as complicated as it sounds. It does pay to learn about share dealing though and so you can start with a ‘fantasy’ account. Look on Yahoo, Google or Reuters for share prices; the latter two do them ‘live’ now. I am looking at buying more shares, maybe this week and so will post a blog about what I buy. So far I have bought Lloyds Banking Group, Royal Bank of Scotland and Premier Foods and they are all doing well; Premier Foods exceptionally well.
Don’t forget there are more blogs on the Home Page. Why not check out Zopa for yourself; it is social lending, that is sustainable and you can get you money back by selling you ‘loan book’ using Rapid Return.
Please note that this is not investment advice just my opinion and you can lose money as well as make money investing on the stock market. I’m 50% up overall on my investments, but it could have gone the other way! Since this article was written there has been a 1 share for 10 swap on Premier Foods and so the price increase as a result.