The Best ISA is NOT an ISA

I bet there are those among you grubby little Englanders who are despairing about where to put the few quid you have stashed away. Where will you get interest that means your paltry little pile at least keeps its value?

There is  after all nothing as depressing as saving for that rainy day, just to watch your money melt away as inflation does its damage.

This government, like the previous government really doesn't give a damn about savers.

As for the banks. To them, my sad little saver, you are just the route to their wealth and extravagance. You will get chucked the scraps.

As the April deadline approaches, we get lots of glitzy adverts and promotions as the banks vie for your ISA pennies.

But look at the rates. They are derisory.

Leave your money with one of these charlatans for more than a year and you even lose the various bonuses. The rate drops from less than 3% down to an interest rate of  1% or less.

The banks all play off that you get the tax back. But really its the banks getting the tax bonus. You get the left-overs.

But if you go for a loan, it is 10% maybe more. So ask yourself. You gets the difference?

The banks are having a laugh. Guess what little Englander. It is you they are laughing at.

So what can you do? Where can you put your money so that it is reasonably safe and gets a decent return. Or alternatively, where can you get a loan at less than loan-shark rates?

Well, I give no advice. But here are two suggestions.

If you want to get a decent return or a loan at a fair rate try Zopa

If you are a small company that needs a loan or you want to lend money into the business sector try Funding Circle.

These are two revolutionary companies, breaking the mould. They do things differently. Have a look.

They beat the banks hands down. It does not matter whether you are a lender or a loaner.

You can try Zopa out with 50 quid. Have a look, read the reviews. Make your own judgement.

Forget about the false gain of the tax free ISA. You will get a far better return from Zopa or Funding Circle.

The greedy banks simply cannot compete with this. With Zopa and Funding Circle everyone is a winner, except the greedy banks.

2 comments:

John said...

Are they safe ?

BilloTheWisp said...

I have stuck some cash in both. It looks safe to me.

It works roughly like this. Firstly, loan applicants are credit checked etc by exactly the same mechanisms as the banks use.

Say you, as a loaner, put £500 quid into Zopa, this gets lent out at £10 per individual loan (in this case 50 different loans).

Each loan is then composed of £10 from many individual "loaners". Zopa acts as an intermediatry and administrator. They do not have access to your cash.

So you risk per loan is £10. Statistically you know what the default rate is for the group(s) you have lent to (Zopa tell you) and this gets factored into the final rate.

If Zopa went bust - they do not hold your money (unlike the banks) and there are arrangements in place to handle this eventuality, really as a confidence building item.

There is no government guarantee though (aka Northern Rock etc).

All I can suggest other than that is to read all the reports from thisismoney.co.uk etc.

I not only reckon they are safe, I reckon they are going to revolutionise the whole way we save and loan money, and the banks are going to rue the day they decided to screw us all over.

Hope that helps.