ISA buyers with overspill should consider new asset class

As this year’s ISA season warms up, Zopa reminds cash and equity ISA buyers of a great new home for their ‘overspill’ investment.

Zopa - the world’s first marketplace where people meet to lend and borrow money - is seeking to remind ISA savers and investors that if they have more than the £3,000 or £7000 limits to save or invest, they should take a good look at the UK’s latest new investment asset class – unsecured lending – available at zopa.com. Since launch nearly two years ago, Zopa lenders have enjoyed an average return of 6.85% p.a., with some lenders enjoying returns of up to 14% p.a. (after any bad debt and fee, but before tax), all at only marginally more risk than a deposit account.

Zopa lending offers the public the chance to access a significant new asset class - unsecured lending – the very place where Banks in this country make a substantial part of their profits. Zopa lending offers many advantages to people looking for attractive returns with low levels of risk:

Four different markets to lend to (A*, A, B and C), each representing a different risk/return level – higher risk borrowers producing higher returns or lower risk borrowers creating more modest returns.

Lenders choose how long they want to lend for (1 – 5 years) and set the rate they want to receive. Borrowers then choose to take up the offer – or decline it if they think it uncompetitive. Lenders can change their offers to the Zopa marketplace at any time.

Zopa ensures risk is kept to an absolute minimum. All borrowers are thoroughly checked for credit worthiness and affordability, and all lending over £500 is split between at least 50 different borrowers. To date, bad debt has been kept at virtually zero (0.05%).

Lenders can choose to spread their investment across different markets and different time periods to achieve a balanced portfolio, and choose to invest as little as £10 right up to in excess of £25,000 (subject to securing a Consumer Credit license with Zopa’s help).

Lenders set their own fixed rates of return, and any funds from loans repaid early can be easily re-lent again via Zopa’s ‘auto re-lend’ system

Lending held in the name of non-taxpayers will not be subject to any income or capital gains tax.

James Alexander, co-founder and CEO of Zopa said, “ISA savers and investors would be well-advised to take a look at what Zopa lending can offer them, either as an alternative to ISAs or as an ideal home for any ‘overspill’ they may have. Those with larger investment portfolios would benefit from the diversification that this new asset class offers and all investors can benefit from the very attractive returns on offer without taking anything like the risk of investing in the stock market.”

“Zopa lending also offers the opportunity to do something positive with you investment – helping out other real people who need to borrow rather than funding the enormous profits of the Big Banks or the startling bonuses of all those City fund managers busy choosing their latest Porsche!”