Finding the best return on your investment can be very time-consuming and risky. There are many methods to earn interest, but all seem to have some kind of catch.
This article has been written with the non-professional investor in mind and will cut through all the waffle as fast as possible.
- P2P Peer-to-peer Lending has been around since 2005. The risks are low but not zero. Normally the interest and principle are returned every night and will accumulate in your holding account. As from 2022 P2P seems to be fading out.
- BOND This covers bonds of all kinds - mini-bonds to normal bonds. As a general rule the higher the interest rate the higher the risk and your money will be unavailable for many years.
- SAVE Interest rates from savings were quite respectable prior to 2008 but few offer interest rates over 2% in 2019. Any account offering more will normally have some kind of catch.
Here is a list of financial vehicles with the highest interest rate at the top :-
- [BOND 13%] WiseAlpha was started by Rezaah Ahmad in 2017. It provides access to the senior secured and high yield corporate bond markets that would normally be inaccessible to non-professional investors.
Typical range would be between 3% ~ 11%, example returns (as of Q3 2019): Netflix (4%), The AA (4.5%), Aston Martin (%6.1%), Virgin Media (5.3%), Pinewood Studios (3.7%), Yell (10.1%). There have been ROIs as high as 13% in recent months, but those are rare.
- Crowdcube allows investment in start-ups but also in mini-bonds that are available to non-professional investors. Update: They seem to have removed mini-bonds - will check later !
- Funding Circle was founded in 2010 and provides a return rate of about 7% (as of 2019) but this does vary with market conditions and seems to be slowly decreasing over time - in 2017 the return was about 8%. As from 2020 Funding Circle is only accepting government money. As from 2022 Funding Circle is not accepting retail money.
- ZOPA was founded in 2005 and the first organisation to offer peer-to-peer lending. Returns are typically between 4.6% ~ 6.0%. This is true P2P as people lend to other people. UPDATE: ZOPA has closed it's P2P service.
- [P2P 5%] LendInvest provides a means for people to invest in property. Returns are between 4% ~ 5% and if you are patient you may get the odd 6%, but anything over that is quite rare in 2019.
- [SAVE 5%] First Direct offers this for one year. To qualify you need to open an account and deposit between £25 ~ £300 per month.
- [??] Buy To Let Mortgages might have been a good RoI a few years ago, but that seems to be changing because of increasing tax burdens.
This article will be updated as new info becomes available.
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