LendingCrowd’s accounts explained: Self Select Account, Growth Account and ISA
We recently launched two exciting new ways to invest with LendingCrowd: the Growth Account and the Innovative Finance ISA. These new accounts give investors options on how they would like to invest and to what extent they want to actively manage their loan portfolio. For those looking to invest to achieve a target rate of return without the need to self select and manage each individual loan, the Growth Account and IFISA are a great option. Our Self Select Account allows you to select the individual loans you want to invest in and have complete control over how much you invest.
With all of the accounts you are investing in UK businesses that have been trading for at least 2 years and have a minimum of £100,000 turnover. Investing through any of the account types means that your capital is at risk. You can read more about the risks involved in peer-to-peer lending here. This blog explains the different features and benefits of each of the accounts to help you decide how to invest with LendingCrowd.
The Growth Account is one of our newly-launched account types and works differently to the Self Select Account. It has a target rate of return of 6% p.a.*, although this could be higher or lower depending on the performance of the loans in the portfolio. While your funds will be invested through the Loan Market in UK businesses, you do not choose your own investments. All funds will be invested instantly across a portfolio of loans that are available on the Loan Market so you don’t have any investment decisions to make.
To help ensure a diverse portfolio of loans there is a minimum investment of £1,000 in the Growth Account and your investment will be spread across at least 20 loans with no more than 5% of your funds in any one loan. All capital and interest repayments are reinvested in other loans increasing diversification, so your money is always working for you.
The Growth Account has no fixed term and you can choose to withdraw funds at any time. Please note that a 1% withdrawal fee applies.
Innovative Finance ISA
The Innovative Finance ISA is our newest account type and enables you to invest in peer-to-peer lending whilst earning tax-free returns on your investment. Innovative Finance ISAs were introduced by HMRC as a new category of ISA to sit alongside Cash ISAs and Stocks & Shares ISAs, allowing you to take advantage of the tax benefits of an ISA when investing in peer-to-peer lending.
LendingCrowd’s IFISA is based on our Growth Account and operates in the same way: there is a target rate of return of 6% p.a.* and funds added to the ISA will be invested across a portfolio of at least 20 loans through our Loan Market. To diversify your portfolio there is a minimum investment in the ISA of £1,000 and you can invest up to £15,240 (the ISA subscription limit for the 2016/2017 tax year). This limit rises to £20,000 in the 2017/2018 tax year, giving you the ability to earn more tax-free returns on your investment.
While you cannot invest more than £15,240 in ISAs in the current tax year, you can transfer ISAs opened in previous tax years to LendingCrowd without affecting this limit. The process to transfer an ISA is simple – just download and complete the Transfer In form and return it to us by post and we’ll take care of the rest with your current ISA provider.
The ISA gives you a diversified portfolio of investments quickly and simply, with the added advantage of the tax benefits of ISAs. All your monthly repayments of capital and interest will be reinvested to help increase the diversification of your investments over time. You can view your loans and the performance of your account at any time through your account page.
Self Select Account
The Self Select Account is our ‘original’ account which allows you to select the loans you’re investing in and what amount to invest. Everyone who invests with LendingCrowd is allocated a Self Select Account (even if you only have funds in the Growth Account or IFISA). This account gives you full control of your loan portfolio; you choose loans on our Loan Market and decide how much you want to invest in each one.
There are two ways to invest on the Loan Market:
- New loans: bid on new Loan Auctions by choosing the amount and interest rate
- Existing loans: buy loan parts from other investors instantly at a fixed rate
You can invest from as little as £20 and interest rates start at 5.95%**. You’ll receive monthly repayments comprised of capital and interest from each of your investments which you can use to invest in other loans.
You can sell loan parts on the Loan Market at any time (please note that there is a 0.5% sale fee) and withdraw funds. Easily manage your full loan portfolio through your Investor Account and get information about the loans you’re invested in and your average returns.
The different LendingCrowd accounts allow you to invest with us in a way that works for you – whether you prefer to make your own investment decisions or to have your funds diversified for you. The newly launched IFISA also comes with the benefit of tax-free returns and allows you to invest up to £15,240 in the current tax year.
If you have any questions about investing with LendingCrowd email email@example.com or call the team on 0345 564 1600.
*This is a variable target rate net of ongoing management fees and estimated bad debt. Your capital is at risk when you invest.
**If you invest through LendingCrowd you should understand that as a lender, your capital may be at risk.
LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.