*This post is written in collaboration with Ratesetter
We are getting to a stage in our financial ‘journey’ where we are considering our options for investing. The idea of investing can sound complicated and daunting but I’ll let you in on a secret…it’s not really that bad once you get your head around it!
If you listen to the Dave Ramsey the you would have heard him talk regularly about American investment mutual funds options that give a 12% rate of return, unfortunately this is not a rate of return that we see often in the UK so the tact we take is to try and get as much return on your money as possible. I’ve been doing a lot of reading and research into investments and one company we will be investing with is Ratesetter.
Ratesetter is currently offering a fantastic bonus for new investors which is a £100 bonus when you invest £1,000 with their IF ISA.
Let’s just pause and do the maths on that…thats a 10% return on your money in the first year which is amazing AND pretty close to the numbers Dave talks about!
(You need to keep the £1,000 invested with them for one year but that isn’t really an issue for us as we don’t intend to be cashing out our investments any time soon, we’re in it for the long haul)
What’s even better though is that their current annualised rate of interest for a 1 year market account is 4.2%, if you add that on to the 10% bonus you’re getting as a new customer than that’s a whopping 14.2% rate of return on your investment!
So, who are Rate Setter and what do they do?
RateSetter is a Peer to Peer lending platform founded in 2010 by Rhydian Lewis and Peter Behrens to address the investment gap between cash and shares and make better returns accessible to everyone in a simple and modern way.
RateSetter brings together people wanting to invest, with borrowers that are looking for a loan, delivering better value to both. Investing in loans is nothing new. After all, that’s how banks earn, by taking deposits from customers and lending that money to borrowers. Banks are regulated with the objective of keeping deposits safe, but this comes at a price: low returns to customers that often don’t even match inflation.
There are two investment account types available with RateSetter:
- Everyday account – allows you to invest in their 3 markets
- Innovative Finance ISA – same as the Everyday account but returns are tax-free. Individuals can open a RateSetter IF ISA alongside a Cash and/or Stocks and Shares ISA
Our investment plan
After looking at a few of our options and looking at our risk ‘Appetite‘ or ‘Tolerance’ we have decided that Ratesetter’s ISAs are where we want to start putting our money because it sits between the safety, but low returns, of a Cash ISA and the potentially large returns, but volatility of a Stocks & Shares ISA. We plan on having a diversified investment portfolio but feel like Ratesetters investment accounts are great for us as we can invest regular amounts each month.
If you had told me a few years ago that we’d be in the position to start thinking about building and investment portfolio I probably wouldn’t have believed you! We are in a good financial position and are able to invest after following the Baby Steps to get ourselves out of debt and on the road to being wealthy – if you aren’t aware of the baby steps let me give you a quick run down
- Step 0 – Commit to no more debt
- Step 1 – Build a £1,000 Baby Emergency Fund
- Step 2 – Use the debt snowball to clear your debt
- Step 3 – Build you emergency fund up to 3-6 months of expenses
- Step 4 – Invest 15% of income into retirement
- Step 5 – Look into University funding/savings for children so that they don’t have to get into debt
- Step 6 – Pay off your house early
- Step 7- Build wealth and Give!
As with anything on this blog, all posts are based solely on my own opinion of what we want to do with our money and should not be taken as financial guidance or advice with regards to what you should do with your money.
To date, every RateSetter investor has received all the interest and capital that they expected. This is all thanks to the Provision Fund which protects invests against missed borrower payments. Past performance is not a guarantee for the future, but RateSetter’s nine-year track record speaks for itself.
RateSetter is no longer a start-up business. It’s been established for 8 years and are fully regulated and authorised by the FCA.
Please remember that if you do take advantage of this offer, there is no FSCS (Financial Services Compensation Scheme) coverage for this and if you do lose capital, you will not be protected. Please be aware of the risks involved. Past performance is not an indicator of future results and Capital is at risk.