The rate of inflation tends to rise on an annual basis. Only once in the past 15 years has it dropped – and that was post-recession back in 2009. At that point, it was a minus figure of 0.5%. In other years, including 2011, it was as high as 5.2%. It sounds like a lot, but look back and you’ll find inflation rates of 18% in 1980 and a whopping 24.2% back in 1975.
The thing about inflation, of course, is that it’s higher when the economy is doing well, and the Bank of England believes we can cope (since the average household income is high). Last year, the inflation rate was 3.6% – which is a good indicator of how the UK is doing compared to around 45 years ago!
A low rate of inflation though, means dismal interest levels from high street banks and other traditional lending institutions. Currently, you can expect interest rates of 1.18% cent (compare that to 15 years ago when you could expect to receive a return of 4.56% on your savings). Even today if you invested £10,000 in a bank with current interest rates at 1.18% you could expect just £10,118 after a year (£118 interest). Considering inflation is sitting at 3.6% you’re actually losing out on a whopping £242 a year (£360 minus £118).
Why savers are shunning traditional saving schemes
Low interest rates are the main reason savers are turning to non-traditional means of investing their money. Online platforms such as those offering Crowdfunding or Peer to Peer Lending opportunities are offering far higher returns on saving. Here on our Sourced Peer to Peer Lending platform, for instance, we are able to offer savers interest rates of between 8% and 12% – a huge difference from the measly 1.18% by the big banks and building societies.
Why our Peer to Peer Lending platform offers security
Our own Peer to Peer Lending platform at Sourced has been successfully running for more than a year now. And it’s not only the great returns that savers like. We offer a higher level of financial security on your savings than many other Peer to Peer Lending platforms, simply because we are an asset-based platform. This means that were anything to go wrong with a deal i.e. the developer defaulting on payments, then we have the building itself to sell off. The money would then be distributed amongst the investors on that particular project. We’re happy to say though, that none of our Peer to Peer Lending deals have defaulted to date!
Another aspect that makes the Sourced Peer to Peer Lending safe is that we are regulated by the Financial Conduct Authority (FCA) as an appointed representative of rebuildingsociety.com.
How to invest in Sourced Peer to Peer Lending
Investing with Sourced isn’t difficult. Our minimum investment is £250 and the average is around £30,000. Our team of property experts have already sourced properties and developments for you, so all you have to do is choose the ones you like (we’d always encourage diversification, if possible) and get in touch. It really is that simple! Why not take a look at our Peer to Peer Lending platform today?
Remember when investing, your capital is at risk. P2P investments are not covered by the Financial services compensation scheme (FSCS). Your returns may vary.
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With an IFISA, you can invest in what’s called “innovative finance”, to benefit from tax-free returns. Download to learn more about investing with a Sourced Capital IFISA.