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.
- 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.
- [BOND 7%] 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 !
- [P2P 7%] 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%.
Funding Circle works by providing funding for businesses from the public. Defaults do happen but most of the investment is recovered after a few months.
- [P2P 5.5%] ZOPA was founded in 2005 and the first organisation to offer peer-to-peer lending. Returns are typically between 4.7% ~ 5.8%. This is true P2P as people lend to other people.
- [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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