Advertorial: highest savings rates can't match peer-to-peer lending returns

Earn up to 3.75% a year (4.25% during April) with this exclusive promotion for loveMONEY readers from Assetz Capital. Capital at risk.

Savers are continuing to struggle with miserly savings rates, new research has suggested.

Data from financial site Moneyfacts revealed that rate cuts in the savings market have easily exceeded rate rises for the past six months in a row. 

For example, last month saw 18 rate rises and 123 rate cuts, meaning that rate cuts in March exceeded rises by almost seven to one.

What's more, savings rates are still falling overall, with the yearly rate paid by the average one-year, fixed-rate bond dropping to a record low of 1.25%, down from 1.42% 12 months ago.

Apply for the Quick Access Account from Assetz Capital

The sorry state of savings

In a 'race to the bottom', most savings providers have been cutting rates for many years. 

This has happened since the Bank of England slashed its base rate to a historic low of 0.5% a year in March 2009 (where it has stayed ever since).

To demonstrate just how low savings rates are today, here's a list of the highest-paying savings accounts in five popular categories (excluding accounts that require savers to buy linked products). 

Source: MoneyFacts, 12/04/16.

As you can see, the best rate that savers can hope for is 2.9% a year - and that involves locking away cash for five years. Obviously, savers aren't going to get rich by tucking away their money at such ultra-low rates.

Consider turning some of your savings into loans

One option open to British savers looking to boost returns on their spare cash is to switch from saving to investing. Of course, with investing, your money is never 100% safe, so you could get back less than you put in - see the 'Risk Warning' below.

More and more savers are turning to peer-to-peer (P2P) lending to improve their portfolio returns. This modern form of investing involves lending to businesses (via secured or unsecured loans) and/or individuals (via unsecured loans), typically at rates ranging from 3.5% to 7.5% a year (before tax and any loan losses not covered by provision funds).

Earn up to 4.25% a year (capital at risk) with Assetz Capital

Introducing the Quick Access Account (QAA) from Assetz Capital

To help P2P investors pocket higher returns from their spare cash, Assetz Capital launched in September 2015 a new type of investment account for secured business lending: the Quick Access Account (QAA). 

Since its launch, this account has attracted more than £30 million, making it Assetz Capital's most successful secured-lending P2P account to date.

Here are eight reasons why it could appeal to income-starved investors:

1.    A rate of 4.25% a year (exclusive)

In an exclusive offer for loveMONEY readers, the QAA's usual yearly target rate of 3.75% is boosted by 0.5% to 4.25% (before deducting tax and any loan losses above and beyond what may be covered by the QAA's discretionary provision fund, see below).

Please note that this exclusive offer ends on Saturday, 30 April.

2.    3% cashback (exclusive)

In an extra boost exclusively for loveMONEY readers, Assetz Capital will pay 3% cashback on all invested balances made into any of our investments accounts on or by Saturday, 7 May. 

Offier is limited to the first £5,000 Invested via loveMONEY. Terms & Conditions apply. Cashback is paid After 12 Months

3.    No fees whatsoever

As with all Assetz Capital accounts, the QAA charges no fees to investors, so the rate you see is the rate you earn (before tax and any uncovered losses).

4.    Speedy deposits and transfers

Using the banks' Faster Payments system during normal banking hours, depositing cash in your QAA account just takes a few minutes.

The good news is that you don’t have to tie up your money in your QAA for weeks, months or years. 

That's because it has the best liquidity, speed and ease of access of any Assetz Capital account. Cash withdrawals from your QAA typically take a few seconds at the most, in normal market conditions. When you need to remove cash from your QAA account, withdrawals from Assetz Capital accounts to external bank accounts take just two working days. In short, your QAA is easy to use and operates fast and smoothly, giving you access to cash as and when you need it (in normal market conditions).

Earn up to. 4.25% a year (capital at risk) with Assetz Capital

5.    Invest from £1 to £125,000

Assetz Capital designed the QAA to appeal to the widest possible mix of investors. That's why the minimum investment is just £1, with the maximum direct investment being £100,000 per investor. 

Additionally, investors can each sweep up to another £25,000 into the QAA from other Assetz Capital investment accounts.

6.    Protected by tangible asset security and a provision fund

As with all P2P lending, QAA investments are not covered by the Financial Services Compensation Scheme (FSCS); which is the Government-backed safety-net that protects 100% of the first £75,000 of cash on deposit per person per UK institution.

However, all QAA business loans are backed by tangible, realisable asset security (such as legal charges over property, land or other assets). 
To boost this safety margin even further, any security Assetz Capital takes will typically be worth between 30% and 300% more than the associated loan.

In addition, the QAA includes a discretionary, ring-fenced loss-provision fund, funded by extra borrower interest and fees. 
This provision fund aims to minimise predicted loan losses for all QAA investors. In the QAA's first six months of operation, there have been no claims on this provision fund and, therefore, all QAA lenders to date have earned the published headline return.

7.    Automatic diversification to reduce risk

To avoid your cash being lent to too few borrowers, your QAA quickly and automatically diversifies (spreads around) your funds across a wide range of secured business loans. 

This auto-picking process means that you don't need to select your own P2P loans, which can be useful for first-time P2P investors.

8.    Automatic reinvestment of interest and capital

If you wish, instead of withdrawing your interest income from your QAA, you can reinvest this income (and/or any capital repayments) into yet more P2P loans, so as to boost your future returns. You can choose to do this automatically using the settings found on your personal Loan Dashboard.

A final word on the QAA

Speaking about the success of the QAA, Assetz Capital co-founder and CEO Stuart Law says: 

“To savers nervous of venturing into P2P lending, I would recommend giving our Quick Access Account a whirl. It's simple and fast to operate and just like wood stain Ronseal, 'It does what it says on the tin.' 

“If you're an income investor seeking a fair rate of return combined with ease of access, then you could consider our incredibly popular QAA!"

RISK WARNING: "As with most forms of investment, peer-to-peer lending carries a degree of risk to your capital; in this case, if borrowers were unable to repay their loans. At Assetz Capital, we seek to reduce this risk to our investors by taking asset security on every loan, with the added benefit of a discretionary Provision Fund for some of our investment accounts."

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