Octopus Investments has had an enormously successful history.
Beginning as a small operation in a spare room in February 2000, it has grown at an astonishing rate to a business with over 600 employees and 150,000 investors with funds in excess of £8.3 billion across a number of businesses at the end of June 2018.
Which might be one reason why Octopus’ business model revolves around high growth small businesses and entrepreneurs – a lot like it was when starting out.
Obviously, like other IFISA providers, the company’s foray into the IFISA market didn’t begin until after April 2016 when their peer-to-peer Octopus Choice investment product was launched.
At 4%, compared to the other IFISAs, Octopus doesn’t promise the best rates of return on the market, but it does promise to make the entire experience as simple and straightforward as possible.
The application process takes just a few minutes and you can start with as little as £10. What’s more, there’s no fixed term, you can withdraw at any time.
Octopus Investments’ website is clean, succinct and makes for easy reading, reflecting the firm’s focus on keeping things simple for customers. In fact, the firm was awarded the accolade of ‘Most IFA-Friendly’ at the AltFi 2016 awards and signalled out as ‘one to watch’.
That’s all backed up by a horde of impressive customer reviews on TrustPilot, many of which praise the customer service offered by Octopus.
Unsurprisingly, the firm gains the full five stars on the review platform – quite an achievement for any financial services company. But, then that’s just one of several industry accreditations that includes a NACFB award in 2015, Estates Gazette finalist the same year and a winner of Business MoneyFacts five years running from 2011 to 2015.
Octopus Investments stats
- Growing company with a successful track record
- Returns from 4% upwards
- Clear and simple investment products – ideal for beginners
- Very easy to get started
- Regular statements and easy-to-use dashboard
- Highly ethical organisation
- Good transparency on performance
- No fixed term
- Minimum investment of £10
- Average LTV of 60%
- Mostly short-term loans
Octopus keeps its tentacles busy funding a range of short term bridging loans to property developers and landlords.
Cash is invested across a bucket of loans with an average LTV of 60%. The loans are arranged by Dragonfly Property Finance which has lent £3 billion since 2009 and lost just £6,000. All the stats related to profitability and performance are there to see on the website.
Octopus Choice IFISA Rates
- The rates are fairly low by IFISA standards at 4% with interest paid monthly either to a bank account of your choice or reinvested into the product.
- Investors can transfer in existing ISAs or set up monthly debits from a debit card in order to drip-feed money into their fund.
Peer-to-peer investments aren’t protected by FSCS (Financial Services Compensation Scheme) but Octopus makes this very clear upfront.
All loans are secured against physical assets with a first legal charge, meaning they can be sold if a borrower defaults.
While average LTV (as of May 2018) is 60.6%, the maximum allowed is 76%, so, in this case, the property would need to fall by 24% before any investor capital is lost.
Interestingly, however, Octopus invests 5% in each loan at first loss. This means investors can get their initial investment and any interest due to them before Octopus receives any.
In other words, the firm will take the first hit of any loss.
All in all, Octopus simple investment structure looks like an ideal platform for beginners.
The only drawback appears to be that you might have a wait on your hands to get your money back if a borrower defaults on their loan.
It’s also worth pointing out that Octopus has a strong CSR policy and actively supports a number of charities through the Octopus Giving initiative.
Since 2014, the company has donated £1 million to nine charitable organisations, such as FoodCycle and Beyond Autism.
But Octopus takes this one step further by making sure that everyone in the company gives one day of their time each year to a charitable cause. So in the cutthroat world of high finance, Octopus is a good option for those with looking to invest ethically.
Updated: Wednesday, November 28th, 2018