Realistic Yields on P2P Investments

P2P lending platforms offer yields much higher than the current Bank of England interest rate. Depending on your appetite for risk (see P2P risks) your investment could see a yield of between 7% and 10%.

Are 10% P2P ISA returns really that realistic?

The UK has seen a surge in the number of peer-to-peer lending platforms in recent years – and many are advertising interest rates way north of those available on bank savings accounts.

P2P platforms are typically advertising rates at between 5-8%, with some even advertising 10% returns.

While such rates certainly have their appeal in a world of 0.5% Cash ISAs, it is vital that those considering lending their money via P2P loan platforms understand the full picture – and specifically, the fact that P2P lending is most definitely not in the same asset class as a Cash ISA or regular savings account. Indeed, P2P lending is perhaps best described as the mid-point between saving and investing. Our Risk pages go a long way to explaining the difference between putting your cash into a peer to peer lending platform and leaving it in a bank savings account.

Tax saving uplifts returns

With a P2P ISA, you pay tax in the same way you would pay tax on a cash ISA – interest on the first £15,000 or so that you wrap in the P2P ISA wrapper will be tax free.