In September 2017, Moneywise revealed that for the very first time, the amount of money deposited in stocks & shares ISAs overtook the amount deposited in cash ISAs.

It seems years of low interest rates may have pushed some to sacrifice the security of a cash ISA, to try to get higher returns by putting their money at risk instead.

That’s not to say cash ISAs are going to become a thing of the past – they still account for a big chunk of people’s tax-free savings. However, with the introduction of the Personal Savings Allowance in 2016, those most likely to have a cash ISA (lower-income savers) may feel they have no need for one at all.

So what about those wanting to put their ISA money to work, without the volatility of stocks & shares?

If you’re after a good return, but aren’t comfortable with the ups and downs of stock market investing, you may have felt a bit stuck for choice. However, the innovative finance ISA (IFISA) could provide the answer.

It allows investors to target good returns on their ISA money by investing in peer-to-peer loans. For those looking to avoid the volatility of stock market investing, it could feel like a good middle-ground.

How does the innovative finance ISA (IFISA) work?

The IFISA allows interest earned through eligible peer-to-peer lending products to be included within the tax-free wrapper.

At Octopus Choice, our innovative finance ISA lets you to target a rate of around 4% a year by investing in loans backed by bricks and mortar. It means you can get a good return on your ISA money without the volatility that comes with stock market investing. You can get set-up in just minutes with a minimum investment of just £10, and – with no fixed-term – you can request a withdrawal at any time.

Although you should know that your capital will still be at risk and it’s possible you’ll get back less than you put in. Also, the Octopus Choice ISA isn’t a flexible ISA. Any withdrawals that you make from this year’s money will still count towards your ISA allowance. Tax rules are subject to change and depend on individual circumstances.

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