This is a paid collaboration with RateSetter.
With paying off £15,000 worth of credit card debt a few years ago and saving to buy a house this year we have had a lot of financial goals and commitments lately, and one area I have been keen to grow is our passive income through investments. In this post I am going to talk about how RateSetter have helped us with this goal, and how you can get a £20 bonus when you start investing.
Who are RateSetter?
RateSetter are a peer-to-peer lender and were launched in 2010 by Rhydian Lewis and Peter Behrens in their quest to make finance fair and to help people like you and me to earn more from their money. By addressing the investment gap between cash and shares they have made better returns accessible to everyone, not just the wealthy.
A really great achievement for RateSetter is that every investor has received all of their capital and expected interest – me included. Of course past performance is by no means a guarantee of future success and your capital is at risk with investing, but this is a great track record.
Since their launch in 2010 they have had over 600,000 customers and they are fully regulated and authorised by the FCA.
What is peer to peer lending?
Peer to peer lending is the practice of lending money to credit worthy individuals or business through websites that match lenders directly with borrowers. These are usually run with lower overhead costs and are able to provide their service at a cheaper price than traditional financial institutions. This in turn helps lenders to often earn higher returns on their money compared to those offered by banks and borrowers are also able to borrow money at lower interest rates too.
Often known as crowd lending, the interest rates can be set by the lenders themselves or fixed by the company. This way of lending has risen to prominence in recent years as people look to get higher returns on their money than what is traditionally offered. RateSetter themselves operate with a high level of caution and only match investors with borrowers who match their strict criteria. In this case, it is RateSetter, who take care of the matching.
One of the issues that investors are concerned about when it comes to peer-to-peer lending is not getting their capital or interest back when borrowers miss a payment. Thanks to the Provision Fund that RateSetter have, investments are protected against missed payments.
Shouldn't I just put my money into a savings account with my bank?
The issue that investors have with cash savings is that there aren't great interest rates at the moment, especially from banks.
This is because of how banks are regulated, with the objective of keeping the cash deposits safe. The pay off for this is typically low returns. This is where RateSetter are different, because they can offer returns of between 3.1% – 5.2%. To put that into perspective my e-savings account with my bank offers me 0.25% interest. What's more, you can get yourself a £100 bonus when you invest with RateSetter, increasing your returns massively.
It is a really good idea to have a diversified portfolio. To do this I have cash savings, property, premium bonds and ISAs.
How to invest with RateSetter
RateSetter have come up with two great investment accounts and three markets for you to choose from, depending on your needs. You can start investing from as little as £10, making it accessible to everyone.
Their three markets are:
- Rolling market – access your investment for free with a past return of 3.4%*
- 1 year market – pay a 0.3% fee to access your investment early with a past return of 4.3%*
- 5 year market – pay a 1.5% fee to access your investment early with a past return of 5.4%*
*Average rates in June 2019
The two investment accounts you can choose are an Everyday Account which allows you to invest in all three markets or an Innovative Finance ISA which also allows you access to the same markets, but your returns (your investment income) is tax-free.
With RateSetter's Innovative Finance ISA not only can you benefit from great returns, you can also enjoy them tax-free.
Get a £20 bonus on your investment with RateSetter
In the past Ratesetter have offered a £100 bonus when you invest £1,000, but now they have a new and improved referral program that I think you will love.
You need to deposit just £10 into Ratesetter to get a £20 bonus using my referral link.
Please remember that if you do take advantage of this offer, there is no FSCS (Financial Services Compensation Scheme) coverage for this and if you do lose capital, you will not be protected. Please be aware of the risks involved.
My RateSetter investments
I thought it would be helpful to show you my results from RateSetter.
As you can see, the investment of £1,000 returned £1,149.64 over 12 months.
As part of a diversified investment portfolio I have been really pleased with my results from RateSetter.
Want to check them out yourself? Click here to find out more about RateSetter.