A leading peer-to-peer lending platform has just launched its new Auto-Invest model, to give investors improved investment security and a hassle-free experience.
The House Crowd, which specialises in peer-to-peer development and bridging loans, has created its Auto-Invest model which offers three varying levels of risk and reward, including target returns of 5%, 6% and 7% over a minimum 12-month term, with the option to compound the returns.
The new investment model mitigates the risk of investment for The House Crowd’s 27,000 members by automatically diversifying investments across a portfolio of property-backed peer-to-peer loans.
Spreading investments across a broad range of secured property development loans in this way reduces the impact of development delays, as interest is paid regularly and it mitigates the risk if a particular development runs into trouble.
Those investing into Auto-Invest will receive interest twice per year if they so choose with the option to request their capital within 30 days-notice, following the initial 12-month term.
Investors may now use the Auto-Invest model in conjunction with the company’s Innovative Finance ISA, meaning members can invest up to £20,000 each year, tax-free. The IF ISA Auto-Invest model offers a minimum investment term of 12-months across 3 investment profiles, Cautious, Balanced and Bold, with varying rates of up to 7% p.a.
Members of The House Crowd are able to transfer an existing ISA over to its IF ISA free of charge, for transfers of £5,000 or greater.
The Auto-Invest model takes the hassle out of managing an investment portfolio by automatically diversifying and reinvesting the returns into new developments.
The move away from traditional self-select investment models comes in response to the changing face of peer-to-peer lending, as consumers increasingly look for greater capital security and hassle-free investment.
Frazer Fearnhead, Founder and CEO of The House Crowd, comments: “All of our peer-to-peer development and bridging loans benefit from a legal charge against the development, which given the relative stability of the UK housing market makes for a potentially lower-risk investment. The new Auto-Invest model is the future of peer-to-peer lending, providing improved capital security that’s hassle-free with the possibility of strong returns in as little as one year.
“Our dedication to making the property market more accessible is at the core of our business. We want to improve the investment experience and not penalise or ostracise our investors as we evolve. Therefore, although our focus is very much now on Auto-Invest, we will for the next 12 months allow members to continue to self-select if that is what they chose to do.
“However, we feel very strongly that Auto-Invest products are a better alternative – not only mitigating risk and providing better liquidity – but we believe they will probably produce better returns, as a result of funds being utilised 365 days a year and returns compounded. Ultimately, we’re confident this is a better option than trying to self-manage a loans portfolio, in the same way choosing a good tracker fund is generally regarded as a wiser investment than stock picking.”