PEER-TO-PEER investors could become Innovative Finance ISA (IFISA) millionaires within 25 years, research claims.
Figures from P2P analyst 4th Way suggest if a lender invests £10,000 each year across several platforms and aims for nine per cent interest after bad debts, they could be a millionaire within two-and-a-half decades.
Read more: Zopa sees £100m boost from IFISA
Neil Faulkner, managing director of 4thWay, said this was a difficult but “potentially achievable” target, and involved investing in asset-backed and property focused platforms that tend to pay higher rates.
“Asset-secured P2P lending sites, such as FundingSecure, MoneyThing and Assetz Capital, typically pay around 12 per cent after fees and before bad debts,” he said.
“Development lending sites, such as Relendex and CapitalRise can pay eight to 15 per cent, often depending on where you are in the queue in the event of a default.
“Shopping around some more, you can pick individual investment-property loans at Proplend, or options like HNW Lending often have juicy individual short-term property loans with huge security for you to select.”
Faulkner concedes that it can be difficult to invest £10,000 each year, but says you will still have quadrupled whatever amount you put away in 25 years at an annual rate of nine per cent or could double your savings if you built a lower-risk portfolio paying five per cent.
Read more: IFISA uptake surpasses expectations