EASYMONEY has calculated that its Innovative Finance ISA (IFISA) account holders could become ISA millionaires within 22 years, compared with 42 years using a cash ISA.
The peer-to-peer investment platform, which is a part of Sir Stelios Haji-Ioannou’s (pictured) easy family of brands, has based these figures on the average interest rate of a cash ISA, versus the target rate of its own IFISA offering.
EasyMoney offers two IFISA products: a ‘Classic’ account which can be opened with £100, and targets returns of up to 4.05 per cent per annum; and a ‘Premier’ account which has a minimum investment threshold of £10,000, and targets up to 7.28 per cent in annual returns.
By contrast, according to the Bank of England database, the average interest rate on a cash ISA was just 0.93 per cent in January of this year.
If the full ISA allowance of £20,000 was invested in a 0.93 per cent cash ISA every year, it would be worth £1m by 2061. The same amount invested in the EasyMoney Premier IFISA would reach the £1m threshold by 2041.
“Given the huge difference in the time it takes to become a millionaire, cash ISAs do not seem worth it,” said Andrew de Candole, chief executive at EasyMoney. “Investors can shed years off the time needed to become a millionaire by taking the simple step of investing in an IFISA.
“We see a lot of Investors who are fed up with the chronically low interest rates on offer – with many cash ISAs it is hardly worth the effort of opening the account. However, investors can make real inroads into their savings goals through IFISAs.”
The platform also pointed out that even using the highest-paying easy-access cash ISA account paying 1.45 per cent per year, it would take 38 years to become an ISA millionaire.
EasyMoney’s IFISAs allow retail investors to lend to UK property at a maximum loan-to-value of 75 per cent.