THE VAST majority of young adults have never heard of an Innovative Finance ISA (IFISA), new research has found.
Peer-to-peer property lender The House Crowd surveyed 2,000 people aged between 18 and 24, and found that one quarter of respondents did not know what an ISA is.
69 per cent did not know the difference between cash ISAs, stocks and shares ISAs and IFISAs.
More alarmingly for P2P lenders, 87 per cent had never heard of an IFISA.
“It seems the government needs to work on increasing general awareness of the ISA product set, especially with the younger generation,” Frazer Fearnhead, founder of The House Crowd, said.
“Two decades on, the cash ISA remains a popular option, but average interest rates can easily be eroded by inflation.
“IFISAs offer returns that are, on average, much higher and much more consistent.”
“A lot of people are reluctant to invest in stocks and shares due to volatility. The FTSE, for example, has dropped 9.6 per cent since April 2018.
“That’s why the IFISA is appealing – it’s based on lending, which people understand.”
Fearnhead said more should be done to promote the benefits of IFISAs.
“What people don’t realise is that even though their investment isn’t protected by the Financial Services Compensation Scheme, it can be secured against a tangible asset like property,” he added.
“The government decided to introduce the IFISA, so we feel it has a responsibility to educate potential investors on what it is.”
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