Assetz Capital reveals minimum ISA rate needed to beat inflation
ISA investors will need a minimum investment rate of return of 1.84% to beat inflation this ISA season, according to Assetz Capital’s indicative ISA calculator.
The marketplace lender’s calculator projects how much tax investors can save when investing their ISA allowance, and whether their ISAs’ target returns are beating the current inflation rate of 1.8%.
The calculator shows that taxpayers who invest the maximum yearly ISA allowance of £20,000 at a rate of 1.84% will receive an effective annual interest rate of 0.01% when adjusted for inflation, yielding a projected annual growth of just £1.38 in real terms.
According to the latest UK Savings Trends Treasury Report by Moneyfacts, the average rate of return for a traditional one-year fixed rate ISA is currently 1.12%. This equates to an effective annual interest rate of minus 0.70%, representing a £140.03 annual loss for investors when inflation is factored in*.
Assetz Capital’s Quick Access Account, which can be wrapped in the marketplace lender’s Innovative Finance ISA (IFISA), is currently offering a target interest rate of 4.1%. According to the calculator, taxpayers who invest their ISA allowance into this account could receive an effective annual rate of 2.23% after inflation, which would produce an annual growth of £445.24 in real terms*.
More than £100m has been invested through Assetz Capital’s IFISA since it launched in 2017, with over 5,000 of the lender’s IFISAs opened to date. An average of more than £19,000 is held in each of these accounts – nearly three times the average of £6,409 that is held across all ISA types, according to the latest statistics available for the whole market.
Stuart Law, CEO at Assetz Capital, said: “Investors that are looking to grow their money this ISA season will find little value in the traditional ISA market. With many conventional ISA products effectively causing people to lose money when inflation is factored in, investors may have to look elsewhere to receive a decent return.
- February 28, 2020