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Find out more on peer to peer lending, crowdfunding and more.

Where to put your money next

By our guest writer, personal finance journalist, Felicity Hannah

When your bonds mature, could a more creative investment earn a greater return?

If your bonds are maturing over the next few months then you can be forgiven for feeling a bit… subdued. Returns have not exactly been exciting as base rate remains low, and even if you’ve managed to achieve slightly higher returns by locking away your cash, it probably won’t have been a life-changing amount.

So what next? Lock the cash back up and hope things improve? Or look for another way to make your money work harder? Investments are always a risk, of course, but the potential returns can be considerably higher than interest rates. Here are a few of the alternatives:

Peer to peer lending
You put your money in a bank account, the bank lends it out and earns interest, and the bank takes the lion’s share of the profits. But there are several companies that take out the middle man (not to mention his bonus) and allow people to lend directly to businesses – this is called peer to peer lending. 

At Crowdstacker, for example, investors can choose which specific businesses they want to lend to – although only from among companies that have passed a tough due diligence process. That means people can lend directly and get more for their money – earning typical rates of interest of around 5-7%.  And the businesses themselves benefit because they can borrow at better rates.

ISA
Yes, returns are pretty low at the moment. But at least investing your money into an ISA means it’s protected from the taxman (up to the specified limit), allowing you to keep any future returns. That could be useful if rates rise in the future.

Offset mortgage
If you have some money then one way to get more out of it is with an offset mortgage. This is a product that bundles your mortgage, savings and current account into one product, meaning any cash that’s in your account is offset against the mortgage. It cuts your mortgage interest and you retain access to the cash.

Invest in property
Not everyone has the cash to plough into a buy-to-let but there’s a growing trend for crowdlords – groups of investors clubbing together to buy and manage a property. With rents rising, this could be a way for people who haven’t bought to gain a small foothold on the property ladder.

Get advice
You know what this article isn’t? It isn’t in-depth financial advice – and that’s something you need before making any kind of decision on where to invest your cash. An IFA will be able to provide tailored advice based on your circumstances and the risks you are willing to take. 

However, there’s also a lot of advice available online, to help you research. The Investment Association has a lot of information for beginners: 
theinvestmentassociation.org

And you may find you have a local investment club where members pool resources and also share tips. Check out the ProShare Investment Clubs website to find one near you:
proshareclubs.co.uk 

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15th October 2015