I've been saving in peer to peer lending for the past 6 months and generally the whole process has gone really smoothly and returns have beaten expectations (so far - at a touch over 8%). Now with the Innovative Finance ISA that's due to launch on the 6th (explained beautifully here) I feel like putting all of my available allowance into this.
Is anyone else being 'bullish' on this new IFISA, or do you feel the risks are too high to justify using 100% of your total available allowance?
Cash ISAs have very little return and flexibility, and I'm too risk averse to look at Stocks & Shares.
The ISA is just a tax wrapper around the core investment which in this case is the P2P lending. The fact that you've already had some experience of P2P is good, especially that you've found it to be a positive outcome so far. The advantage to you of using the ISA wrapper is that any interest or capital gains that you make from the P2P investment will be exempt from Income Tax or CGT which therefore maximises your returns from the underlying investment, whatever they may be. The wrapper of itself makes no difference to whether the P2P produces a high or low return.
However, attitude to risk is a very personal thing. I'm comfortable with Stocks & Shares but not very comfortable with P2P, for example. You need to consider your Capacity for Loss - how much of your investment can you realistically afford to lose before it has a detrimental impact on your standard of living and/or your appetite for risk?