The easyMoney Glossary – Part One
(Capital at risk - Past performance does not guarantee future results)
At easyMoney, we like to think that our approach is summed up in our name: that is, we aim to make everything easy. Or rather, to connect with our investors to make the features and benefits of our P2P lending platform as clear-cut as possible.
In our view, there’s no need for financial matters to be complicated, so everything you’ll read about our IFISA lending platform is open and authentic. It’s our ongoing mission to de-mystify and add value every time you log on to our website.
To support our jargon-free style, we’ve put together two glossary blogs to explain the terms that you may see on our website, or in our communication with you. This is the first – lookout for the second one on our site very soon.
We’ve picked out the words and phrases that may require just one or two further definitions, or that our would-be investors ask us about on a regular basis.
First though, some good news for our investors, and also for you if you’re thinking of an IFISA with us:
We’re delighted that on May 27th Peer2Peer Finance News reported that in 2020, despite the impact of the Covid-19 pandemic, easyMoney made a profit of £269,000 and paid out an average interest rate of 7.4% to our investors. This, despite an obviously challenging year for many P2P lenders, with some even having to cease trading.
In fact, we think that our conservative approach to lending, as well as our team’s combined 100-plus years of property market experience and expertise, has served us – and our customers - outstandingly well. Last year saw us open up our first shop in Chelsea, with new opportunities for retail investors. With our distinctive orange branding, we’re easy to spot at 158-164 Fulham Road.
Set against this update, here’s your guide to some of the terms you’ll see and hear most often with easyMoney.
easyMoney Glossary Part 1
Target Rate. The average from across the range of interest rates that easyMoney sets on new loans. With the exception of professional investors (who select their own loans), target rates apply to all of our products and will vary, depending on how much you invest. For example, with a minimum investment of just £100, easyMoney’s Classic Account offers between 3.4% and 4% returns; conversely, an investment with us starting at £100,000 into our High Net Worth account could offer between 6.6% and 7.5%.
Therefore, the higher the investment sum, the greater the potential return although we must advise that larger the outlay, the riskier it may be.
Don’t forget: with an IFISA from easyMoney, you can invest up to £20,000 tax-free each financial year.
Have a look at our Home page, where the target rates for each product are published.
Actual Rate. The amount of interest earned by all investors from a single product during a calendar year. This rate will include other elements, for example, Cash Drag (defined below), Defaults, and Compound Interest.
You may be interested to learn that in line with easyMoney’s compliance with industry regulations, we publish an “Outcomes Statement” that summarises how our loan book performs year on year.
Compound Interest. Simply defined, it’s the opportunity to earn additional interest on the interest received from your capital. The default setting on your account is that your interest is automatically reinvested in new loans (although you won’t have the same access to your money as if you withdrew it). Of course, you can change this should you wish to, and choose to have your interest paid to your available balance or set it to draw down to your bank account every month.
With compound interest, your investment could therefore grow exponentially.
Auto-Re-Investment. As it sounds, this default setting – referenced above – automatically re-invests your interest, with the aim of maximising your returns.
Loan Diversification. At easyMoney, we focus on bridge (or bridging) loans, as well as development loans to property professionals. The projects requiring loans can be many and varied: from a single apartment through to a longer-term housing development
Spreading your investment across more than one loan could help to mitigate risk, create greater security and could help to maximise your returns. As a conservative lending platform, easyMoney has grown its loan portfolio steadily, and we expect to increase our diversification in line with its growth.
Market conditions will determine the number of loans in your investment diversification. Here, it’s worth pointing out that with easyMoney, all valuations are undertaken by RICS valuers who have experience in a specific geographical property location. easyMoney's default rate can be checked on our statistics page.
We should reiterate, however, that there is no such thing as a risk-free investment.
Cash Drag. The interval between your money being held in cash and easyMoney distributing it fully to the loans on our platform. For example, this could happen when you place your initial investment with us before a loan allocation. Also, when a loan is repaid, and we re-invest the proceeds.
We hope that you’ve found this guide useful. Look out for Part 2 very soon.
Here at easyMoney, we believe that experience in our chosen sector – in this case, property – is essential. This know-how has enabled us to remain in robust health and to deliver equally robust above-average interest rate returns to our investors during 2020. We’d be pleased to hear from you, so do get in touch for more information.
e-Money Capital Ltd trading as easyMoney is authorised and regulated by the FCA (FRN 231680). Instant access to your money can’t be guaranteed. The property industry is subject to market conditions and therefore your capital is at risk. Peer-to-Peer Investments are not cash savings accounts so they are not covered by the Financial Services Compensation Scheme (FSCS). Past performance does not guarantee future results. Tax treatment is dependent on individual circumstances and subject to change.