Investing

Post about boosting your funds through investment. Includes both traditional and non-traditional investment opportunities.

PrimeStox - An Unusual Way to Make Money Investing in Food

PrimeStox – An Unusual Way to Make Money Investing in Food

If you’re looking for a more remunerative (and interesting) home for some of your savings than a low-paying bank account, you might like to check out what PrimeStox has to offer.

PrimeStox is basically a crowdfunding platform for high-quality food producers and sellers. These businesses are seeking short-term funding (typically for four months) to make products and get them to market. Once the products are sold, investors get their money back with interest. This is generally around 8% for four months, which works out as an annual rate of around 24%. If you immediately reinvest your money in another project, the annual interest rate will be more than this, due to the effects of compounding.

The opportunity may be best explained by an example, so here’s one product I invested in recently. Scarlett and Mustard is a range of premium salsas, dressings, and so on produced by a husband and wife team in East Soham. They say all the ingredients they use are 100% natural and sourced locally.

Last month they were looking for a total investment of £6,000 to fund 6,000 jars of their tomato salsa range (pictured below). I decided to invest a modest £50, which made me the beneficial owner of 50 jars. All being well, I shall receive £54 (my original investment plus 8% interest) by the end of September 2017.

Tomato salsa jars

You might ask what will happen if they don’t sell the salsa. The answer is that all investments are secured by the products concerned, so in the worst case scenario I will receive 50 jars of tomato salsa, which would keep me going for a very long time! Or I could sell them or give them away to friends, of course.

In practice, though, that is an unlikely scenario. So far all investments on PrimeStox have been repaid with interest on or before the date specified. If there is a problem, all investors vote on how best to resolve it, e.g. by selling the goods to a third party for a smaller margin. It is therefore highly unlikely that you would ever lose all your money.



Primestox Pros and Cons

Obviously, investing in PrimeStox is not as safe as putting your money in the bank. In addition, the money will be tied up during the investment period with no easy way of accessing it (although this.is generally no more than a few months). You shouldn’t therefore invest money you may need urgently in the near future.

On the other hand, there are a lot of things I like about it…

  • Rates of return are highly competitive, even compared with other crowdfunding and P2P investment opportunities.
  • The minimum investment is very low – typically £20. You can therefore test the water without risking any significant funds.
  • If you are prepared to spend a bit more – say £100 or over – in many cases you will receive a higher interest rate.
  • Unlike some other crowdfunding platforms where demand from investors greatly exceeds supply, with PrimeStox there are generally a few days to decide whether you want to invest and how much (though I have noticed that opportunities are filling up faster and faster).
  • You are supporting small businesses in the UK and abroad who are dedicated to producing high-quality foodstuffs.
  • And, as mentioned earlier, as an investor you hold title in the product until it is sold. PrimeStox will even send your share to you free of charge if you want.

As for why producers are offering these sort of returns, it is basically to aid their cashflow by covering the cost of raw materials, production, storage, transportation, and so on. But also, they hope that investors will act as ‘brand ambassadors’ for them, helping to promote the product, and maybe even buying some themselves.

In that spirit, here are links to the three products I have invested in on the platform so far, with the amounts I purchased included.

Scarlett & Mustard – Tomato Salsa – £50

Strong Roots Sweet Potato – £100

Bread Tree – Rainbow Pasta (pictured below) – £56

rainbow pasta

 

There is absolutely no obligation to promote any of the products you invest in, but obviously as an investor you have a financial interest in ensuring they are successful. Investors are also sometimes offered rewards, discounts and other incentives by the producers in question.

Clearly nobody should invest more than a small portion of their savings in PrimeStox, but the potential returns on offer are compelling, and investing this way is certainly more fun than stocks and shares!

If you have any comments or questions about PrimeStox, as always, please feel free to post them below.

Disclaimer: I am an investor with PrimeStox but have no other relationship with the company and am not an affiliate for them. Neither am I advising anyone to invest in PrimeStox. Investment decisions are personal to every individual and if in any doubt you should seek advice from a qualified financial adviser. This post is provided for information purposes only and should not be construed as financial advice..




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The Alternative Guide to Property Investment - Review

Review: The Alternative Guide to Property Investment by Frazer Fearnhead

Today I’m reviewing a guide to property crowdfunding that has just been published by Frazer Fearnhead. The full title is The Alternative Guide to Property Investment: How to Build Your Property Portfolio via the New Property Crowdfunding Platforms.

The book is available in both hard copy and Kindle e-book form. I bought the e-book version, partly because (I admit it) I’m a cheapskate, but also because I wanted to get my hands on it as quickly as possible.

For those who may not know, Frazer is the founder and managing director of The House Crowd, one of the UK’s leading property crowdfunding platforms. In his book, he explains what property crowdfunding is and the pros and cons compared with other forms of investment. The book is organized in twenty-three main chapters (most of them quite short), as follows:

  1. Why Invest in Property at All?
  2. How Much Diversification is Sensible?
  3. Why Property Investment is the Best Vehicle to Supplement Your Pension
  4. Establishing Your Own Investment Criteria
  5. Capital Growth vs Cash Flow
  6. Residential vs Commercial
  7. How to Beat the Averages and Give Yourself the Best Chance of Making a Successful Property Investment
  8. The UK Property Market – 2017 and Beyond
  9. Passive Property Investment
  10. A Brief History of the Alternative Finance Industry
  11. All About Equity Crowdfunding
  12. How Does Property Crowdfunding Compare with Traditional Property Investment?
  13. All About Peer-to-Peer Secured Lending
  14. Commonly Asked Questions About Property Crowdfunding
  15. Comparison: Equity Crowdfunding vs Peer-to-Peer
  16. What Returns Can You Expect?
  17. Taxation
  18. How to Decide Whether Crowdfunding is Right for You
  19. Key Factors to Consider When Choosing a Property Crowdfunding Platform
  20. Using Your Pension to Invest via Crowdfunding
  21. Crowdfunding Your Own Property Deals
  22. FCA Regulated Companies
  23. In Conclusion




My Review

The Alternative Guide to Property Investment is well written and neatly presented, with illustrations where relevant. It covers most things someone new to property crowdfunding would want to know. As I have been investing this way for several years (using The House Crowd and other platforms such as Property Partner and Crowdlords) quite a lot of the information was familiar to me already. Nonetheless, it is valuable to get Frazer’s perspective as one of the pioneers of property crowdfunding, and there is plenty of food for thought even for seasoned property investors.

Clearly, as the MD of The House Crowd, Frazer has a vested interest in promoting the attractions of property crowdfunding. Nonetheless, he gives a balanced view of the pros and cons and is not afraid to state that it does carry a degree of risk. I agree though with his view that people should not automatically rule it out because of this. While property crowdfunding is not as safe as putting your money in a bank savings account, the potential returns are much higher. And a variety of safeguards exist, including the fact that most property crowdfunding (except for the most speculative development projects) is secured by bricks and mortar. But of course, you should only invest in property crowdfunding as part of a balanced portfolio.

Another aspect of this book I liked is that it explains the range of investment opportunities now available in property crowdfunding. These include equity crowdfunding – the original and most familiar form of property crowdfunding – where investors purchase shares in a property and receive a proportion of the rent paid as well as capital appreciation when the property is sold. But the book also covers secured lending – an increasingly popular option – where investors provide cash to property owners and get the capital and interest back at the end of the loan period (typically 6 to 12 months). And finally, the book discusses property development projects, which offer greater potential profits but also involve bigger risks.

Another important topic covered in the book is taxation, and specifically how property crowdfunding can be used to make the most of your tax-free allowances. The latter include savings interest, dividends, and capital gains. This is a feature of property crowdfunding that can be highly advantageous for investors.

If you are new to property crowdfunding, The Alternative Guide to Property Investment will provide a concise and easily digestible introduction to this field, from someone who really does know this business inside and out. The asking price is modest, and all profits from sales are going to the charity Lifeshare who work with the homeless and vulnerable in Manchester (where Frazer was born).

If you have any comments about The Alternative Guide to Property Investment (or property crowdfunding more generally) please feel free to post them below and I will do my best to answer them. You might also enjoy reading my earlier post How to Profit from Property Crowdfunding, which sets out the basics of how property crowdfunding works.

Disclosure: I have a range of investments with The House Crowd and other property crowdfunding platforms, including development loans, secured lending and equity crowdfunding. I am also a shareholder in The House Crowd. I firmly believe that property crowdfunding can be a worthwhile addition to any investor’s portfolio, and have put my own money where my mouth is!

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How to Boost Your ISA by up to £250!

How to Boost Your ISA by up to £250!

At the time of writing there is just over a week to the end of the 2016/17 ISA season. That is all the time you have left to make use of this year’s allowance of £15,240 before it is gone forever.

If you haven’t already used your allowance – and you have money available to invest, of course – it is therefore essential to take action now. Investing via an ISA means that any profits you make will be free of UK Income Tax or Capital Gains Tax. And you won’t even have to declare it on your tax return, which if you’re anything like me will be a welcome simplification…

You can of course put your money into a cash ISA, but the rates of return on such accounts are currently derisory, and basic rate taxpayers now have a £1000 tax-free savings allowance anyway. The argument for investing in a cash ISA is therefore weak for most people, although if you think interest rates are likely to rise significantly in future there might still be a case for using one. Count me out, though 🙂

That leaves stocks and shares ISAs (and the new IFISAs, if you can find one). For most people this is likely to be the favoured choice at the moment. So in this post I wanted to reveal a way you can get a cash boost of up to £250 if you plan to invest in one of these.

The method in question is to use a cashback platform such as Top Cashback or Quidco. I wrote about cashback platforms in this blog post a while ago. Basically, the platforms rebate the commission they receive from ‘introducing’ you to a company if you click via a link on the platform. Obviously, you need to sign up for an account with the cashback platform itself before doing this. I highly recommend signing up with both Quidco and Top Cashback, even if you aren’t planning to invest in an ISA currently.



So What’s On Offer Right Now?

On Top Cashback one of the best offers comes from Fidelity. If you put £5000 or more into their Stocks and Shares ISA, you can get £105 cashback. You have to be a new customer and remain invested for a minimum of three months to get the cashback.

If you invest in a Shepherds Friendly Stocks and Shares ISA, an even more generous £126 cashback is on offer for a minimum £5000 investment. And you can earn as much as £210 if you set up monthly deposits instead, though to get the full amount you must put in £900 a month or more. Again, you must remain invested for a minimum of three months to receive the cashback.

Another offer on Top Cashback that’s well worth a look comes from the investment platform Nutmeg. They are currently offering a generous £200 cashback to anyone investing a lump sum of £5000 or more or an initial investment of £500 and monthly payments of at least £100. You will need to move rapidly on this, though, as this offer ends today. I expect there will still be an offer available tomorrow but it probably won’t be as generous. I am, incidentally, a fan of Nutmeg myself, and will be writing about their investment service soon.

Over on Quidco there are also some great offers. With Scottish Friendly you can get up to £215 cashback when you invest in their My Moneybuilder ISA. To get the maximum you have to invest at least £1000 a month, though.

Nutmeg are also on Quidco. Their current offering is £150 with the same conditions as Top Cashback (see above). At present, then, Top Cashback offers slightly more cashback on Nutmeg than Quidco, but this can change by the day, so it’s important to check and compare both.

Finally, Shepherds Friendly are on Quidco too. Currently £150 cashback is on offer there for a minimum £5000 investment. And you can earn up to a chart-topping £250 if you set up monthly deposits, although to get the full amount you must invest £900 a month or more.

Obviously you shouldn’t invest in an ISA purely for the cashback on offer, but if you are thinking of doing so anyway it makes sense to do it through a cashback site and get the benefit of the extra money available.

Good luck, and if you have any comments or queries, please do leave them below.

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When Ernie Became Scrooge - Why I Just Sold Most of my Premium Bonds

When Ernie Became Scrooge: Why I Just Sold Most of My Premium Bonds

In late 2014 I invested £30,000 from an inheritance on premium bonds. I liked the idea of making a tax-free income this way, with the (admittedly slim) chance every month of winning a life-changing sum.

Initially anyway it went fairly well, though all I ever won were £25 prizes. Then in June 2016 the interest rate and hence the prize fund was reduced, and almost immediately I saw a big drop in the number of prizes I was receiving. For comparison purposes, here are the prizes I got from November 2014 (the first month my bonds were eligible for the monthly draws) to May 2016…

Month/YearNumber of Prizes wonTotal Prize Value £s
TOTAL23600
11/14125
12/14250
1/15125
2/15125
3/1500
4/15250
5/15250
6/15250
7/1500
8/1500
9/1500
10/15125
11/15125
12/1500
1/16375
2/16125
3/164100
4/16375
5/1600

In contrast, here are my winnings after the change was made in June 2016.

Month/yearNumber of Prizes wonTotal Prize Value £s
TOTAL6150
6/1600
7/16250
8/16125
9/1600
10/1600
11/16250
12/16125
1/1700
2/1700

So in the period November 2014 to May 2016 I won 23 prizes totaling £600 in value, and from June 2016 to February 2017 I won 7 prizes totaling £150 in value.

Obviously we aren’t comparing like with like here, as the first period is 16 months and the second period just nine months. So here are the pro rata figures for the returns both pre- and post-June 2016.

Pre-June 2016 – 600 x 12/16 = £450 per year

June 2016 onward – 150 x 12/9 = £200 per year

So, in effect, my rate of return has more than halved since the June 2016 changes. When you calculate this as a percentage return on my £30,000 investment it looks even worse.

Pre-June 2016 – 450/30000 x 100 = 1.5%

June 2016 onwards – 200/30000 x 100 = 0.67%

By current standards, a tax-free return of 1.5% per year isn’t too shabby – it compares pretty well with cash ISAs, for example, even though the return with the latter is guaranteed (until the rate changes anyway).

On the other hand, 0.67% is clearly disappointing. I would have made more keeping the money in my Santander 123 current account which pays 1.5% (3% pre-November 2016), even though they only pay this on the first £20,000 in your account.

It’s hard to quantify what the chance of winning a big prize is worth. On the one hand you probably won’t – but on the other hand, somebody has to!



So What Action Am I Taking?

After nine months under the current premium bond terms I have decided enough is enough.

I withdrew £25,000 of my £30,000 today and plan to put this in a variety of equity-based investments. Obviously these are not guaranteed either, but by a conservative assessment they should generate an annual return of around 5%, or about eight times what I am getting from premium bonds currently.

I am going to keep £5,000 in premium bonds for the time being. At least it gives me a bit of excitement at the start of every month. And I am never going to lose this money, although obviously in time its value will be eroded by inflation.

So that’s my view of premium bonds, but what do you think? Are they still a worthwhile investment or are they now a mug’s game? Please leave any comments below as usual!

UPDATE 7 February 2017 – Just heard that the premium bond prize fund is being slashed again in May 2017. Yet another reason for looking elsewhere!

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How to profit from property crowdfunding

How to Profit from Property Crowdfunding

Crowdfunding and crowdlending are opportunities I particularly wanted to discuss on Pounds and Sense, so I thought I would kick off by looking at the investment possibilities offered by property crowdfunding.

As ever, I have to start with a disclaimer that I am not a qualified financial adviser. I am simply talking about this topic as an interested individual who has invested this way himself. You should do your own ‘due diligence’ before investing, and never risk money you cannot afford to lose in a worst-case scenario.



Why Property Crowdfunding?

Investing in bricks and mortar has long been a favourite strategy of the wealthy. Property owners get a double benefit: rent from tenants for as long as they own the property, and – in most cases – a profit if they choose to sell.

Of course, property doesn’t come cheap. And even if you can stretch to buying a modest house or flat for investment purposes, you are taking the risk of putting all your eggs in one basket. As a result, many people of more modest means have concluded that property investment is not for them.

Crowdfunding is changing all that, however. A growing number of platforms now exist that allow ordinary folk the chance to buy a share in an investment property for as little as £50. Investors then receive a proportion of the rental income generated, and also get a share of the profit when and if the property is sold.

I now have investments via three different property crowdfunding platforms – a block of flats in Torquay in which I own a small share is pictured above – but in this post I want to focus on one platform in particular, the UK-based Property Partner. This was only launched in January 2015, and has swiftly become the UK’s largest property crowdfunding website. They have over 9,060 investors, who between them have invested over £44 million in properties across the UK. Non-UK investors are welcome to join Property Partner too, so long as the legal system in their country permits it. Unfortunately, US residents are not able to invest this way at the moment.

One big attraction of Property Partner is that they have an active secondary market. That means investors can offer part or all of their portfolio for sale at any time.

Obviously, to sell your shares in a property you will need a buyer, but Property Partner say that so long as they are priced reasonably (i.e. at or below the current official price) shares normally sell within 72 hours. By contrast, other property crowdfunding platforms such as The House Crowd and CrowdLords do not run formal secondary markets, though they say they will always help would-be sellers find a buyer if required.

Another attraction of Property Partner is that dividends are paid monthly, unlike other platforms which typically pay annually. Money from dividends builds up in your account, and you can either withdraw it or reinvest it in other properties. When you add that you can get started on Property Partner for as little as £50, it is not all that surprising to me that they have enjoyed such success.

Understanding the Risks

With all property crowdfunding platforms, it is important to understand that there is an element of risk. Clearly, your returns may be affected if occupancy falls or there is a major issue affecting the property (e.g. a fire). Your money is not as safe as with a UK bank savings account (although of course the potential returns are much better).

It is therefore important not to put all your eggs in one basket. As mentioned, I have investments with three different property crowdfunding platforms, and within each platform I am invested in several different properties as well. I have only had one investment fail – a highly speculative development venture – and fortunately I only had the minimum amount invested in that.

On the positive side, I have made several thousand pounds profit from my property crowdfunding investments to date, and have been pleased with the net rate of return. With Property Partner alone I have around £5000 invested and made £500 profit in the last year or about a 10% return (allowing for both rental income and capital appreciation).

Clearly, I’m not saying that everyone should invest in Property Partner – that depends on your personal circumstances and investment goals, and you should always take professional advice if you have any doubts before investing. But if you are looking for a property crowdfunding platform to invest with, in my view they should definitely be at or near the top of your list.

£50 Sign-up Bonus!

Finally, if you join Property Partner via any of the links in this article and invest at least £1,000, you will receive an extra £50 (and so will I!). This is a special promotion and may of course be withdrawn at any time. I am not aware of any plans to end this offer currently, but if that happens I will of course amend this post accordingly.

I do hope you have found this post on property crowdfunding of interest. As I mentioned earlier, this subject (and crowdfunding/lending in general) is one I intend to return to on Pounds and Sense regularly in future.

Good luck, and if you have any comments or questions about property crowdfunding and/or Property Partner, please do post them below.

Please note: This article is an extended version of one I posted last year on my Entrepreneur Writer blog.

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Sign Up Now for this Free Online Course on Managing Your Investments from Futurelearn

Sign Up Now for this Free Online Course on Managing Your Investments from Futurelearn

Futurelearn is a UK-based platform for short online courses from British and international universities. All Futurelearn courses are free and open to anyone in the world.

I thought you might like to know that a course titled Managing My Investments begins on 20 March 2017. It comes from The Open University. It will run for six weeks and you can enrol now if you wish.

Managing My Investments is intended for anyone with an interest in developing their personal financial skills to make good decisions when managing their investments and buying investment products. The course does not require any previous experience of this subject.

On the website, it says:

On this free online course, you’ll learn about different investment choices, the returns and risks associated with each, and the evidence about their historical performance. You’ll explore investment strategies, as well as the practicalities about involvement in personal finance markets. And you’ll look at how to avoid the individual and group behavioural traits that can impair effective investment decision making .

Throughout, the course will provide recent and current case studies on investment issues, to demonstrate how the ideas and issues explored in the course are reflected in the arena of personal investments.

The course is up-to-date and covers the current reforms to UK pensions due to be rolled out in 2015 – changes that will radically alter the way many people will use their pension savings as they move into retirement .

Managing My Investments aims to give you the knowledge and confidence to take charge of your investments and your financial future.




Finding Out More

The course is run by Martin Upton of the OU Business School (previously Treasurer of the Nationwide Building Society). It requires a commitment of around three hours a week.

For more information (including a video trailer) and to register, visit the Managing My Investments information page of the Futurelearn website.

Futurelearn have lots of other interesting free courses, incidentally. I recently took one called Strategies for Successful Ageing from Trinity College, Dublin, which was informative and thought-provoking. I am currently half-way through a course on understanding diabetes (I was diagnosed as prediabetic earlier this year).

As well as the teaching, another big attraction of Futurelearn courses is the opportunity they provide to interact with fellow students from all over the world. There is often almost as much to learn from the other students as the course material itself!

I am also enrolled on Managing My Investments, so if you decide to sign up for the course, keep an eye out for me on the course website. I try to comment regularly and get as actively involved as I can in discussions 🙂

If you have any comments or questions about this post, please do post them below.

NOTE: This course has been postponed till 20 March 2017 from its original start date of 9 January. I have amended the post accordingly.

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