Posted 21st November 18
Diversification can be a significant contributor to reducing the risks to your investment portfolio. However, IFISA Diversification can be a difficult task to achieve, particularly as government rules limit the number of ISA investments available to each individual each year.
Just has put together this guide on some ways in which individuals could diversify their IFISA investments to help manage their investment options.
If you wish to keep your investments focused on IFISA opportunities, the main method of diversifying your portfolio is to open a new IFISA account every year which focuses on a different element of the sector, or to open an IFISA that invests in many Bonds/Peer to Peer loans rather than just one. There are a myriad of options available within the tax-free* wrapper that suit this strategy, including:
Property-backed IFISAs allow investors to ultimately fund building projects, property developments, buy-to-let properties, commercial real estate or residential homes.
Small and medium-sized businesses have been flocking to the P2P sector in recent years as they find it increasingly hard to get funding from traditional banks.
Ethical IFISAs will only facilitate investment in projects that promote green initiatives or socially-responsible projects. These might include social housing developments, geothermal plant construction, wind farms or solar energy manufacturing.
Mini bond IFISAs
Mini bonds have been used by corporations for years as a way of raising money quickly for short-term use and can often be portrayed as direct-lending opportunities.
Alongside diversification into other ISA options, it is also possible to invest in other areas like P2P lending, stocks and shares investments, or by looking into ‘pooled loan’ opportunities that automatically spread your funds out over a number of different products.
Diversification through these options is not the only route to take, and not the only risk to alleviate. Every investor should carry out research into their potential portfolio options before making a decision, and should be aware of all the terms and conditions, other risks, or factors that might affect their investment.
To start your journey with Just, follow these simple steps:
*Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.