Our last how-to blog looked at the ways in which an Abundance ISA can be a helpful tool for generating an income. This time, we look at the features of the Abundance ISA that can help you to grow your money and create a lump sum for the future.
When you ask what people want to grow their money for there are numerous very commonly cited answers: retirement, the deposit on a home, weddings, school or university fees, travelling. Many of these big goals we save for are a long way in the future – so we need investments that are designed to grow money over long time frames. Alongside other tax efficient products, the Abundance ISA can be a useful tool to grow that savings pot to the size you need.
Take, for example, saving for the deposit on a home. It is becoming increasingly common for grandparents and parents to help out with home deposits for the younger generation as the ‘Bank of Mum and Dad’. The Abundance ISA could be a tax efficient, flexible way for parents, grandparents, or first time buyers to do so. This is because of the way the investments we sell, are structured. The Abundance ISA combines the positive benefits of ISAs – tax free returns and no tax to pay on withdrawal – with the positive benefits of Debentures (these are the investments we sell) – regular, semi-annual interest payments and capital repayments over a set period of time.
The interest and capital repayments in particular are interesting in the context of growth. Unlike with shares or a bond, most Abundance Debentures regularly return instalments of invested capital over the full term of the project. This, alongside interest payments, lets you reinvest more of your money, more quickly, and put it to work again in new investments that, again, regularly return capital and interest – although there is always a risk to your money when investing. So for the full timespan of an investment – whether that be 7 years, 15 years or 20 years – investors are getting the money they invested back, while earning interest based on the original invested amount. And all the time, the returns are tax free.
It means that for those with a specific goal, the Abundance ISA can help it be met a little sooner:
- Firstly, because of the tax benefit – i.e. paying no tax on interest earned or money withdrawn
- Secondly, because of the early return of capital for reinvestment, in order to earn further interest on a relatively small amount of capital
Do bear in mind that as with any investment product there is a risk to your money with our Debentures, even when in an ISA, and that you may not be able to access it immediately if your needs change in the future. Read the Risk Warning at the end of this blog to find out more.
The flexibility of the Abundance ISA also extends to withdrawing money. Our investors can withdraw part or all of their money using a number of strategies. They can stop reinvesting and begin to withdraw cash returns as they come, or leave cash returns accumulating up to a desired sum, all free of charge and free of tax. Abundance members can even sell their investments in part or full to fellow members on our Marketplace – although achieving a sale or getting the desired price is not guaranteed. The key point here is that with an Abundance ISA you are in control of when and how you access your money.
And in the end, no matter how our customers choose to use their Abundance ISA, the same three things remain true:
- It is always for them to choose where they want their ISA money invested
- It is always for them to choose just what they want to do with their returns
- It is always doing something good for the environment and society, too.
Part or all of your original capital may be at risk and any return on your loan or investment depends on the success of the project. Investments tend to be long term and may not be readily realisable. Estimated rates of return are variable and estimates are no guarantee of actual return. Consider all risks before investing.