Classic cars, coins and fine wine have been the best investments in the last five years

Just a day after posting its biggest one day decline, the price of gold skyrocketed last week as scares over the spread of the coronavirus caused a ‘flight into safe havens’ by many investors.

However, the latest research by the peer to peer lending platform, Sourced Capital, has found that over the last five years, gold has been one of the worst investments one can make.

Sourced Capital looked at the average annual rate of return across a number of traditional investment options over the last five years, which are topping the table as the most lucrative and what return you would have gained from a £1,000 investment.

The research shows that classic cars have been the best investment in the last five years, with an average annual rate of return hitting 16% meaning a £1,000 investment would see a return of £1,136 today in addition to your original investment.

While gold hasn’t fared so well, investing in rare coins has been a pretty safe bet, returning an additional £1,033 on a £1,000 investment with the average annual rate of return sitting at 15%.

Fine wines rank as the third most lucrative investment returning an average of 13% each year or £859 on your investment.

While prime bricks and mortar haven’t performed well with an average annual RoR of just 6%, investing through a peer to peer lending platform such as Souced has proved a much better option, with an annual RoR of 10% returning £611 in addition to a £1,000 investment.

Vintage watches (8%) jewellery (7%) and good old fashioned stamps (7%) have proved the next safest bet, while the FTSE 100 (6%) sits on par with prime property investment and as previously mentioned, gold brings up the rear with an average annual RoR of just 5% over the last five years.

Stephen Moss, founder and MD of Sourced Capital, commented:

“The recent surge in the popularity of gold is likely to be short-lived and although it can bring some huge returns, these more volatile options are also prone to huge losses.

When it comes to the more stable investment options, the classics such as cars, rare coins and fine wine seem to bring the most consistent returns on a long term basis. That said, while bricks and mortar has traditionally been as safe as houses, a Brexit inspired market slowdown has even seen that drop down the table.

However, we’ve also seen investment in the property sector evolve as a result with a greater preference to invest via peer to peer platforms and while capital is always at risk, new-age options such as the Innovative Finance ISA have seen many investors average 10% annually through property investment, with some achieving returns as high as 12%.”

What is an IFISA?

The IFISA is a category of ISA which was launched in April 2016 for UK taxpayers and can provide returns as high as 10-12% an annum, although capital is of, course, at risk. Previously, there have been two main types of ISA: Cash ISAs and Stocks and Shares ISAs.

Similar to these ISAs, the IFISA allows you to invest money without paying personal income tax. This enables you to invest your money into the growing peer to peer market.

Like cash ISAs Each tax year, you get an allowance of up to £20,000 to put into IFISAs which you can distribute across your different ISAs should you wish to. In addition, you can transfer your previous year’s ISA investments into your IFISA. Unlike cash ISAs, funds held in an IF ISA are not protected by the FSCS.

One should keep in mind that tax treatment depends on the individual circumstances of each client and may be subject to change in future.


The property investment North-South (Midlands) divide

The latest research from peer to peer lending platform, Sourced Capital of the Group, has looked at where’s best to invest in bricks and mortar across the north, south and midlands regions of Britain.

Location can be vital when investing in property and regional influences can make the difference between profit and loss, so Sourced Capital has dissected the market based on the value of a property and the total value sold, as well as demand for these properties based on the volume of transactions.

The North-South divide is a very contentious issue but with the Midlands becoming a property powerhouse in its own right over the last few years, Sourced Capital totted up the totals based on: –

  • The North including the North West, North East, Yorkshire and the Humber and Scotland.
  • The South including the East of England, London, the South East and South West.
  • The Midlands including the East and West Midlands and Wales.

The figures show that despite much talk of the Northern Powerhouse, the South remains in pole position where the property market is concerned. In the last 12 months, house prices across the South have averaged £335,567 with £132.7bn worth of property sold across 401,606 transactions.

The North doesn’t trail by much when it comes to the churn of property sales though, with 333,262 transactions over the last month, although the value of these properties is significantly lower with the average property going for £152,276 with a total value of £52.1bn.

The Midlands and Wales accounted for the lowest level of transactions at 67,862 and while total value also trailed at just £12.8bn, the average house price does exceed that of the North at £185,241.

Stephen Moss, founder and MD of Sourced Capital, commented:

“When it comes to the sheer volume of transactions and the value of bricks and mortar, the South continues to lead the way and while this is largely driven by London, each region provides an attractive proposition when it comes to investing from both a demand and value point of view.

However, the North isn’t far behind when it comes to demand for housing and with the exception of the North East, it’s fair to say the property market across the majority of the North and even parts of the Midlands can go toe to toe with the South on transaction volume.

Scotland and the North West have seen the highest level of transactions outside of London in the last 12 months which demonstrates that the need for property investment doesn’t dry up once you reach Milton Keynes. While property values are lower on average, a good investment isn’t built on these alone and it’s finding the balance between cost, demand and return that will make your bricks and mortar venture a success.

Traditionally, the average buy-to-let landlord tends to invest close to home as they know the area and it also makes managing their investment that much easier. However, the rise of the armchair investor via peer to peer lending platforms means this is no longer the norm.

You can now spread your property investments across the length and breadth of the nation, all from the comfort of your front room. This means you can place some of your property investment eggs in London, some in the Midlands and some in the North West and Scotland, if you so wish to do so.

Spreading your investment also reduces the risk of more granular market influences. As we’ve seen over the last year due to Brexit, London cooled considerably while much of the Midlands and the North continued to register healthy levels of price growth. Building a diverse portfolio via a peer to peer platform allows you to adapt to this changing landscape and ensures your investment remains as profitable as it can be.”

Inflation is wiping out the nation’s savings

The latest research by the peer to peer lending platform, Sourced Capital of the Group, has revealed how high inflation rates and below-par interest rates on savings accounts are making it tough for the nation’s savers.

Sourced Capital looked at the annual rate of inflation seen since 2012 on an annual basis and compared this yearly change in the cost of living to the interest secured on an annual basis via the average savings account rate and a one year, fixed-rate ISA, to see how if saving is really worth the time and investment anymore.

Inflation effectively shrinks the value of your money over time and according to the Consumer Price Index, which tracks the cost of household items, the value of £1,000 on the high street at the start of 2012, would now have climbed to £1,153 today.

But what about your savings? Had you invested that £1,000 in the average savings account with your bank or building society back in 2012, your money today would have climbed to just £1,048.

Opting for the average cash ISA with an annual fixed rate would have seen your £1,000 investment reach £1,126 today.

As a result, the interest earned on these savings options would have been wiped out due to the increasing cost of inflation.

In fact, since 2012 inflation has increased at a greater rate than the return available from the average savings account each year, with an ISA proving a better option in just two of the eight years (2015 and 2016).

With traditional routes to saving no longer providing a sufficient return, many armchair investors have turned to Innovative Finance ISAs, which while pose the same capital at risk as other investment platforms, provide much greater returns of up to 10%.

Looking at the last three years alone since they have grown in popularity, the value of £1,000 on the high street according to the CPI would now have climbed to £1,067 today. Again, a traditional savings account would have returned just £1,008, while a fixed rate ISA is slightly better but still offers a loss compared to inflation at £1,037.

An IFISA however, would have returned £1,331, £264 higher than the loss due to the rate of inflation over that time.

Founder and Managing Director of Sourced Capital, Stephen Moss, commented:

“It’s been a tough ask to get any form return on your savings in recent years and this has been largely down to interest rates remaining so low in an attempt to stimulate the economy through consumer spending.

Of course, the flip side to this is that inflation has remained fairly robust and has sat between 1.5% and 2.6% in all but two of the last eight years. As a result, not only has the return on our savings been minimal, but the increasing cost of living has pretty much wiped out any return available.

It’s no surprise that as a result, alternative methods of investing have come to the forefront and the likes of the Innovation Finance ISA have grown in popularity with armchair investors and investment professionals alike. While there is, of course, an element of risk, investing in peer to peer products particularly in the property sector has seen consistently higher returns over the last few years, despite quieter market conditions due to Brexit uncertainty.”

P2P investments not covered by the FSCS. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Tax-Free Property Investing with your ISA – London Event

Sourced Capital will be holding an event in London on Friday 20th March 2020 to discuss the alternative investment opportunity that can make your money work harder with tax-free returns.

14.00 – 17.00
20th March
The Yacht, London