A retired friend of mine has £30,000 which she wants to generate income from, she does not want to lose the capital by buying an annuity but she does want a lot more than the paltry amount of interest paid by banks. I have suggested she talk to her IFA about two things that are little known about.  The first is actually an annuity but for a limited amount and with an excellent return rate, an IVPP.  The second is social lending.

An Immediate Vesting Personal Pension for a retired person is limited to £2,880 per year but the sum is boosted by tax relief so for example if you put £1,000 into an IVPP you will be credited with  £1,250 after basic rate tax relief.  If your annuity rate is 6% your return is £75 which equates to 7.5% return on what you actually paid in to the plan.  Not exactly what my friend is looking for but worth considering for the improved return on a small part of her lump sum.

The second thing I really do want her to consult on with her IFA is social lending which would result in her getting regular monthly payments made up of capital and interest.  Social lending is where a group of individuals combine their capital to lend to business (or individuals), basically taking on the role of banks.  This sounds difficult but is actually made quite easy by using organisations who co-ordinate the loans.  You select a lender that operates a way you feel comfortable with and deposit a lump sum in a bank account to show your commitment.  The lender will send you loan prospectuses with all the relevant details regarding the borrower and security or insurance on the loan.  If you like the loan you bid how much you are prepared to lend and the interest rate you want.  If your bid is accepted then you will get monthly capital repayments and interest paid into your account.  There are variations on the above procedure.  The borrower pays a fee to the organiser. more information on social lending (new window)

If any reader is already involved in social lending I would appreciate their comments.


2 comments on “Money

  1. Brian says:

    Hey Jim. Why don’t you get a few of those recipes of yours up here? I made the chicken curry that you showed me when we were in Moraira, great!
    Hope all well with you- all the best. Brian

    • alespiller says:

      What? You mean my cookbook should actually be a…. cookbook? I have thought about it, especially now they decided I could have diabetes as well as everything else. When you are diabetic you have to be so much more careful in your diet.

      One of the reasons for starting this blog was to document what I am doing and thinking as much for myself as other people. So much of the last 4 years of my life comes back to me in random flashbacks and I have no idea how much is lost forever. When we were in Moraira I was fully healthy and I remember that well. Considering you were invited out there by my brother who never turned up it was fortunate that we got on so well. It is good to see that you are happily settled in Thailand.

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