What's the difference between Bonds and P2P Loans?

What's the difference between Bonds & P2P Loans? With bank savings accounts currently only offering paltry rates of around 3%, if you choose P2P or bonds carefully you could achieve returns of around 5-7% a year in interest. Although investments such as Bonds and Peer to Peer As with any money you make, the tax office wants its cut. Lending (P2P) are not covered by the FSCS protection scheme and carry more risk, the rewards are Bonds: you may be liable for tax unless your bonds are eligible for an ISA or pension. P2P: your interest is also liable for tax, but from April the new 'Innovative Finance ISA' and the changes to the personal savings allowance will further boost the benefits of potentially much greater. P2P lending. Both require a lump sum money investment for a defined period of time. Both Bonds & Peer to Peer make a return Both should return your capital in a money lump sum at the end of the term. on an 'interest only' basis. So what are the key differences? Investments P2P: Individual P2P P2P lending is a chance for investors to lend to businesses or individuals. P2P P2P P2P Instead of asking banks for loans, P2P cuts out the bank' and websites like Crowdstacker connect lenders and borrowers. P2P loans will be eligible to be included in a new catagory of ISA from April 2016 called the Innovative Finance ISA (IFISA) meaning you can shelter more of your Bonds: Group Investments interest from tax Bonds Much like an 'I.O.U', a Government or company borrows money from you for a fixed period and promises to pay you back with interest. With bonds, you'll usually need the services of a BOND stockbroker or bank. What about Savings Bonds? It is important to note that Savings Bonds are totally different to Bonds. To avoid confusion, Saving Bonds are offered by banks and are basically just fixed term savings accounts. Read the full article "What's the difference between a bond and a P2P loan?" by our guest writer, finance columnist, Sue Hayward at www.crowdstacker.com/knowledge-hub CROWDSTACKER Your capital is at risk if you lend to businesses through peer to peer lending. Peer to peer lending is not covered by the Financial Services Compensation Scheme FSCS. Tax treatment is dependent on an individual's circumstances and may be subject to change in the future. ....... wo ........... ....... ....... ...........