How we work: The crofting for savings

Let’s continue our series of short stories by choosing a new example to explain what we do in a simple manner. After picking the cake and allotment example this time we are north of the border, in Scotland, crofting.

How does it work?

Crofting has been popular in Scotland since the 19th century, especially in the Scottish Highlands. This clever idea is to make people – usually farmers living in the same village or town – collaborate together to run a small-scale food production operation and by doing so reduce the costs, increase efficiencies and have the benefits of a local production.

How do we apply this concept?

We are taking the same original idea and applying it in a bigger scale on a different market to reduce the cost of buying a corporate bond for the smaller investor, who can’t afford this kind of product.The usual threshold to buy a bond is £100,000 so much like buying a masses of land to run a farm is prohibitively expensive to most of us.

What we want people to create as an output by working together is not food, but income.

By helping you – a smaller investor – collaborate with others we enable a group of people to purchase a fraction of a bond and by doing so unlock access to the corporate bond market so more investors can find a good alternative to the traditional products proposed by the market.

The main result is almost the same as the original, people were able to produce food in a different way allowing them to be more independent while being part of a community. We are helping you to produce income for your retirement and contributing to ease off the effects of the saving crisis in the UK.

How we work: allot in community growing

Here is the second article in our series taking the complication of the financial world and explaining our purpose in a non-financial sector example.

This time around, we visit the quintessential British allotment. Previously we were sharing cake.

An allotment divides a field into parcels where individuals can grow their own produce as part of a community initiative. The allotment members are part of a community by collaborating together. One famous example would be how people use the roofs in New York to produce honey or salads. In America allotments are often called community gardens.

Nowadays, most people live in cities with large densities so land is expensive – the average price of a square meter of property is £2,216 in the UK. So for anyone wanting to grow something but does not have a garden buying a piece of land can be costly and unproductive as land is rarely sold in small sizes. So Council’s and co-ownership societies have taken a piece of land and put it into parcels that are rented by a keen grower to maintain and grow produce. Breaking the larger piece into smaller chunks reduces the threshold to the person most likely to be interested. Its also an efficient method to use a resource that may be held back from public use or be wasteland.

In our case, instead of sharing a field together you will share a corporate bond by buying a fraction of it, reducing the cost of ownership for everybody but receive the full reward. We are making you collaborate together, not to produce locally grown vegetables or fruits, but to help you produce income by using your savings as the fertilizer to make your income grow.

With this concept of fractional ownership of bonds we want to help you start to harvest income in a collaborative way and together we build a community of savers.

How we work: a piece of cake

Financial jargon is a curse of the investment profession, turning the intangible into PhD rocket science. So in a short series of articles we want to take our business and explain it in terms that are far more tangible to everyday life.

It is hard to explain an idea clearly without being dry.

We believe describing a concept by using a simple example is the best approach to show what we do.

Our goal is to give you an opportunity to enjoy a cake currently not available to you or most ordinary people. Unless you are rich enough to have access to an exclusive club you are not let in. The cake is supremely expensive to buy so you need people to share the cost to enjoy a slice.

Here’s a tasty story. You want to go to a party, where everybody else wants to go, to try a quadruple chocolate cake, everyone’s favourite. Arriving at the event the front door is locked and you are with most people waiting outside. Even worse, only a few can enter because they have enough money to buy the cake which costs in excess of £100,000.

You are excluded from the party and from buying a slice of the cake. We come to the rescue to unlock the door and by grouping you with others everyone can buy it and you get a slice. This is the power of co-ownership.

By allowing you to buy a fraction of the cake, instead of the whole, you will be able to savour it with others and because of the setup of our business you get VIP access to the party.

This is how we help investors earn a better income. In this example, the party where everyone wants to go is the closed world of professional fund managers and the cake is corporate bond which requires a minimum investment amount of over £100,000 so we help to make it available at a lower cost by buying the whole and making slices available.

Brexit and You

Everyday life has its small and unexpected challenges

Once in a lifetime a change comes along (welcomed or not) and though it may not feel like Brexit will impact you, anyone with a relationship with a financial institution may see things change. The next few years will be foggy in many aspects until the detail burns the mists away. Though this is a great opportunity to redouble efforts to go forward and have a win attitude. Take control of things you can in your life and work.

Renegotiating treaties involving thousands of laws between UK and the EU won’t be an easy task.

Financial services are a massive export from the UK. Changes to passporting of these services will impact how they are delivered. Regulation following the Financial Crisis and new technologies are transforming the market and Brexit is another factor to add the list of things influencing change.

What issues Brexit could present to users of financial services:

  • The uncertain economic journey is unlikely to mean higher interest rates and thus not optimal for savers wanting an income.
  • Even with the protection of savings in the UK given by the Financial Services Compensation Schemes (FSCS), it’s uncertain how European protection schemes shall cover UK investors with savings overseas.
  • Complicated legal issues to solve between UK and EU banks might lead to more complex legislation for a UK investor who wants to invest somewhere in Europe and surely more bureaucracy to handle for you and your adviser.

Helping to ease investment headaches is the core of our platform and we are focusing on using the power of the crowd to give you access to high income securities; moreover, by investing in known companies in the UK, you contribute to its economic health and transition.

In our world we think “be great and support everyone to build and prosper.” We continue under Brexit with no change in our mission and renewed energy to do good.

Challenge of being a future retiree

Governments are trying to find solutions to finance the future retirement of current workers with no real master plan. Raising the age of retirement seems to be the main policy response – they do not have other ideas yet – to one of the biggest challenges faced by the majority of developed countries.

How can we effectively support older generations as they reach retirement?

A much older society means that, independently of the system of retirement planning, future generations will have to work longer to finance life after their working years. Be that as it may, people need better products to ensure their savings help them to live comfortably. Governments are not leading the way anymore, it’s down to the individuals to take the proactive steps to secure their own financial future.

Living comfortably after state retirement age means for most people paid work after retirement and also maximizing income from savings.

So, anyone in the middle of their career has to do a financial health check to know how they can save more and get better returns on their existing assets to ease pressures later in life.

Here are some thoughts:

  • As a saver you know your life goals and tolerance for risks, but it’s a struggle to see through the financial maze or simply don’t know where to invest your savings. It is essential that any investment meets your needs; especially given the current unstable economic situation that makes the challenge no easier.
  • As an everyday investor you should be able to get access to the same financial products as the elite but the minimum requirements exclude you from buying those. Look at ways to be involved in innovative finance to open new doors.

Our ambition is to give you access to high income securities, in a simple and easy manner to help you secure your financial future.

A greying society and opportunity in shared ownership

A greying society and increasing life expectancy are creating new problems for retirement savings.

As you get older, the worry of not saving enough during your career increases drastically. Nowadays, from the mid-career professional through to the baby-boomer, we are all facing the reality of lower returns in an economic environment full of uncertainty.

How should we invest for our greying years?

You could go to your financial adviser, create a diversified portfolio, or instead place your money in a deposit account. The current problems with those solutions are the persistent lower interest rate, and the lack of access to high income products. Clients need a solution to match a move from wealth accumulation to income generation.

Also, most of the savings products are either too complex or high minimum amounts so unavailable to the majority of investors.

Savers need an intermediary between them and the product

Crowdfunding can be an innovative way to gain access collectively to products you may not afford individually; this concept is even more powerful when the asset concerned is not freely available.

We are building a platform that allows:

  • Direct ownership
  • Access to high income products
  • Lower investment costs
  • Secure investments
  • Simplicity

Helping investors earn a decent income or “salary” on your savings is one of the main outcomes we want to achieve with our platform.