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  • Rafter
    • #2
    • 7th Dec 12, 2:19 PM
    • #2
    • 7th Dec 12, 2:19 PM
    What we really need is a market to develop that sits somewhere between peer-to-peer and equity investments on the one hand (100% of your money at risk) and on the other hand savings and deposit accounts (85k protection but low returns).

    Otherwise we get the current system with horrible protected equity investments backed by derivatives where the bank selling them takes all the dividends and profits in commission and 'savers' are left with still poor returns or the risks that a peer-to-peer lender goes belly up or gets its risk management wrong exposing investors to losses and risks they didn't believe they were taking.

    Not sure I've got the answer but it seems the current financial system doesn't really meet the needs of borrowers (companies or individuals) or investors (savers, pension funds) because of a disfunctional banking system and poor regulations.

    R.
    Last edited by Rafter; 07-12-2012 at 2:21 PM. Reason: clarifying
    Smile , it makes people wonder what you have been up to.
  • jamesd
    • #3
    • 7th Dec 12, 3:10 PM
    • #3
    • 7th Dec 12, 3:10 PM
    Rafter, you don't need to choose between just the bank retail products using derivatives, and shares. There's a broad range of funds available that have yields (interest or dividends or a mixture) in the 6-8% range that can be held tax free within a S&S ISA. As usual with investments the capital value varies over time. Don't just pick the ones with the highest yields.

    There's also the Retail Bond Market of the London Stock Exchange where companies can offer bonds for consumers to buy them directly, typically paying 5-7% interest. These are corporate bonds, not term deposit accounts, and as usual for investments including P2P the capital is at risk if the company fails. Not that it's particularly likely for some of them. FSA regulated.

    For those who don't mind funding onshore wind or solar there are debentures available that lock in money for 20-25 years and pay 6-8% in dividends, split to pay twice a year. Because the payments are dividends there's no extra tax to pay for a basic rate tax payer and just the usual extra for higher rate that takes the total tax to pay to less than the income tax rate. Not that this really is a 20-25 year lock in, while it's possible that there will be a way to resell, don't count on it. FSA regulated.

    One of the problems with P2P is that it attracts people who don't know about their other investment options and might miss the safer alternatives that are out there.

    As always, I've just mentioned some possible investments and it's up to the individual to determine what is or isn't appropriate for them, if any of them are.
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