Peer-to-peer lending sites: MSE guide discussion

Froggitt · 21 March 2016 at 3:45PM

Jonbvn wrote: »

They key to managing risk with this (and other investments) is diversification.

+1

I have some money with Zopa and some with Ratesetter. Ratesetter is a better return. I am looking to move more money into P2P. However, Zopa diversify my investment into £10 chunks. Ratesetter seem to put the lot with one borrower. Is that correct?

They say its fine because of the contingency fund. However if it gets wiped out thru defaults, I want my money diversified, like Zopa, so I reduce the chance of big losses.

Any thoughts? Am I misunderstanding the difference between the two?

Jayp7541 · 21 March 2016 at 5:53PM

I assure you it wasn't a spam post. If it was spam wouldn't you think I'd have taken the effort to put a link in to the site I'm trying to promote ?

Thanks AlanP, very useful read.

badger09 · 21 March 2016 at 6:52PM

Jayp7541 wrote: »

I assure you it wasn't a spam post. If it was spam wouldn't you think I'd have taken the effort to put a link in to the site I'm trying to promote ?

Thanks AlanP, very useful read.

Being a very new user, you wouldn't yet be able to post links.

Just saying;)

jamesd · 21 March 2016 at 9:28PM

Froggitt wrote: »

Any thoughts?

Just wondering why you're bothering with two of the lower paying platforms that also have some of the worst exit costs if you want to sell a loan.

kremmen · 21 March 2016 at 10:07PM

itm2 wrote: »

To partially answer my own question (in the absence of any other replies!)....I tried cashing in my £1k investment with Funding Circle a few weeks ago, to see how smooth/quick the process was, and how liquid my assets were. I used the autobid/autosell settings. The funds had been invested for 23 months, at a chosen target annual rate of return of 6.1%

After 2 weeks I had been able to sell and cash in £1071.84. After another 10 days another £23.27 had been sold (and is now available to be transferred to my bank account). There remains £27.22 out on loan, unsold as yet.

So I have now recovered my original investment plus a 9.5% return after 23 months, having originally selected a target annual return of 6.1%. I have yet to discover the fate of the remaining loans of £27.22, which would increase my total return to 12.23% over 2 years if it can be sold and cashed in quickly.

I guess this is broadly in line with what I expected, although I'm curious to know what will happen to the remaining £27.22 (i.e. how long it will take to recover it).

I have trialed accessing some of my funds on Funding Circle just to see if it is easy to cash in and as you have found out it isn't necessarily that quick. I sold 4 of my 5 loans within a few days . The exception was one which had a late payments history and I understand (as a buyer of loan parts ) why that may not sell. In the worst case scenario I will have to wait for all loan repayments to be made to get all of my money.
The other alternative is to offer a discount manually to buyers in the hope that the prospect of a bigger profit might temp some investors ( gamblers ) to buy.

Paul

Flobberchops · 22 March 2016 at 2:05AM

Newbie question. I recently heard about Lendinvest, had a look on their website, they seem legit enough, googled for them in the news or user reviews and likewise it's mostly positive.

As a result I'm thinking of dipping a toe into it - probably the minimum £100 investment to begin with. Absolute worst case scenario, I lose £100 and learn a hard lesson. Right?

Anything I should beware of? Does anybody have experience of investing with them? Are the returns circa 7% they're advertising realistic or typical?

Apologies if this has already been discussed.

jamesd · 22 March 2016 at 5:55AM

Have a read over at the P2P Independent forum. I don't know enough about them to comment but there should be some useful discussion over there in their section.

Given that interest rates of 10-12% for secured lending to businesses before default losses are available 7% would be less than achievable unless their terms are providing for some additional protection. Might still be useful for diversification across platforms though.

PropertyPlayer · 22 March 2016 at 7:57AM

Kendall80 wrote: »

If they were to guarantee that 7% rate i'd be interested. Although i'm not sure the built in safeguards of Safeguard make it such a guarantee.

I think you'll find the Plus isn't even covered by Safeguard, and that all rates are projected.

Froggitt · 22 March 2016 at 10:41AM

jamesd wrote: »

Just wondering why you're bothering with two of the lower paying platforms that also have some of the worst exit costs if you want to sell a loan.

Risk averse/safeguard fund. Although I'm sure you could also work that out for yourself. And obviously not totally risk averse, otherwise I would be shoveling my cash into Halifax.

itm2 · 22 March 2016 at 11:33AM

kremmen wrote: »

I have trialed accessing some of my funds on Funding Circle just to see if it is easy to cash in and as you have found out it isn't necessarily that quick. I sold 4 of my 5 loans within a few days . The exception was one which had a late payments history and I understand (as a buyer of loan parts ) why that may not sell. In the worst case scenario I will have to wait for all loan repayments to be made to get all of my money.
The other alternative is to offer a discount manually to buyers in the hope that the prospect of a bigger profit might temp some investors ( gamblers ) to buy.

Paul

Yes I think liquidity is a consideration with P2P - about 2.7% of my investment remains unsold today, so unless I choose to discount it as you suggest I suspect I'll need to wait until the end of the loan period to recover it (or default, whichever comes first)

Peer-to-peer lending sites: MSE guide discussion

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