Peer-to-peer lending sites: MSE guide discussion
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why is it suddenly "earn 6%" whereas before it was "earn 8%". What has changed? Were we being mislead before? Also, why do you have to be debt free to invest?
In the earlier days, you might have got 8% out of the P2P lending, now that rates have fallen on Zopa, and also on Funding Circle and Ratesetter to some extent, returns are lower.
Lazy journalism meant that newspapers etc. keep quoting older out of date figures and facts. Why research current figures when you can copy the old ones?
You don't have to be debt free to invest: There is no such requirement set by the P2P companies.
But, it makes no sense to be in debt -- that is, paying interest on money you have borrowed at a rate of 6% or more, and then trying to make 6% on P2P lending.
You'd be losing money overall.
Pay off debts first, then save and invest ...0 -
But, it makes no sense to be in debt -- You'd be losing money overall. Pay off debts first, then save and invest ...
So this is sound advice, not to be confused with rules or regulations.
The exception is usually pension investment, where it pays to contribute at least the minimum to a scheme for the long-term.
Unless you're carrying unconsolidated credit card debt and don't have access to a final-salary pension scheme. Like far too many employees nowadays.
All of which is off-subject, but I thought I'd mention it in context here. We can take it elsewhere if anyone fancies a punch-up for All Saints' Day.
Rich.x0 -
So this is sound advice, not to be confused with rules or regulations.
The exception is usually pension investment, where it pays to contribute at least the minimum to a scheme for the long-term.
Unless you're carrying unconsolidated credit card debt and don't have access to a final-salary pension scheme. Like far too many employees nowadays.
All of which is off-subject, but I thought I'd mention it in context here. We can take it elsewhere if anyone fancies a punch-up for All Saints' Day.
Rich.x
So why do financial advisors always say that we should engage in leverage? Didn't Rich Dad, Poor Dad not pay off his debts first? Hasn't he got rich out of buying properties and businesses with other people's money? Should I not invest or save anything until my mortgage has been paid off?0 -
Should I not invest or save anything until my mortgage has been paid off?
That all depends. If your mortgage is < 6% interest rate, then you could pour all of your spare cash into P2P lending and come out ahead. Lucky you!
But: If your mortgage rate shoots up, and your money is tied up in P2P lending, and the rates there fall further, you will have to kick yourself for doing it
By all means -- if you have a pile of money burning a hole in your pocket, use it to take a lump out of your mortgage, a lot of people do!
Usually mortgages are "special cases" of debt, you can't really just clear them easily. I'm talking about other kinds of debt, from the good-deal credit cards and catalogue accounts, up to the Wonga eye-watering APR loan, and the loan sharks beyond ...0 -
I'm looking for some advice anyone feel free to input I'll be very grateful. Basically I have £30ish k to go towards savings of some sort. I am a 1st year student at university but as a mature student having worked hard for 7 years previously hence the savings. Currently living with long term girlfriend who is in 2nd year at uni both of us have part time jobs and rent together. The 30k won't be needed for the next year and probably the year after and at present our cash flow is comfortable so the money is sitting in a current account at present in my name we do have joint finances to pay bills etc but as we aren't married the 30k is mine you can't take any chances. I have set up an ISA with this years max amount in it and I've also given her nearly 3k to go with 3k she had saved so she could set an ISA up too and max it. Previously the 30K came from a long term saving account (4/5 years) with decent interest. I'm intrigued by this peer to peer lending and have done a lot of reading on it. At the moment I'm most drawn to Ratesetters because it seems the least risky and the savings accounts on offer at the moment barely seem worth bothering with. Also as a side note I currently pay tax but once this year is out I probably won't be as my part time work won't take me over the tax threshold - at the moment my tax is decreasing and I would guess a rebate will be due at the end of the financial year as I was very much full time prior to september. Will not paying tax have a bearing on how tax is paid on returns?0
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I currently pay tax but once this year is out I probably won't be as my part time work won't take me over the tax threshold ... Will not paying tax have a bearing on how tax is paid on returns?
On ^ this ^ point ...
If your total income (earnings, interest from savings excluding ISA, p2p earnings) is under your tax allowance then you are due to pay no income tax.
So for P2P lending: You get it paid gross anyway, so you won't need to worry about paying (or reclaiming) tax on it. For now anyway -- regulations could change in the future.
For your other accounts, then get R85 forms in for them, one per account, so that they don't take tax off you in the first place, that will save you getting rebates at the end of tax year.0 -
Not out of properties, but yes, with other people's money and not paying it back, taking the money out of the business then making it bankrupt instead of repaying, dodging a $24 million court order that he had to pay the debts.Hasn't he got rich out of buying properties and businesses with other people's money?0 -
The standard minimum term recommendation for investments of all sorts, including peer to peer lending, is a minimum of five years. You should be using savings accounts, not investments.The 30k won't be needed for the next year and probably the year after
You should also understand a bit more about how bad debt affects lending. What happens is that as people get into trouble and start to not pay back or pay back much more slowly than planned, a lot of your profit ends up tied up in the money lent to those people. At current low P2P interest rates it could be all of the profit and take years to get back even as much as you put in.
It's also necessary to understand that you can't just freely take the money out. At Zopa for example, you can't sell any loans where there has been even one late payment. So you can't extract all of the money from those until the end of the loan's original term. You can sell the rest but you might get back less than you put in because the selling price has to reflect current market conditions. If interest rates are higher when you try to sell you may end up having to lose some of your capital to give the buyer a good enough rate of interest to match what they can get with new lending.0 -
Not out of properties, but yes, with other people's money and not paying it back, taking the money out of the business then making it bankrupt instead of repaying, dodging a $24 million court order that he had to pay the debts.
That can't be true! He is a financial genius and an example to us all! Otherwise why do so many intelligent people rave about him and make him even richer by buying his books and attending his seminars?0 -
Have I misunderstood the post a few posts up? You get the interest paid gross, but due to being P2P you don't have to pay any income tax on it?0
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