higher risk Stoozing ?

budgetflyer

Has anyone tried putting their stooze money into "higher risk" investments as on
www.Zopa.com ie ave 9% PA return ?
or
http://www.perfectpersonalinvestments.co.uk/ ie 2% to 5% per month ?

I'm tempted with the high returns offered by Perfect Personal Investments especially.

Owner Robert Clark is well known and respected in the property investment circles through his old company www.rapidpropertyinvestment.com

Id hope for around 3% per month with the money locked up for maybe a year max at a time.

Ive heard of similar "high return "schemes going bust but the fact its backed by Robert is tempting me

CannyJock

These types of investments aren't normally recommended for the stoozepot because you're tieing up your capital.

These sort of investments, property and using the stoozepot to give you a stake for a bit of ebay trading have all been done in the past, but normally only by those who don't actually need the stoozed funds to repay the card if push comes to shove.

YorkshireBoy

Would you invest your own money in such schemes, where the risk, along with loss of capital of course, is a loss of 3-4% AER interest?

If not, then why would you risk losing money that has a potential debt-servicing cost of 15.9% APR plus (if you can't shift to another 0% card for whatever reason)?

Paul_Herring

budgetflyer wrote: »

Has anyone tried putting their stooze money into "higher risk" investments as on
www.Zopa.com ie ave 9% PA return ?
or
http://www.perfectpersonalinvestments.co.uk/ ie 2% to 5% per month ?

Not if you're going to need that money to pay off the cards at the end of the deal period. Most of the higher risk investments require you to keep your money in there for longer than the typical 0% periods.

budgetflyer

I was thinking of locking in £10K for a year max at a time. If I could secure 3% p/mth, even if the principle sum went on to a 15% variable rate,although Ive never had any hassle moving money in the last 5 years, there is still potential to make nearly 20% profit PA B4 tax. Capital risk accepted, It wouldn't bust me even if I lost the lot.
Most of the funds are used for Provi type small loans and/or same day + short term bridging etc so risks are spread and the company concerned makes huge returns on the capital

jamesd

The Consumer Credit Register says that the firm is currently trading as Perfect Payday Loans and Perfect Paydays, so the short term microfinance lending seems to be payday loans.

Zopa doesn't really deliver an average 9% return at present. You need to read between the lines of that number:

1. It's before bad debt, I think.
2. It's for the last year. A year is too short a time for most bad debt to appear (it takes six months plus much of the time even if the person didn't make even the first payment). Zopa lenders lent more in 2009 than in all previous years, so even past year for all loans is heavily loaded to very immature loans with limited time for bad debts to appear.
3. The real rates currently being obtained in markets like A36 are in the 7% range, before 1% bad debt allowance for a non tax payer, delivering an expected return nearer 5% after fee and bad debt allowance to a person not paying tax. Because bad debts are not tax deductible that's really the equivalent of 4.3% before higher rate tax.

Here's the trustnet fund list sorted by yield. You'll find twelve funds with yields in the range 8.03 to 12.78%. Another twenty have yields of at least 7%. The popular Invesco Perpetual Monthly Income Plus fund, an 85%:15% bond:equity mixture, reports a yield of 7.4% and it's a decent choice for someone who wants income with inflation protection. And you can do this inside a S&S ISA so avoiding tax.

I do have offers at Zopa at the moment but they have to compete with those funds and they start at around 12% up and are seldom matched or accepted.

Personally I've been stoozing over the last year with unit trusts and OEICs and have done very nicely from it with a stooze pot currently in the £28,000 range.

Paul_Herring

jamesd wrote:

1. It's before bad debt, I think.

And probably fees (1% of money lent out for newcomers,) and income tax as well (your marginal rate on any interest - you cannot, currently AFAIK, deduct bad debt from your interest to mitigate your income tax.)