Lending money via Ratesetter?

khampson

Hi, I have been filtering money into p2p lending sites such as Zopa and Yes secure, now the rates are so high on yes secure that rarely loand are accepted and on zopa there are that many users the rates are quite low, I was wondering if anyone can give me some advice on Ratesetter. what are your dealings with ratesetter and how do you find them, is it simular to zopa where I can lend as little as tenner per borrower or is it more, and is there any data on bad debt?

Regards Keith

jamesd

Did you know that you can get about 8% lending money to mixtures of normal companies through their corporate bonds or corporate bond funds, tax free inside a stocks and shares ISA? That's lower risk than any of the new places.

khampson

jamesd wrote: »

Did you know that you can get about 8% lending money to mixtures of normal companies through their corporate bonds or corporate bond funds, tax free inside a stocks and shares ISA? That's lower risk than any of the new places.

I do understand this but am I correct in thinking that you are charged 5% admin fees and also I only have a small amount to invest around :£20 a week

Keith

jamesd

You aren't charged 5% admin fees. Say you were to use the ISA from Hargreaves Lansdown, you could put in £50 or more a month. The performance figures are after fees have been deducted and those are usually in the 1% to 1.5% range. HL will return part of that to you each month, how much depends on the specific fund but it's usually in the 0.1 to 0.25% range. The closest to a 5% fee would be an initial charge that's often 5% but that's all or almost all eliminated at HL and most other places that you'd want to use to buy them.

The sort of funds that might be used and their yields include:

9.5% Marlborough High Yield Fixed Interest *
7.8% Newton Global High Yield Bond *
7.3% Newton Higher Income
6.6% Invesco Perpetual Monthly Income Plus (pays monthly) *
5.7% Invesco Perpetual Distribution (pays monthly) *
3.9% Invesco Perpetual Income

Those yields are historic and not guaranteed. The capital value varies, by as much as 40% in some of them. You'd use many different funds, not just one. The ones with a * after them are all or almost all using bond lending to companies. The others use a mix that includes more shares.

You could set up £80 for one one month and change to another for the next month.

Given the £20 a week that you have it's not economic to buy the individual corporate bonds of companies because the dealing costs for that would be too high.