Peer-to-peer lending sites: MSE guide discussion

TheTracker

The 2014 autumn statement introduced some loss tax relief for p2p investors/savers, though details are yet to be finalised.

It also introduced a review on the introduction of a withholding tax, rather than requiring declaration through self assessment, similar to a bank operation.

kevin52

Is this in addition to introducing an ISA tax shelter, or instead of?

Ryan_Futuristics

transparent_opacity wrote: »

I was introduced to P2P saving through Martin's articles on the site back when Zopa started, and I thought it was worth coming back to mention www.lovefruitful.com. There's a 6% rate instant access, so no tie-in or penalty for withdrawal. I got the invite to sign up today and it looks easy to use.

I came across the company at the Data Visualisation Summit last month, and they're planning to give savers the feature to set savings targets - car, holiday, rainy day, etc. - to which you can allocate your savings. I like that feature, I was always jealous of those who get to use a similar feature on Mint.com (which is US-only).

Cheers,
Chris

Only thing, I couldn't find any information on Love Fruitful that they didn't create themselves - so just be careful that's not a nice looking site set up in Eastern Europe to take your money (easiest cybercrime going)

TheTracker

kevin52 wrote: »

Is this in addition to introducing an ISA tax shelter, or instead of?

No additional news on the ISA front, as they are in consultation. Hopefully for 2016 they'll have a position of P2P in ISAs, tax withholding for those outside, and loss relief for tax purposes. By which point p2p may well be delivering far lower returns and hardly worth the effort

Ryan_Futuristics

Then again, with base rates rising, there could be an upwind on P2P lending too

ChopperST

Come on Ryan, surely you don't think the base rate is really going to rise?

Ryan_Futuristics

ChopperST wrote: »

Come on Ryan, surely you don't think the base rate is really going to rise?

Well it can't stay this low forever - I think if it drags on, I'd say we'll get to a point where we're happy to take no news as good news, and just see how it goes

ChopperST

Inflationary pressures are continuing to fall alongside wage increases so I personally see no need for the BOE to raise interest rates.

That's if we are playing by the accepted economic rule book with the base rate to keep inflation in check.

I think the US and OPEC are setting the bar for global interest rates and currency prices purely to p**s off Putin. This will continue to make governments happy as they keep the interest rates on their bonds at historically low levels and potentially even lower.

Any interest rate rise by Carney and the BOE will be purely for show and nothing significant.

stphnstevey

stphnstevey wrote: »

My accountant said ok to invest in P2P, but cautioned on only a small investment.

What account do you have at 1.8%, I can only get 1%?

Managed to boost the business savings return to 1.8% in a notice account thanks to TheTracker

The average rates for P2P seem to be around 3% for 1 year or 4% for 3 years. Initially sounds more attractive, but would anyone like to give me a rough estimate of what they feel the actual return would be after bad debt, early repayment etc so I could make a better comparison?

Ryan_Futuristics

Roughly it seems RateSetter offer 5.9% over 5 years, while Funding Circle are about 6.9%

That's after fees and bad debt - my current return with Funding Circle is about 12%, my averaged return should be about 10.3% ... Estimated with normal bad debt levels this should be around 7.3% ... Funding Circle loans go from 1 year to 5 years, but with all of these you can withdraw cash at any time for a small fee

RateSetter's slightly lower rates come from having a big group cash pot, which takes some of the luck out of the equation ... If there's a bad debt, it can cover you - and apparently no one's lost a penny on it

I use Funding Circle's Autobid feature, lending no more than £20 to any company ... You can also set your lending rates, which just affects lending speed ... I offer 8.8% on A+ loans (very reliable) and 14.3% or more on riskier loans ... I set A+ rates more competitively than C-, so I've not got many risky firms I'm lending to, but when I do I get a very high return

You could opt just to lend to A+ companies, and you could lend to them very quickly at 7%, or quite slowly at 9% ... I figured when loans are repaid over such long periods, going a bit slower and higher probably pays off

It's probably sensible to be cautious - at the same time, US hedge fund managers are all over P2P lending now ... If it proves as reliable as it's been, and rates stay high, it's the perfect alternative fixed income solution we've been looking for

Even poor stock market returns over the next 5-10 years could be ameliorated if you're rebalancing with fixed income earning over 7%