Peer-to-peer lending sites: MSE guide discussion

taylornj

Lostdoggy wrote: »

Hello all,


A bit of a novice question here from first time forum user, so apologies if I am hijacking thread, or if I'm being dim....


I applied for a Ratesetter Rolling account via MSE link in early December. MSE quoted that the first 5,000 applicants investing £1k+ would receive cashback, but this cashback would not be paid until after 12 months. I transferred in £1,200 straight away.


How do I know if I have qualified for cashback? (I had no message upon setup and can't see anything within Ratesetter).


Thanks!

You don't, you used to get a banner or something in the past. What I did was to e-mail support, they checked and replied back I followed the correct link, so I now have a record in my Rate Setter e-mail folder, that within 30days of the 1yr of being invested I will get the bonus. Included in the e-mail I sent was the T&C of the bonus, plus url so I have the full information.


I just started with £100 to try out get 4.9% in the 1yr market, the next £900 I got 5.4% in the 1yr market. Giving and overall rate of 5.35% plus 11% = 16.35%, given the 30day delay reduces to about 15.09%pa.


I set the loan to be reinvested at 5.4% in the rolling market should the loan be repaid early otherwise it could just take the current rate which has fallen to 2% in rolling market, worse than the current CPI 2.4%.

bxboards

My last Kuflink self-select while they were still putting in 20% of their own money in has repaid early this morning.

Still have some in the auto-invests when there was 3% cashback.

But all self-select capital has now been repaid.

Snow_Dog

bxboards wrote: »

My last Kuflink self-select while they were still putting in 20% of their own money in has repaid early this morning.

Still have some in the auto-invests when there was 3% cashback.

But all self-select capital has now been repaid.

Is that you headed out of Kuflink then?


Think it was your referral link i used to head into Kuflink last summer. :beer:

bxboards

Snow_Dog wrote: »

Is that you headed out of Kuflink then?


Think it was your referral link i used to head into Kuflink last summer. :beer:

Yes, I remember you used my sign-up when the thread was still active - I probably will still go in with any 7% self-selects but these seem rare. And I don't do second charges or development loans generally. When I first joined when they got going 7% was the rule, rather than the exception.

I'm favoring Assetz Capital at the moment for new money in - still can get 8%+ in numerous loans. I don't do anything less than 8% on Assetz if investing manually. With some many more loans on Assstz it's easier getting diversified.

Jordan_Stodart

What financial publications do people generally read on this forum?

Are there any specific ones where I can find good information on P2P?

I know of the P2P Independent Forum and some other sites that provide useful comparison, but actual online magazine publications...?

bxboards

Jordan_Stodart wrote: »

What financial publications do people generally read on this forum?

I don't read any, on the basic that if they were as financially acute as they'd like to claim, its very unlikely they'd need a job writing for a publication

I just think you can't beat commonsense - avoid herd instinct / fear of missing out trends, avoid chasing sky high pie in the sky interest rates and you probably won't go too far wrong.

firestone

Jordan_Stodart wrote: »

What financial publications do people generally read on this forum?

Are there any specific ones where I can find good information on P2P?

I know of the P2P Independent Forum and some other sites that provide useful comparison, but actual online magazine publications...?

Peer to peer finance news (p2pfinancenews.co.uk) is an online and print p2p magazine which tends to be news and trade puff pieces but could be of interest.There is also a site called 4thway

jamesd

short_butt_sweet wrote: »

and as masonic has pointed out, returns have been great over long periods. that is not guaranteed to be repeated, so you could get unlucky by happening to invest over a 10- or 20-year period with lower returns than the longer-term averages. but you don't need above-average luck to do well; about average would do fine; and even somewhat below average luck is probably OK over several decades.

Given that the UK equity return has been a bit over 5% plus inflation that's useful but you can anticipate what to expect because ten year returns are well inversely correlated with cyclically adjusted price/earnings ratio. Currently somewhat mediocre but bonds that would be a natural alternative also don't look good. Which is where some P2P use can fit.

short_butt_sweet wrote: »

so you don't need skill for S&S, but you do for p2p? or at least: it would help for p2p?

Knowledge and skill are of value for both. Economic cycle position varies as do fund relative performances. So do P2P platforms and individual loans. It wasn't just chance that caused me to increase regular equity buying after the initial drops in 2008, nor was adding lump sum money early in 2009 or more recently reducing my equity holdings.

short_butt_sweet wrote: »

as masonic says, equities can fall suddenly in price, but unlike p2p, they don't lose big chunks of your capital, without hope of recovery (provided you stick to well-diversified funds ... if you buy shares in individual companies, you can lose chunks of capital).

Those equity drops are a real loss of money. Provided you can afford to stay invested you are likely to make it back. Which is the case for P2P as well.

If you use equity funds the day to day drops in some shares are smoothed by the gains in others. That's how it works for P2P as well: the interest rates have a margin for defaults built in and that from the better loans is intended to cover the losses, after recovery, from the bad ones.

Without hope of recovery is typically misrepresentation as well. Beyond the interest rate margin many P2P platforms make secured loans. That security can be commercial or residential property, land, goods, guarantees from various parties or even insurance at one platform. So if the borrower defaults those forms of security can be called on as part of debt recovery. For the platforms doing unsecured lending the recovery methods open to normal lenders can be used.

Where P2P differs from equity funds tends to be transparency: a fund doesn't even tell you day to day where your money is invested, let alone which shares went down or which company became bankrupt. By contrast you do normally get far more transparency with P2P, so you tend to see the steady drips of defaults, recoveries and ordinary interest payments. Bond funds have similar properties to P2P but with less transparency, you just won't be told which borrowers defaulted or how recovery is going.

That equity volatility isn't free even if you can hold a lot. Those using income drawdown suffer reduced income levels because they have to be prepared for bad sequences of returns.

short_butt_sweet wrote: »

S&S is more volatile because it is a more liquid market, i.e. the market price may bounce around a lot but there almost always is a price that it's possible to deal at. p2p secondary markets are much more likely to seize up in a crisis, making it impossible to sell.

P2P lending is more like bond markets than equity and you're probably aware that bond markets ceasing to operate is what caused the failure of Northern Rock, which couldn't replace loans as they matured, and led to the need for the largest ever bank rescue, of RBS, when it was also unable to borrow from markets. You're also probably familiar with property funds banning sales and might know of the FSA forcing investors in the New Star Heart of Africa fund to sell at a market low plus more when it lost the liquidity to handle redemption requests.

Still, I do agree that P2P markets are more likely suffer liquidity issues. Indeed my greatest likely P2P capital loss in one loan is likely to be one where I was selling on a par only platform and hadn't completely sold. However, unlike global bond markets in 2008 I don't expect all to freeze.

short_butt_sweet wrote: »

the whole secondary market for any one platform could disappear if the platform gets into trouble.)

And of course this has happened at Collateral, where the administrators are handling loan collections and will eventually move on to liquidation. Meanwhile there is no liquidity for lenders. Those 16,000 who have pension or other investments with Beaufort Securities are in a similar situation and it'll be a matter of individual circumstances whether the security at Collateral or £50k of FSCS protection at BS produces a better outcome for each investor.

As Beaufort Securities investors have discovered, the financial stability of their brokers matters (via googling), as it does for P2P platforms.

masonic

jamesd wrote: »

Without hope of recovery is typically misrepresentation as well. Beyond the interest rate margin many P2P platforms make secured loans. That security can be commercial or residential property, land, goods, guarantees from various parties or even insurance at one platform. So if the borrower defaults those forms of security can be called on as part of debt recovery. For the platforms doing unsecured lending the recovery methods open to normal lenders can be used.

While it is undoubtedly true that recovery options are available, the number of occasions where this has not been straightforward and led to a loss of the majority of capital on secured loans has been a bit of an eye opener for me. While I've avoided many of the worst examples, I've been caught up in a few and can't help but wonder what is lurking in my residual loans. It's not just one or two platforms either, though I have more confidence in some than others to (a) avoid these errors in judgement in the first place, and (b) manage recoveries well when they do occur.

fun4everyone

masonic wrote: »

manage recoveries well when they do occur.

What is this mystical site you speak of?