Peer to peer loosing

bowlhead99

N1AK wrote: »

I think you'd struggle to find a p2p lending platform where even fully automated lending returns as low as 5% without a provision fund on long term lending. There's nothing wrong with questioning the value of p2p funding, but if you don't know the market well enough to use realistic figures or know it well enough that you know those figures are unrealistic it undermines your credibility.

Well, the poster directly above you *edit, just realised it was actually you* mentioned Ratesetter, and while they have 5.9% on a 5 year 'max return' repaid monthly loan assuming reinvestment into an equivalent product, it drops to 4.1% on a 3 year repaid monthly, at least according to the front page of the site. I can't see the live rates without an account. And only 3.4% on month to month if you want to avoid an early exit penalty. Yes there is a provision fund, which they stress is not a guarantee.

So while almost 6% (if you don't mind keeping recycling into 5 year products) is possible with a provision fund, the amount on a 3 year product is closer to 4% and the amount on 1 month access is closer to 3. The amount at Santander is circa 3% same day access.

So I don't think I'm being disingenuous when saying that getting an extra percent or two for taking on some element of investment risk and locking up your money, isn't awesome when you can get 3% on £20k risk free instant access.

Clearly ratesetter with their opaque structure do not offer the best rates in the market and are trying to appeal to investors who want a simple, more bank-like product. But in the same way that ratesetter rates aren't the most appealing in the market, Santander or Tesco at 3% aren't the highest either.

For example if I put my money into a 3 year ratesetter product and have them pay me back capital and interest at 4% in monthly chunks over the next 36 months, and I put the proceeds into first direct or nationwide regular savings account, then over the course of the 3 years my money will have spent on average half the time at ratesetter and half the time at the banks, and the portion of the time in the banks is both safer and pays higher interest.

In any case the point I was making is that, regardless of exact specifics because everyone has their preferred bank and preferred P2P... low premiums for extra risk in a bank-like product is not attractive, and alternatively, high premiums for extra risk demands due diligence and administrative effort and takes you to the point where you're competing with lots and lots of traditional investments.

This is not a party political broadcast for or against the holding of p2p just some observations of things to consider. I don't think my credibility has been shot to hell by my comments borne of somewhat superficial research and common sense, but you might of course disagree

Maelwys

bowlhead99 wrote: »

So while almost 6% (if you don't mind keeping recycling into 5 year products) is possible with a provision fund, the amount on a 3 year product is closer to 4% and the amount on 1 month access is closer to 3. The amount at Santander is circa 3% same day access.

So I don't think I'm being disingenuous when saying that getting an extra percent or two for taking on some element of investment risk and locking up your money, isn't awesome when you can get 3% on £20k risk free instant access.

Clearly ratesetter with their opaque structure do not offer the best rates in the market and are trying to appeal to investors who want a simple, more bank-like product. But in the same way that ratesetter rates aren't the most appealing in the market, Santander or Tesco at 3% aren't the highest either.

Ratesetter is one of the better known but less profitable options.

As mentioned in my previous post, you can find Secured P2P lending in several places at rates of 10-14%, with next-working-day access to your money.

That's not to say that there isn't a use for the likes of TSB's 5%-on-balances-of-up-to-£2000 Current Account or the Santander 1-2-3... but I'd suggest that those are places to keep your day-to-day and emergency buffer cash, rather than your long-term savings/investments.

Even the 6% Linked Savings Accounts from some banks are limited in that you have to drip-feed into them each month - with P2P or a Stocks & Shares ISA you can drip feed or invest lump sums as/when you want.

In any case the point I was making is that, regardless of exact specifics because everyone has their preferred bank and preferred P2P... low premiums for extra risk in a bank-like product is not attractive, and alternatively, high premiums for extra risk demands due diligence and administrative effort and takes you to the point where you're competing with lots and lots of traditional investments.

Just as long as you're comfortable with the risk level - that's where the personal choice comes in: Risk level versus potential reward.

Personally, since I'm looking at a timescale of 25+ years, I'd traditionally be putting my savings into a S&S ISA... but Secured P2P investment opportunities are currently soundly beating S&S, with better rates and stability and easier access to cash. My S&S holdings have decreased slightly in value over the past year, but I've been getting an average of 13% return from my P2P holdings - there's simply lower day-to-day volatility than there is in the stock market.

Not all of my savings are in P2P by any stretch of the imagination, it's still relatively new and unproven. But I'm currently throwing a sizable proportion of my spare cash at it that would otherwise be going into S&S.

caveman38

Dan83 wrote: »

Yes I understand the risks, unfortunately I invested £3000 (to me a large sum) in a company at 4% locked in for 18 months, abit more research and I could of got a better deal with out any risk in a current account. I've wrote it off to be honest, if it comes back great, if not, it's a learning curve.

When my current loan finish in funding circle, currently 1-2 months, I'll be switching over to saving stream and give that ago.

Assuming you mean Wellesley (note the free iPad in your later post) - how have you lost your money?

Dan83

I haven't lost it, I was obsessed with it, I'd check the site about 5 times a day checking if I've lost anything. I can't get it until my 18 month term is over which is early 2017.

It's easier for me to forget about it as my money and accept its gone, hopefully it'll all come back.

Just physiological thing I think.

Any way people, thanks for the replies, I have read and read some of the links, I will read the others.

There is some good points made by some people, even if all my money coed back with interest, I can see it was a bad investment when I didn't have to risk anything for the same returns.

On the other hand, someone has also mentioned more sites, which I have looked at and I'm getting itchy thinking about investing more. I think just like the risk but on a much smaller scale.

bigfreddiel

Dan83 wrote: »

Hi,

After reading another thread on peer to peer lending, I've joined an other site, not invested yet.

The site in question is saving stream.

Reading the advertising pitch about Having a fund ( can't remember their term for it) basically to really any bad debt, so the lender doesn't loose out.

Has anyone actually lost money through a bad loan on here, I've read the news paper stories, but not ever spoke to any one has lost out.

Don't need to know how much you lost and all that, I'm just interested if they really do pay out like they say the fund is for.

Thanks

First of its spelt with one one 'o'.

Secondly no one here will own up to losing any money, we're all far to clever to ever make a loss, or own up to it if we did.

Cheers fj

bowlhead99

bigfreddiel wrote: »

First of its spelt with one one 'o'.

Cheers fj

And second of? And its what? You mean the spelt that belongs to it? And by one one 'o' do you mean eleven 'o's?

Otherwise, great post.:T

masonic

bigfreddiel wrote: »

Secondly no one here will own up to losing any money, we're all far to clever to ever make a loss, or own up to it if we did.

Oh ye of little faith. People are comfortable admitting when investments they have made have lost them money (at least some are).

I've sustained no losses yet, but losses are inevitable. A certain percentage of loans will not be repaid. Some are unsecured, and for others, the security will fall short. You don't get paid a premium over cash rates without taking on some risk.

jimjames

I did wonder with the title. I've heard of P2P lending but Peer to peer loosing brings another twist.

Pool your money and lose together?

Dan83

Read the post's, at least 1 has said they have lost money.

N1AK

bowlhead99 wrote: »

Well, the poster directly above you *edit, just realised it was actually you* mentioned Ratesetter, and while they have 5.9% on a 5 year 'max return' repaid monthly loan assuming reinvestment into an equivalent product, it drops to 4.1% on a 3 year repaid monthly, at least according to the front page of the site. I can't see the live rates without an account. And only 3.4% on month to month if you want to avoid an early exit penalty. Yes there is a provision fund, which they stress is not a guarantee. ..

This is not a party political broadcast for or against the holding of p2p just some observations of things to consider. I don't think my credibility has been shot to hell by my comments borne of somewhat superficial research and common sense, but you might of course disagree

So in short now you've looked in a little more depth you've accepted that the figures you used for p2p lending were incorrect having to surround the admission in a few paragraphs of justification seems like unnecessary defensiveness though.

I'd also wonder why some people seem to lend on p2p platforms at rates that are readily available on safer options, but to me it's a largely redundant point. No one is advising anyone on here to put money in p2p if they could use savings accounts to get near the same return.

In my own case I only have a relatively modest sum in two p2p platforms where it is earning an average of around 7% pre-tax. I have no convenient option of achieving 4%+ in savings left available so the difference for me from 3%-fees from Santander on a 2nd 123 account to 7% is a worthwhile improvement for money I intend to keep long term.