What % do you put into P2P ?

jamesd

fun4everyone wrote: »

Been reading some more. From what I can gather software bots are rife over some of the platforms (Funding Circle specifically). They snap up all the tasty proposals within a minute

It happens at some platforms, either in primary or secondary markets or both.

Ablrate, MoneyThing and SavingStream use rationing systems to prevent it in the primary market and pay attention to possible bot activity, not liking it in general in either primary or secondary markets. At those places it shouldn't be unduly difficult to get invested via the primary market, though the amount will be limited by the deal flow and capping or rationing mechanisms being used.

Some platforms go out of their way to be helpful to bots. Bondora being an example of one of those, with an API for automated tool writers to use.

Both Ablrate and MoneThing currently have attractive primary market loans available. Didn't check SavingStream.

fun4everyone

Thanks for the replies, I might dip my little toe into "investing" via these platforms soon.

Thrugelmir

fun4everyone wrote: »

Secondly I read the Government is using these sites now to lend money out to small business. That, on the other hand, must be a very good sign? Surely they did their due diligence before handing multi millions over?

From acorns grow oak trees. Along the way many saplings will succumb. That's the nature of SME finance. You can spend millions on developing the best idea in the world and not achieve market success.

BristolManc

Thrugelmir wrote: »

Instead I invest in the platforms themselves. As that's where the bigger returns will be found in the longer term.

How do you do this?

TheTracker

BristolManc wrote: »

How do you do this?

A few have been on seedrs recently, Assetz capital, landbay, landlordinvest, etc. High risk investments, IMHO far more risky than buying loan parts on consumer p2p platforms. Still hoping my AC investment pays off, though!

Flobberchops

There's a lot of talk about how "risky" P2P is, but how many people here actually had a loan default on them? And if so, what percentage did the platform manage to recover? Would be interesting to hear some experiences.

jamesd

Defaults are a routine fact of life so anyone who's been in P2P for more than a fairly short time will probably have experience with them. Recoveries from defaulted loans are also routine though some don't recover, say after bankruptcy, while others recover 100%.

I last lent at Zopa in around 2012. In February I received about £1 in capital from defaulted loans and about £2 in interest from all loans, including the defaulted ones that are paying. For the whole of 2015-16 Zopa (not quite correctly) says that I received about £40 in interest, had £35 in new defaults and had capital recovery of £40 from defaulted loans.

I last lent at Bondora in late 2014. At present I have about €2,800 in defaulted loans and have received about €18,600 in interest. This set of results is not available for new investments, I got in early when the risk-return combination is different from today.

Rollinghome

bigadaj wrote: »

Interesting that you're bearish on the asset class but have committed a six figure to it.

I've only put a few thousand in so far, and wouldn't anticipate going above the low tens of thousands at most, so would still see equities as the vast bulk of my investments.

Interesting too that you appear so bullish on p2p and yet have invested so little. That's what makes people so interesting.

Equities are the vast bulk of my investments too and are also likely to remain so. (Until I’m persuaded otherwise.)

jamesd wrote: »

However, this is not an either/or choice. I'm moving into P2P to avoid what I think is a higher risk time for equities but will happily move back into equities after a large drop. I don't know exactly when that will happen but unless history decides to take a break, I do know that it will at some point and that now the chance is greater than it usually is.

I’ve moved some money into p2p for the same reason though I probably see the potential for risk in p2p as much higher than you. It’s one thing looking back and noticing that the good interest rates already received would cover losing capital. It’s another to assume that capital invested today will likewise be covered should an unforeseen calamity happen not so far down the line.

It also may be that we’re at different stages. You’re probably younger than me whereas I’m at a point where I don’t need to take on risk. I’m seeking to only to preserve capital even if that means mixing some higher risk with very low risk. I take an holistic view and see the overall risk across all my investments and savings as the most critical, rather than the risk of specific investments.

pantaiema wrote: »

I just have a look on two of the well know P2P lending platform, Ratesetter, Zopa they just offer the interest for less than 3% for short term lending lower than one year.

I still cannot understand. Why would anyone sensible want to put their money into P2P lending scheme when with a relatively small work to do you could get risk free, instant access in high interest current accounts ??

Various reasons I think.

In one specific case, that person was unable to open current accounts, I assume due to a low credit rating. In other cases, people just aren’t aware of how interest paying current accounts can be used or misunderstand how easy it is to manage them.

Then there are those who have already opened all the current accounts they can and see the low paying p2p platforms as the least-worst next option, perhaps without thinking too hard about what could happen if there were a liquidity problem.

TheTracker

Flobberchops wrote: »

There's a lot of talk about how "risky" P2P is, but how many people here actually had a loan default on them? And if so, what percentage did the platform manage to recover? Would be interesting to hear some experiences.

It depends on the platform but a 2% default of all money is the historical average on some platforms including the one I primarily use. I've one loan in recovery, I'd expected to lose 70%, now I'm hopeful of full recovery. I've another loan that hasn't repaid for 2 months but expect a full repayment. Another is two months in arrears. I've had others that recovered in full. My planning assumption is a 2% loss across all money invested over time, and I'd be comfortable with an 8% loss that reduced gain to a few percent. I reckon I'd need a catastrophic macro economic event, worse than a bad recession, to suffer equity style losses on stable and scaled p2p platform with a well diversified portfolio of loans.

Kendall80

TheTracker wrote: »

I reckon I'd need a catastrophic macro economic event, worse than a bad recession, to suffer equity style losses on stable and scaled p2p platform with a well diversified portfolio of loans.

Should such a scenario occur and indeed persist, there is the concern that it would be difficult to sell loans/access funds tied up in P2P.


We may avoid the 'equity style' losses initially but perhaps not over an extended time period.