What % do you put into P2P ?

saver861

masonic wrote: »

- 4% interest on £100k spread over 2 people would result in at least £400 of income tax unless they were on very low incomes.

Yes thats true .. depending on tax circumstances .... if either partner is a non tax payer currently so with taking advantage of the married tax allowance etc the tax burden can be reduced.

masonic wrote: »

- Platform charges? I have money in 6 different platforms and none of them have a platform charge.

But how do the platform fund the process? Charges might not be direct but the platform has to get its slice?

masonic wrote: »

If there were more 4% and 5% accounts available, I wouldn't pull money out of equities to put into those accounts.

Nor have I .... but I would now be more inclined to put new additional money into new high interest accounts rather than putting it in a higher risk at this stage. But that depends on personal circumstances and age predominantly I guess.

bowlhead99

saver861 wrote: »

But how do the platform fund the process? Charges might not be direct but the platform has to get its slice?

They get their slice by taking a higher interest rate or fees from borrowers than they give to the lenders, for facilitating the transaction.

As mentioned up thread for example, Saving Stream secured bridging finance pays about 1% a month to the lenders after charging 1.5% a month to the borrowers. In some markets the cuts taken will be smaller but they will have higher volume, so still get enough money to run their business (and in some cases maintain a bad debts reserve fund). But if you sign up to get your 12% a year then you don't pay additional platform fees because it's already been siphoned off.

Compare to a bank: 21.9% APR on a credit card or a lower percentage on a small unsecured personal loan, funded by savers who are given maybe 4-5% on the first £2.5 to 5k, and 0.5-1% on the rest.

The banks don't call the difference an explicit "platform fee" either, but they do take large fees to be able to run their business and contribute to the FSCS deposit protection insurance scheme. You have to get their annual financial statements to understand their margins.

saver861

bowlhead99 wrote: »

As mentioned up thread for example, Saving Stream secured bridging finance pays about 1% a month to the lenders after charging 1.5% a month to the borrowers. In some markets the cuts taken will be smaller but they will have higher volume, so still get enough money to run their business (and in some cases maintain a bad debts reserve fund). But if you sign up to get your 12% a year then you don't pay additional platform fees because it's already been siphoned off.

Ok sure - so the platform sets its own fees to the borrower of which the lender has the agreed amount e.g. 12%pa.

Thus all those borrowers have to pay 12% plus platform percentage, which might be 6%. If the borrower defaults then lender loses his dosh plus the ongoing 12% while the platform just don't get its 6% anymore - if I have that right.

What happens though in the case where there is a default against a secured loan e.g. for simplicity, the security is sold at the value of the outstanding loan. Does lender then get his full dosh back or does platform take a chunk from the sold security?

bigadaj

saver861 wrote: »

Ok sure - so the platform sets its own fees to the borrower of which the lender has the agreed amount e.g. 12%pa.

Thus all those borrowers have to pay 12% plus platform percentage, which might be 6%. If the borrower defaults then lender loses his dosh plus the ongoing 12% while the platform just don't get its 6% anymore - if I have that right.

What happens though in the case where there is a default against a secured loan e.g. for simplicity, the security is sold at the value of the outstanding loan. Does lender then get his full dosh back or does platform take a chunk from the sold security?

Depends on the platform rules really.

In your example the security would be sold and costs deducted, Savingstream I believe take all the annual interest up front so this would be paid out with their interest/ fees included.

I wouldn't expect the platform to take further fees though realising the security could be quite expensive in itself, then lenders get paid out either fully or at a particular percentage if the realised sum doesn't achieve the sum lent.

fun4everyone

Firstly thanks for this thread OP, and thanks to all contributors it is a good read.


I am a bit new to "investing" my money (I think p2p is probably more of an "investment" than "savings") so forgive me if my thoughts are a bit obvious.


Firstly I am a bit tempted by P2P.....I have exhausted current accounts/regular savers and I am looking for something else. Perhaps P2P could fill a % of this I think. I however don't have any money in it at the moment.


I read about trustbuddy in Sweden. Pretty terrible news for P2P sites. It does not seem a stretch to imagine other p2p sites are being run in similar manners, if not quite to that degree. I know regulation is here now in the UK but regulation does not mean fraud cannot happen or a site cannot be dipping into the funds. Is that incident a significant worry?


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?


I am very tempted to allocate a few percent and try. Trustbuddy does worry me though.

jamesd

fun4everyone wrote: »

I read about trustbuddy in Sweden. Pretty terrible news for P2P sites. It does not seem a stretch to imagine other p2p sites are being run in similar manners, if not quite to that degree. I know regulation is here now in the UK but regulation does not mean fraud cannot happen or a site cannot be dipping into the funds. Is that incident a significant worry?

It's perhaps more of a risk than a worry. You need to be planning for the possibility of such an event and diversifying across platforms as required to keep the potential loss to a suitable level.

Pretending that Trustbuddy recovery is 50% then an even split of two platforms with the same recovery would lead to a 25% potential loss. Five platforms would cut it to 10% but for prudence you should really be anticipating possible 100% loss to fraud so 20%. If 20% isn't acceptable, use more platforms.

Eco_Miser

Daz2009 wrote: »

You missed my point.
A person might have very little income......so they can't meet the criteria of paying £1,000 into a current account every month.But they have substantial savings.
They could of course draw £1,000 per month out of their savings and pay it into the current account to earn the 3 - 5%

You totally missed my point, repeated by subsequent posters, that anyone with over £1000 in current accounts can just circulate that money round their current accounts - no additional money required, minimum hassle with set and forget standing orders.

fun4everyone

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 and all normal users are left with is 5 year+ low rate loans unless they use autobid. Curious as to real life experiences from people on here if that is true. Disappointing if it is.

Kendall80

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 and all normal users are left with is 5 year+ low rate loans unless they use autobid. Curious as to real life experiences from people on here if that is true. Disappointing if it is.

There have been times where that seems to be the case on saving stream. Of course there could just be a 1000 people like me hitting F5 and swearing at the recaptcha images.

ajdj

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 and all normal users are left with is 5 year+ low rate loans unless they use autobid. Curious as to real life experiences from people on here if that is true. Disappointing if it is.

Yes, there are certainly bots a plenty but still lots to go after for the average user. Putting a bit of time into the secondary market on Funding Circle can be rewarding, you just need to watch out for premiums and have your own strategy for due diligence. I've never used autobid and only have 1 loan part that came from a bid on the loan request page- I don't like the fact your money is tied up whilst the bidding process is concluded and the wait for the borrower to accept (or not!) the interest rate offered.