P2P: Saving Stream (AKA SavingStream)

economic

AnubisHorus wrote: »

I"ve over 300K invested over vairious platforms. from 12%-21.9% Instead of focusing on "losses" (tax deductable now) Just spread your investments thinly currently over 2000 different loans. Count any defaults as just reduction in interest. With Banks paying 0.1%-3% interest you should make between 25-100 times more interest stop getting obsessed with maximum returns. Stock markets can drop 5% in a day and not recover.for years Only losses over the 30% LTV buffer need to be covered. Unless RIAS surveyrs are incompetant (For which the are insured) returns should be good. My elderly mother is in a care home £3500 a month balance from pension ALL paid by intreest on her Savings without loss of capital. Just think spread as wide as possible and enjoy the returns.

how much as a percentage of your net worth or investible assets is your P2P savings?

masonic

AnubisHorus wrote: »

I"ve over 300K invested over vairious platforms. from 12%-21.9% Instead of focusing on "losses" (tax deductable now) Just spread your investments thinly currently over 2000 different loans. Count any defaults as just reduction in interest. With Banks paying 0.1%-3% interest you should make between 25-100 times more interest stop getting obsessed with maximum returns.

Such a strategy is likely to be successful if the current economic conditions continue. If they don't, then it is quite possible that losses will not be covered by interest. Losses would probably be not as severe as equities, but this is largely untested. Avoiding the worst loans increases your chances of making a net positive return during less buoyant times.

Only losses over the 30% LTV buffer need to be covered. Unless RIAS surveyrs are incompetant (For which the are insured) returns should be good.

It is a mistake to assume that there is a 30% LTV buffer on "70% LTV" loans. RICS surveyors are instructed by the platform and will not test assumptions used in the basis of the valuation. Taking a real world example from the Lendy (formerly SavingStream) platform, a security valued at £2.4m was sold during a recovery process after a year's marketing for £1.3m. So much for 30% LTV buffer! The actual LTV was not 70% but 130%. No legal action has been taken against the surveyor because they were fed incorrect information by the platform.

My elderly mother is in a care home £3500 a month balance from pension ALL paid by intreest on her Savings without loss of capital. Just think spread as wide as possible and enjoy the returns.

They may behave like savings right now, but they are not savings. I hope for her sake your savings stream continues.

Biggles

AnubisHorus wrote: »

My elderly mother is in a care home £3500 a month balance from pension ALL paid by intreest on her Savings without loss of capital.

Wow! You are investing your elderly mother's savings in high-risk investments that aren't protected by the FSCS, with the risk that she'll have to be moved to a care home that is the choice of the Council if things go wrong and she loses the lot or, indeed, if she just lives so long that she runs out of funds. She wouldn't benefit from the move, I can tell you. I call that irresponsible.

A better investment would be an immediate care needs annuity. Proceeds paid, tax-free, direct to the care home and, as it's an annuity, there's no risk of her running out of money.

Malthusian

Biggles wrote: »

A better investment would be an immediate care needs annuity. Proceeds paid, tax-free, direct to the care home and, as it's an annuity, there's no risk of her running out of money.

Or cash. Or something like 2/3 in cash and the rest in a diversified stockmarket portfolio. She has £300,000 in the bank, and her care fees are £42,000 a year - people rarely spend 7 years in a care home so the risk of her exhausting her savings is really quite small. And as you say if this risk absolutely must be eliminated, the solution is an immediate care needs annuity, not trying to generate 12% yield from high-risk investments.

AnubisHorus is taking very high risks with his mother's capital in order to benefit himself - we have established that she has no need to take on high amounts of investment risk which means this is all about his inheritance. I hope to Bastet that he is the sole beneficiary, because if there are others and he loses her money they will hold him liable for misusing the power of attorney.

Biggles

Malthusian wrote: »

I hope to Bastet that he is the sole beneficiary, because if there are others and he loses her money they will hold him liable for misusing the power of attorney.

PoA? You really think he's bothered with such trivia?

jamesd

Biggles wrote: »

Wow! You are investing your elderly mother's savings in high-risk investments that aren't protected by the FSCS, with the risk that she'll have to be moved to a care home that is the choice of the Council if things go wrong and she loses the lot or, indeed, if she just lives so long that she runs out of funds. She wouldn't benefit from the move, I can tell you. I call that irresponsible.

A better investment would be an immediate care needs annuity. Proceeds paid, tax-free, direct to the care home and, as it's an annuity, there's no risk of her running out of money.

An immediate needs annuity is a far worse choice when there is sufficient income from her investments to meet her needs. It's wrong to suggest spending capital to buy an unnecessary annuity and if it was done by someone with PoA I'd recommend a formal complaint about misuse of the assets of the individual. Immediate needs annuities have their place but buying when income from such commonly used low volatility investments fully meets needs is not one of them.

Lendy isn't a good choice but P2P in general is.

Many people grossly misunderstand and misrepresent the risk of P2P, particularly notable in Malthusian suggesting use of a stock market portfolio instead when the investment horizon is not likely to exceed three years, that being fifty percent longer than the typical time in a care home and well below the normal minimum five year investment horizon usually recommended for use of equities. With such a timescale there is little opportunity to recover from a routine 20-40% stock market drop, while UK P2P is unlikely to see any net capital decrease at all at most platforms, particularly most of those with insurance or protection funds, which are readily available. UK P2P is considerably lower risk than equities, particularly with such a short timescale involved.

While the loans marketed by Lendy do benefit from both security and a discretionary protection fund the last known value of the fund was insufficient to cover the potential short term losses from late and soon to be late loans if the value of the security matched past performance.

That's not so at other platforms with protection funds, insurance or first loss provisions in addition to security on some loans. While avoiding holding loans at Lendy that are close to maturity or late will help and be wise, better to reduce the overall exposure at Lendy as well.

It's also worth noting that the FSCS does not protect the value (investment performance) of equity or bond investments, while protection funds, insurance and security do for P2P offering those things. What the FSCS protects against is largely crime or business failure at a broker. Or, for professionally advised investments, use of inappropriate investments like equities with a two to three year time span, instead of fixed interest with low volatility like P2P. Though equities can be appropriate even with short life expectancy, depending on the objectives of the investor.

jamesd

Biggles wrote: »

Wow! You are investing your elderly mother's savings

The poster did not say that. They wrote about their investments "I've" and "her Savings" as two different things.

Speculation that they are also controlling her investments under a PoA is just that: speculation. Though if they were and provided little of the money was invested via Lendy it would seem like a prudent investment choice to avoid wasting her capital or exposing it to the risks of equity ups and downs with a shorter than normally recommended investment time horizon for the use of equities.

AnubisHorus

Well that woke some of you up. Thank you "jamesd" for you well considered and thought out reply. As you say I've and her savings are two different things. She is 91 and I and my rwo brothers have more than sufficient funds to keep her well looked after for as long as needed. Immediate needs Annuity like most offer poor returns and no access to unused capital. Talking to my brother and friends we must have in excessof 1 million in p2p further 1 million in buy to let and another in shares/funds. 200K in AJ Bell giving rasonable return this year but previously just holding it's own. None of us have had a nett capital loss on investment in P2P and now FSCS cash compensation limit cut to £75,000 in vectors that this applies to. Yes there are a few examples of bad or even fradulent loans but as I say spread thinly even in the example given "masonic" there was still 50% recovered and this would have been covered by Lendy so no invester lad capital loss in that example I may have had £500 invested even if I lost the lot it is only 16% of 1 months interest at 12% which is the lowest return we are getting . p2p is good if you use it with caution. FCS require arrangments for managment of loans if parent company fails.
As with most things only invest what you can afford to loose in anything. "Asset secured investments by virtue of their nature preclude total loss of capital.
By many years of study on finance in my spare time I was able to retire at 58 after 43 years in NHS and thanks to Mr. Osbourne had the oppertunity (No longer available) to transfer my pension pot and invest it to give me a annual pension three times that I would have had in NHS and still have access to my entire funds were this required. Thanks to all for their comments.

AnubisHorus

There are currently 13 defaulted loans assuming I had £1000 (unlikely more like 500) and I had loan from the start I would have invested £13000. I would have had £780 in interest (assuming not SBL) leaving £12220 of capital at risk. Assuming 50% loss after recovery I would in theory loose £6120. This is at 12% which is my lowest P2P return I get. This equates to about 2 months interest. £30000 invested over 6 months at 12% compunded gives £18500 in interest . Take off the £6120 and you would still have a 4.1% (8.2% APR) return on total investment. Even if you lost the lot you would still be getting 4.2% APR return. 40 times the bank's . SPREAD THE MONEY LOWER THE RISK

Fatbritabroad

Where are you getting12- 16% return? Surely even diversified they are going into higher risk loans? What about in the event of economic downturn these loans are likely to be the first to default. And how long did it take you to diversify 1 million quid I wouldn't think there was enough platforms to diversify that much money. Not disbelieving genuine question Ive literally just parked a grand in ratesetter to get the bonus so in no position to back either viewpoint here!