Newbie Q re returns on investment

jamesd

Part of the answer depends on how much income you're after and why. It's not currently hard to get 12% or so from peer to per lending secured on property through the likes of Ablrate and MoneyThing though you should allow 1-2% for bad debt after the security of any defaulters has been taken and sold. At the moment I have more than £50k in each and an average interest rate of about 12.7%. Any of the currently available primary (new loans) and secondary (buying from others) deals at either place is OK so you could start out just by spreading the money fairly evenly until you learn more.

FundingSecure and Collateral are also worth a look but it's essential to consider each loan individually at those places. Raw interest rates are similar but default losses may be higher and will be if you're not selective about which loans to invest in.

FundingSecure currently has an innovative finance ISA available, Ablrate expects theirs in a few weeks. MoneyThing expects to do one but not for at least many months.

It'll be hard to get sensible, informed advice about P2P from a UK adviser at present and if you get much comment it's most likely to say that it's high risk unsecured lending without explaining that the UK stock market is high risk, anything about the different characteristics of the risk and probably without knowing that all of the places I mentioned don't do unsecured lending.

If your purpose is retirement income drawdown you should read Drawdown: safe withdrawal rates for an introduction to the subject and do at least some exploring with cfiresim. Assuming that you're willing to do the fairly minimal work of following the Guyton and Klinger rules a safe withdrawal rate of six percent or so is likely. Higher once you add in the effect of the state pension. Guyton also has rules to reduce the effect of drops in markets called sequence of return risk and you should become familiar with that and the underlying research.