Peer to peer lending, where to start

RomfordNavy

Can anyone give me a clue where to start with peer-to-peer investing, what is the best way to get started? So far my investment experience has been limited to Equities and Gold/Silver.


Due to a change in circumstances I now need to start returning an income from investments rather than just leaving it in the bank.

Fatbritabroad

Why are you considering p2p as opposed to say an income equity fund? Don't get me wrong I'm in growth rather than income phase and use both but was just interested why your specifically considering p2p

jamesd

Ablrate is my favourite and well worth a look, they also offer an ISA and have full rather than interim permission from the FCA. Unbolted can be handy for low work investing but their substantial recent interest rate cuts now limit their attractiveness, notably the only 6% on gold loans when more than twice that is available via Ablrate, though with losses due to bad debt to be paid out of that.

For discussion of many more see the P2P Frank Discussion boards, note that only those signed in can see the boards where a fair bit of loan discussion, particularly due diligence and related fact checking goes on.

jamesd

Fatbritabroad wrote: »

Why are you considering p2p as opposed to say an income equity fund? Don't get me wrong I'm in growth rather than income phase and use both but was just interested why your specifically considering p2p

P2P users have a high retired proportion because they offer interest rates that are likely to be high even after bad debt costs, low equity market correlation, very low volatility and minimal capital loss if interest rates go up at most platforms*, unlike many bond funds.

But there's no FSCS protection so diversifying across many platforms is important to reduce overall risk, it's not something that can be managed just by using lots of loans on one platform.

*Zopa and Ratesetter are two exceptions, they impose a capital loss after rate rises if you sell before the loan term ends, and you don't get the capital profit if rates fall either, they take that.

RomfordNavy

jamesd wrote: »

Ablrate is my favourite and well worth a look, they also offer an ISA and have full rather than interim permission from the FCA. Unbolted can be handy for low work investing but their substantial recent interest rate cuts now limit their attractiveness, notably the only 6% on gold loans when more than twice that is available via Ablrate, though with losses due to bad debt to be paid out of that.

For discussion of many more see the P2P Frank Discussion boards, note that only those signed in can see the boards where a fair bit of loan discussion, particularly due diligence and related fact checking goes on.

Have joined that forum now, however a bit concerned that the numbers of people there is quite small.

EmilyG2010

Personally I am a fan of Ratesetter and Assetz Capital (you can get up to about 5% in both of these and can hold them in an ISA). I've not lost any money since I've been with them (almost a year). Crucially there is in both a fund of monies designed to pay out in the event of losses. Try to make the most of cash back offers (Ratesetter are currently running one). Cashback is tax free and effectively increases your total return.
There are a lot of online discussion places such as P2P forum.

EmilyG2010

Laurence has some good advice on Financial Thing dotcom too

firestone

RomfordNavy wrote: »

Have joined that forum now, however a bit concerned that the numbers of people there is quite small.

That forum is a spin off from the P2Pindependent forum which is more used and older and would probably also be be better for a new person.You should note that even platforms that claim to be instant access will still hold money back due to late loans or if there was a run but so far it seems to have been ok for most.I would throw Octopus choice(who also run Octopus cash),Landbay & Lending Works into the hat for a new person due to the ease of use,size of backers,provision fund etc.
Beware chasing high rates as on most platforms to get that you will find yourself checking property details,Land reg & companies house among others and reading through loan details as you have to make your own choice rather then seeing your money pooled with others

firestone

Also you mention a need to earn income as others have alluded to & hopefully you are aware P2P companies are not covered in the same way Banks or BS are if things go wrong so there is always the chance of losing capital.Thats not to say don't do it (as i admit i have) but make sure your happy with the product.

jamesd

RomfordNavy wrote: »

Have joined that forum now, however a bit concerned that the numbers of people there is quite small.

Some of the better ones, though don't expect to recognise account names because choosing different ones seems common.

Marine_life

I quite like financial thing which has a good overview of the different lenders.

As with any investment you need to decide how active you want to be (in selecting loans) and how much risk you are prepared to stomach. That does not necessarily mean risk today but risk if / when there is another major economic event.

Personally, I prefer asset-backed lending so I am mostly with two lenders, Assetz Capital and Funding Secure. Assetz offers some safety nets and also an auto allocate account (which is nice if you don't like high maintenance). funding secure offers much higher interest rates, no safety net and therefore higher risk. so far the higher risk of losses is more than offset by the higher rates.

I've also recently upped my investment significantly with Mintos which is a Eurozone based investor which enables you to specify 'guaranteed buy-back' i.e. if the loan is going bad they will automatically buy it back from you .....so technically no risk. It seems to work and is currently paying me over 11%. But again, untested in difficult market conditions.