Alternatives to P2P for 1-3 Year Investing

stehouk

Alexland wrote: »

Why not £400? I referred my wife to switch and we got £100 each. She referred me to switch and we got another £100 each. Neither of us had switched to Nationwide before but I was an existing customer.

We invested the money and it's now worth even more!

Alex

I'm going off my own experience, i got refered of a friend so £100 and then i refered my wife +£200:beer::beer:
I have refered my son now and my other son will be joining soon, so not bad for 5 mins work.

dont_use_vistaprint

Fatbritabroad wrote: »

What admin? A few minutes setting up dds to make sure the required money goes in and comes back out again

Between two of you off the top of my head

7500 at 5% nationwide plus a 5% monthly-saver at5%

4500 5% tsb plus regular saver3%

5% regular saver santander at 200 a month.

That's over £700 a year to start with without any need to faf with dds like Tesco at3%on 9k

Are you serious? No its not over £700. Its £700 minus the net sum of the all the previous deal(s) you were on which you will now lose , and its not anything like a few minutes.

Personally I'd put the cost of switching my current account at around £1500 - £3000. Until they offer anything like that Ill stick and quite happily be paid nothing, because they actually have far superior products that work, hence why we have seen waiting lists for new current accounts from companies like Monzo that offer £0 to switch

As well as the few minutes changing DD's think about....

1) Any BACS payments that come in will need to be changed. If you provide bank details on any documents for people to pay you , they will need to be changed

2) You will be sent new debit cards via the post and new PIN's and have yo reset them or learn new ones

3) You will likely be charged for the previous account if it was via a deal that made it your main account, so you will have to close this account and destroy the cards.

4) You are choosing a new product for a few £ without even trying being able to try it out first. Some of the apps on these accounts are an absolute joke and you will end up having to get to a computer to use your account properly making them totally unusable when out. Some like Virgin Savings dont even have an app yet.

5) All your online payment and payout methods are going to need changing .. for me just the ones Iv'e used in the last week I can think of off the top of my head: Uber, Pay Pal, Ringo, Fiverr, Amazon, Booking.com, AirBnB, Vanguard, Funding Circle, Quidco, Apple Pay, Revolut, World Remit.

Some of these alone like Ringo, takes more than a few minutes to update....or you'll be parking rushing for a meeting unable to pay and risk being late. They'll be apps used much less frequently that will catch you out too.

6) Your finance history for one year will now be across two accounts. If you do this regularly and ever need to produce statements, or have certain types of bank history checks, file tax returns it is going to add a lot of extra work. Particularly if you close the accounts, you are going to need to keep paper copies to have a proper history.

7) You will need to update your password vault with any new PINs and passwords.

8) Your are likely going to get snail mail from the old company, the new company or both. It will take your "few minutes" simply to deal with that.

That's just some of the impact that springs to mind, theres tons more.

We all know it, they all really know it! (ask anyone that works in consumer banking!) only a minority of simple customers ever switch, which is why they are finally being investigated for loyalty penalties.

Fatbritabroad wrote: »

Between two of you off the top of my head

Now multiply the above effort by 2.

Who in their right mind would do this for a couple hundred pounds ? You may as well just spend a week filling in surveys and clicking affiliate links and keep your accounts as-is

masonic

dont_use_vistaprint wrote: »

Are you serious? No its not over £700. Its £700 minus the net sum of the all the previous deal(s) you were on which you will now lose , and its not anything like a few minutes.

Personally I'd put the cost of switching my current account at around £1500 - £3000. Until they offer anything like that Ill stick and quite happily be paid nothing, because they actually have far superior products that work, hence why we have seen waiting lists for new current accounts from companies like Monzo that offer £0 to switch

As well as the few minutes changing DD's think about....
<snip>

That's why you keep your main current account and switch one opened for the purpose of switching away. For some of the incentives mentioned by Fatbritabroad, it is not necessary to switch an existing account.

There's a lot more work involved in P2P investing with the 8-12% paying providers.

dont_use_vistaprint

masonic wrote: »

That's why you keep your main current account and switch one opened for the purpose of switching away. For some of the incentives mentioned by Fatbritabroad, it is not necessary to switch an existing account.

There's a lot more work involved in P2P investing with the 8-12% paying providers.

Fair point on the main account.

Theres not a lot to do in my opinion, I hardly touch them once set up. Yes funding circle messed up auto-lend and you get a few warnings now its over subscribed but I'm still on £0 actual losses, & kufflinks and others with zero effort look like 7%, and will some basic common sense on how ROI works for SME's you can notch that up above 8.

Anyway you are comparing apples to pears. Current account switching incentives doesnt solve the problem of where to put capital to make it grow. Luckily we have Marcus now for a year, small but solid :-)

masonic

dont_use_vistaprint wrote: »

Theres not a lot to do in my opinion, I hardly touch them once set up. Yes funding circle messed up auto-lend and you get a few warnings now its over subscribed but I'm still on £0 actual losses, & kufflinks and others with zero effort look like 7%, and will some basic common sense on how ROI works for SME's you can notch that up above 8.

Neither Funding Circle, nor Kuflink fall into the 8-12% bracket. You'll struggle to find any options with projected returns in that range among those who offer automated options.

If you are using P2P with returns in the 8-12% range then you'll almost certainly be investing in self-selected loan opportunities. You need to be aware of the difference in regulatory regime vs. mainstream investments. P2P is subject to 'light touch' regulation and a caveat emptor stance from the FCA. One needs to do at least a modicum of due diligence, first on the platform itself, then on the mechanics of the offering and also, of course, the individual loan offerings. Preferably, you will identify and monitor the borrowing entity, employ a degree of risk management to prevent yourself being over-exposed to connected loans and those from the same borrower. Platform collapse is not unprecedented within this headline interest rate range. Your protection in the case of this risk is lower than investing in equities through a stockbroker.

Defaults are a fact of life at this bracket of nominal return, so your actual return is likely to fall short of the headline figure. Some research into loss-potential is therefore prudent.

Loan supply tends to be highly variable and so cash drag is a problem at times (not enough new opportunities to reinvest into). Loans are of highly variable quality, such that the best opportunities are often fought over and you may need to be logged in at the right time ready to bid to avoid missing out. Other loans may be readily available, but because they are of low quality and are shunned by those who have done their research.

It's worth remembering that borrowers will be paying a significantly higher rate than the headline rate you can earn from a loan, they could be paying 15-25% pa at this bracket. They are willing to do so because mainstream lending is not available to them.

All of the above means that a lot more work is involved maintaining a P2P lending portfolio paying a projected weighted return in the 8-12% bracket than opening a selection of risk-free products offering 5% returns and cashback incentives. Personally, I choose to prioritise the latter over the former.

Anyway you are comparing apples to pears. Current account switching incentives doesnt solve the problem of where to put capital to make it grow. Luckily we have Marcus now for a year, small but solid :-)

It is true that comparing a series of risk free products allowing a modest return on a relatively small amount of capital (or no capital in some cases) with a medium-high risk set of products with a high projected rate of return, but a high loss potential is unfair. They are quite different and either may (or may not) be of use depending on your personal circumstances and objectives. I'm merely comparing the amount of work involved in managing them, given that this is your objection to utilising one of them.

I personally wouldn't describe Marcus as a "solid" option to prioritise above the risk free 5% and even 3% returns available elsewhere. I can understand someone unwilling to expend time and effort choosing it over those higher paying accounts, but such a person would be unsuited to investing in P2P at this level of risk/return, at least if they wish to do so in a prudent manner.