Ratesetter which is better rolling or 1 year

happyhero

Hi, I want to put £1000 in Ratesetter for one year and get the £100 bonus and then take my money out. I will not want to touch my money in that year other than to possibly invest the £100 bonus aswell.


I see the rates differ between the Rolling market and the 1 Year market and so do some bits of each account such as it says "Capital and Interest Continuously Reinvested" and free withdrawals under the Rolling market so which is better, ie which one will give me the better return at the end of 1 year?



At first it seems obvious that the answer is the 1 year market being over 1% higher but could the Rolling one be better with the constant reinvestments even though it starts off lower?



Are there fees even after one year when withdrawing the money in the 1 Year Market? Which could possibly destroy any advantage of the 1 year account over the rolling one?


I noted that on their site they say 2/3's of there clients take the Rolling one but I think thats because they can withdraw free at any time with that account (obviously you lose the £100 bonus if you dont leave the money invested for one year).


Also I cant help being suspicious and thinking they want you to pick the lowest rate way in by taking the Rolling account so they can take more profits.


Any advice or info appreciated.

lg13mza

I recently put money into this. I decided that if you have to keep the money in for 1 year to get the bonus, then I may as well go for the 1 year fix.


You do know you can 'request' a interest rate of your choice? It took 2 or 3 days to get match but we got a good rate above what was advertised at the time.

firestone

yes the rates are usually better in One the rolling unless you accept market rate then that not may be the case I.e last night 1 year was 5.1% then dropped lower then rolling(which is why people set their own rate and don't take market rate)
Yes you will pay fees(think its 0.3) on 1 year if you withdraw money and that loan has time left no matter how long you have been with them a bit like losing interest on a BS fixed rate bond if closing early
But note even a One year loan can repay early even within a month or Two.You will get the interest due but the repayment plus capital will go into your account and sit there till you do a manual payment.Which is why most people set auto reinvestment at their preferred rate

happyhero

lg13mza wrote: »

I recently put money into this. I decided that if you have to keep the money in for 1 year to get the bonus, then I may as well go for the 1 year fix.


You do know you can 'request' a interest rate of your choice? It took 2 or 3 days to get match but we got a good rate above what was advertised at the time.

Ok thank you lg13mza for your reply, but please guide me a little with the rate, what rate did you pick and how long did it take before someone took you up on that?

happyhero

firestone wrote: »

yes the rates are usually better in One the rolling unless you accept market rate then that not may be the case I.e last night 1 year was 5.1% then dropped lower then rolling(which is why people set their own rate and don't take market rate)
Yes you will pay fees(think its 0.3) on 1 year if you withdraw money and that loan has time left no matter how long you have been with them a bit like losing interest on a BS fixed rate bond if closing early
But note even a One year loan can repay early even within a month or Two.You will get the interest due but the repayment plus capital will go into your account and sit there till you do a manual payment.Which is why most people set auto reinvestment at their preferred rate

Thanks for all the info firestone, so Rolling looks favourable and select my own rate but can I ask you the same question for guidance, what rate did you pick and how long before someone took you up on it?

firestone

rates and waiting times it can depend on many things during the year i.e summer or xmas can be short of borrowers so rates drop since the new year rates have picked up (don't look much but have not seen rolling go past 3.8% & 1 year past 5.2 but they may have
On your account page you can click market data on the left hand side to get some idea of whats happening in each loan type.It may only be me but i think the better rates are late afternoon/early evening but it may take a few days (or except market rate which can be low but usually pretty quick)
If you dont know how to set your own rate - when you pick your term and the page comes up to invest you can invest at the current rate but it will say at the top of the page on the right set your own rate so click the link and you go to a new page where you can pick your rate.If you feel its taking to long to invest you can always cancel and pick a lower(or higher) rate at anytime
Ratesetter is not quite hands off unless taking market rate but is not to bad once you have your settings ( also once invested you can click the reinvestment tab on your account page to set a rate to save time)

Joe_Bloggs

Bracket your money in to increasing interest rate bands. So say £100 @ 3.75 and then another £100@4.0% .


The rates in the morning are very low due to negligence in observing the afternoon/evening rates when setting an auto reinvestment rate.
J_B.

Oliver1191

Why would you bother investing in this if the rates are so low?

Ok, you get an initial 10% bonus. But, a LISA gives you a 25% bonus and a pension will give you 20 / 40% tax relief.

Then, if you invest in an index fund, and select reinvest the yield, you'll easily do better than 3/5% over the long term.

You could just chuck it into an ISA. If you want monthly returns, there are plenty of funds which offer it.

firestone

Oliver1191 wrote: »

Why would you bother investing in this if the rates are so low?

Ok, you get an initial 10% bonus. But, a LISA gives you a 25% bonus and a pension will give you 20 / 40% tax relief.

Then, if you invest in an index fund, and select reinvest the yield, you'll easily do better than 3/5% over the long term.

You could just chuck it into an ISA. If you want monthly returns, there are plenty of funds which offer it.

Not sure you will easily do better then 5% on most trackers and many don't like the FTSE 100 which is One choice for yield but i know what you mean in a way.
In my case i have already invested in IT's mainly over the years plus funds passive/active offered in a pension.While i know it can be seen as a risk i use some p2p for use with part of my cash savings that i would have put in a fixed BS bond.So not long term growth or maybe not being unable to get at capital when i want (and yes i know some see a risk to capital in p2p)
I even feed the income from a non ISA p2p into an extra IT share plan than i already had just for that income

bowlhead99

Oliver1191 wrote: »

Why would you bother investing in this if the rates are so low?

Ok, you get an initial 10% bonus. But, a LISA gives you a 25% bonus and a pension will give you 20 / 40% tax relief.

Then, if you invest in an index fund, and select reinvest the yield, you'll easily do better than 3/5% over the long term.

You seem to be mixing apples with oranges.

The rates are not particularly high, but the bonus, obtained after a year of investing in the product, can be withdrawn along with the capital and interest.

You would then have £1100 plus interest on the £1000 (less bad debts), rather than £1000 plus interest on the £1000 (less bad debts). This money could later be invested in the LISA or pension products you mention and would attract the bonuses and tax reliefs you mention - if you are willing to use those structures and do without the money until you're in your late 50s or beyond, which is a much bigger commitment than just investing for a year.

The ratesetter P2P with sign-up bonus is just a solution for one year and does not stop you using the other products once you have first taken the free money offered by the marketing men at ratesetter.

The free money is something of a giveaway, designed to help them build their business as you trial their product. You get that on top of their market return for lending/investing. Whereas if you put it in a pension you just get the standard tax breaks and the standard market return of whatever you're investing in.

Oliver1191

Not sure you will easily do better then 5% on most trackers and many don't like the FTSE 100 which is One choice for yield

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-ftse-250-index-class-s-accumulation - this fund averaged 7.65% growth per year over the last 3 years.


https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/i/ishares-japan-equity-index-h-accumulation - this fund averaged 12.33% growth per year over the last 4 years.


https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-global-small-cap-index-accumulation - this fund averaged 11.53 growth per year over the last 5 years.

Ok, the future is not certain, but the risks with lending - particularly small amounts of money - are no lower. I know there is often a contingency fund with these P2P platforms, but even if they do pay you any lost capital (and forgone interest??), it's still dramatically less money made...