Ratesetter which is better rolling or 1 year

bowlhead99

firestone wrote: »

Still not sure why it keeps getting called investment when its more like savings.Its like comparing a ETF with an instant access account when there doing different things

When you deposit money in a bank account to save it for a rainy day, and the bank guarantees you will get the money back when you mutually agree... and an industry compensation scheme guarantees that if the bank goes bust all the other financial services institutions in the UK will be forced by the government to chip in to give you your money back - that's "saving". You are putting money aside to pick it up later.

When you put money into an investment platform such as Ratesetter and ask them to invest your money into their marketplace to buy a portfolio of loan parts, which you hope will get paid back at the contracted rates (or if the borrower fails to pay back, the provision fund run by the platform out of their profits will be enough to cover the losses), that's "investing". You might feel like you are just putting money aside to pick up later, but actually it's being lent out to borrowers and you might not get it back. Taking the risks is why you are able to get higher advertised interest rates than on your "savings" in a bank account.

An ETF should not be compared to a bank account because they do different things and expose you to different risks. Likewise P2P lending is not the same as a bank account as they do different things and expose you to different risks. However, p2p looks closer to a bank account than an ETF does, so people sometimes think they are worth comparing.

If the bank account pays almost as much as the P2P offers, you should take the bank account because it's lower risk. But where the P2P offers significantly more, you have a decision to make on whether the extra risk is acceptable for the extra return you might get.

.But it can be saved in an ISA/pension if you want a tax break not sure about the LISA but i'm to long in the tooth for that

Putting money in ratesetter for a year to get the bonus is quite different to putting money in a LISA for decades to get a government incentive to build money for retirement ; they are not really comparable.

firestone

Only mentioned the LISA as it keeps getting mentioned in other posts which i don't get as i agree there different things.Take the point about calling it investing over saving but its still been compared to an investment with growth as opposed to an income only product.But hopefully for p2p people hang around longer then just for the bonus or they are in trouble

Snow_Dog

Back to the OP question - differential between rolling and 1 year is rarly more than a couple of % and the main point is on £1000 to get the £100 bonus then a couple of % is less relevant.


Personally I would in the OP shoes, put the £1000 into the 1 year setting it in £100 increments from 4.0% to 5.0% (ensuring it gets split up into individual loans) and set the reinvest at a very high rate in 11 months so when it all matures it doesnt reinvest. Job done.


£100 + average 4.5%, on £1000 makes a 14.5% return.

redpete

RS vs LISA vs pension...

I've pretty much used my 40% bonus with pension investments already. Got as much going into 5% regular savings accounts as I can manage. I treat RS as medium term home for risk and reward levels between cash and bond funds with relatively easy access.

firestone

Snow_Dog wrote: »

Back to the OP question - differential between rolling and 1 year is rarly more than a couple of % and the main point is on £1000 to get the £100 bonus then a couple of % is less relevant.


Personally I would in the OP shoes, put the £1000 into the 1 year setting it in £100 increments from 4.0% to 5.0% (ensuring it gets split up into individual loans) and set the reinvest at a very high rate in 11 months so when it all matures it doesnt reinvest. Job done.


£100 + average 4.5%, on £1000 makes a 14.5% return.

I like One year but the OP should know that each increment will run One year as will any early repayments so any cash out after they have the bonus would possibly incur a small fee(or set repayments to go into rolling which is where the bonus is usually paid anyway)

quirkydeptless

"The following RateSetter Notice was published as a RateSetter blog on 3 January 2019 and was emailed to investors on the same day as part of the December 2018 monthly statements:

RateSetter aims to be the destination of choice for people looking to earn more on their money - offering more earning potential than cash without the volatility of shares. In eight years we have come a long way: you, together with 70,000 other investors, have lent £3 billion to 550,000 borrowers across the UK.


You can choose to invest between three markets on RateSetter. Our Rolling market is optimised for free and flexible access; our 5 Year market rewards longer-term investments. Positioned in-between is the 1 Year market which is currently the smallest of the three, with 15% of total funds.


Currently, it is only the 1 Year market that can fund loans that repay your money plus interest at the end of the term as opposed to loans that pay it back in monthly instalments. Borrower demand for these loans is strong and, while investor supply in the 1 Year market is also strong, it has not grown to a similar size as the Rolling and 5 Year markets.


In February, we are planning to add the functionality for the Rolling market to be able to fund these loans. This will further enhance the depth of the Rolling market, improving access for investors and providing greater certainty of funds for borrowers.


The Rolling market will continue to work as it does now, with your money matched to borrowers for the term of the loan and you can request access to it any time, at no cost."

poppy10_2

Oliver1191 wrote: »

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.

What was the performance of this fund over the last twelve months, Oliver?

bugbyte_2

Hi - I have read through the thread and still none the wiser on a couple of points.

Taking out all of the is it worth it? considerations, going back to the original OP's question, can I ask:

On the rolling market, am I correct in saying that every month your funds have to be re matched, and this may take a day or two. Whilst they are being re matched, you are not paid interest on your funds, so potentially if that takes two days every month you loose nearly a months worth of interest?

Secondly, Someone alluded to a table or website indicating what rates are likely to be successful. I don't want to go with the 'market rate' of 3.8% if I can easily get 5%, but how do you know what to set your rate to?

Thanks in advance!

firestone

bugbyte wrote: »

Hi - I have read through the thread and still none the wiser on a couple of points.

Taking out all of the is it worth it? considerations, going back to the original OP's question, can I ask:

On the rolling market, am I correct in saying that every month your funds have to be re matched, and this may take a day or two. Whilst they are being re matched, you are not paid interest on your funds, so potentially if that takes two days every month you loose nearly a months worth of interest?

Secondly, Someone alluded to a table or website indicating what rates are likely to be successful. I don't want to go with the 'market rate' of 3.8% if I can easily get 5%, but how do you know what to set your rate to?

Thanks in advance!

as to your First question and the way its worded - then no you are not re-matched or out of the market as its only your repayments you need to reinvest (or have paid in to your bank) Yes you could wait days if you set your rate to high but market rate would probably be within a day.
As for finding out rates on the Left side of your account page there is a link to market data this give you an idea of where lenders & borrowers are sitting.Your example of 5% would be 1 or 5 year i would guess so over the last week due to ISA money there was about 5m sitting at 5.8% in 5 year and hardly anything at 5.7% so i set my repayments at that rate and most went within hours.But its a bit of a guessing game and also what you will except but it was still better then market rate which was about 3.2% at the time
RS is not the most simple of this type of P2P (that would probably be Lending Works) unless you take market rate but after a while you get the hang of it

soulsaver

@bugbyte
You may have found conflicting historical reports about how the rolling market works; it worked as you describe in your question but changed in June 2018 to remain invested with the same borrower (as firestone implied) until you sell out or until the loan is repaid.