Peer to Peer - how much money is at risk?

Fatbritabroad

justme111 wrote: »

Farbrit , have you thought about possibly investing in high risk venues rather than giving them loans? Because if you hit the right one I guess the investment could return 1000% , upside would be massive while loaning them money looks like downside is 100% and the max you can get is the advertised rate whatever it is?
I have about 10k in p2p speard over 5 platforms; would hurt if I lost them but not catastrophe. Looking at it now I think it is very risky - I have money stuck in collateral. Ok, it's all fun and dandy to talk about your contract with the users, not the platform and it all should working but in reality have you thought what is going to happen if your platform fails? What recourse you would have ? Administrator expenses have to be covered first ...
Even without platform collapse - if you lend money at 10% in 10 loans only one defaulted loan with a wipe out of capital in a year will be enough to get your benefit to 0. 2 defaulted ones will result in a more than 10% capital loss - do not think it is a very good business , eh ..
I tried FC - got about 4% there. I don't Thu k it is good enough for risk. Tried Moneything - 30% of my capital is inaccessible in defaulted loans. Tried ablrate- none of my loans is declared in default but some of them don't pay interest and I would not be able to sell now - like like ddeualt to me

For me i dont want to invest in single companies like crowd funding sites. I'd never put 10% of my money in one loan so use the auto diversification sites or with things like ablrate I invest less than my interest earned (currently about 800) in any one borrower. The sites i use have been going for a few years now but I'm still Cautious. There's a blog I read where the guy has over 300k in p2p. He must have balls of steel to have that much in it lol

masonic

Fatbritabroad wrote: »

There's a blog I read where the guy has over 300k in p2p. He must have balls of steel to have that much in it lol

I physically shuddered at the thought of the 18 people over on the P2P IF who have said they hold 91-100% of their non-pension investments in P2P.

firestone

masonic wrote: »

The "light touch" regulatory regime that has been applied to P2P is worse than the sector being unregulated, because it leads people to believe that there are protections when in practice there are none.

It is worth noting that the financial promotions of mini bonds must be approved by an FCA Authorised firm and the main issuers of mini bonds are FCA Authorised.

I don't share your optimism regarding P2P being better regulated. I see retail investors being limited to investing no more than 10% of their net assets in P2P (as is already the case for unregulated bonds), but not much else.

Not sure i am that optimistic which is why i mentioned what the FCA do to keep check and i am aware that at least 2 platforms have hit trouble over the last few months
But there have been "tighter" regs from 2014 and since that time i have seen the likes of my local building society (Saffron) do business with Zopa,Barclays with Market invoice,L&G i believe with Landbay and others such as the govt funded British Business Bank getting involved so hopefully something is in place to keep control of the market or there could be a big fall out

agent69

Fatbritabroad wrote: »

There's a blog I read where the guy has over 300k in p2p. He must have balls of steel to have that much in it lol

Several years ago AC had a loan of over £3m, which was all taken by a single investor.

agent69

bxboards wrote: »

I use several P2P companies and at least a few like Ratesetter or Assetz Capital I treat as 30 day notice accounts

But they are not 30 day notice accounts, and there is no guarantee you will always be able to get your money out.


The problem with AC is that you have no idea how much of the money in the black box accounts is invested (at full value) in defaulted or distressed loans. Everything works fine until there is a loss of confidence and investors start rushing for the door.

dave_ave

agent69 wrote: »

Or if Lendy's London loan is anything to go by, possible more than 100% of your investment.

Yep, I'm one of those "lucky" investors ;-(

aroominyork

Elika0215 wrote: »

I like the sound of less risky and potentially higher returns. This is a new one on me - is it something you can invest in and it's all managed (i.e. I allow experts to make all the financial decisions and I just keep a track of what's going on) or does it need active, frequent involvement? Also, is this suitable for say a two year investment or does the "5 year minimum" advice apply?

Not sure if I'm stating the bleeding obvious, but the five year minimum (if you trust in it) doesn't mean that if you don't need the money until 2024 you can invest in equities and forget about it. It means that once you hit 4 years 364 days the warning lights should flash to start de-risking.

masonic

aroominyork wrote: »

Not sure if I'm stating the bleeding obvious, but the five year minimum (if you trust in it) doesn't mean that if you don't need the money until 2024 you can invest in equities and forget about it. It means that once you hit 4 years 364 days the warning lights should flash to start de-risking.

The suggested/minimum holding periods are usually determined by considering the risk of sustaining an investment loss when holding over the stated period. So, for example, an asset allocation/fund with a suggested holding period of 5 years might have a less than 1 in 10 risk of a loss based on historic 5 year holding periods.

It would certainly not be sensible to invest in something that had a suggested minimum 5 year holding period and almost immediately start derisking. This would not constitute holding for a minimum of 5 years and would increase your risk of loss rather than decreasing it (because your average holding period will be lower than 5 years).

Lifestyling is, however, a sensible thing to do if you want to access your money in a lump sum at a known time. To do so requires that you significantly increase the holding period - perhaps doubling it.

Nardge

masonic wrote: »

I wouldn't invest in those, any more than I'd partake in Chip's series A funding or Revolut's funding rounds.

I've opened accounts with almost a dozen P2P platforms, but never FC.

Masonic -

Out of interest and for my own learning in the investment realm, why wouldn't you partake in Chip or Revolut's funding rounds? I'm assuming you'd include Monzo in that list too?

I myself invested in Chip, and may cherish or regret that at a later date, but if Revolut or Monzo are something to go by, people investing in the latter two at inception have now made a fortune?

Regarding your 12 P2P Companies, if you did not mind, may I ask which they are? I'm already in Ratesetter, Zopa, Funding Circle, Growth Street, Lending Crowd, Assetz Capital, Kuflink, and Octopus Choice (8 Firms), and will be spreading those funds further into Lending Works very soon. I'm keen to note which three to four other firms you might suggest (I have noted your distaste for Funding Circle)? This is addressed at anyone else invested into P2P too...

With Kind Regards

Nardge

aroominyork wrote: »

Not sure if I'm stating the bleeding obvious, but the five year minimum (if you trust in it) doesn't mean that if you don't need the money until 2024 you can invest in equities and forget about it. It means that once you hit 4 years 364 days the warning lights should flash to start de-risking.

Can you elaborate? Why would one de-risk just prior to the 5-year timeframe?

My understanding was that the longer you leave your money there, (historically-speaking) the higher it goes?

With Kind Regards