Future of P2P investment. Is diversification the real answer?

Lukelo

Hello everyone,
What are your thoughts about the future of p2p investment? Do you agree that spreading your investments around more than two or more P2P lenders is a great idea? 
Thanks for your answers!

DiggerUK

P2P is the equivalent of lending money to a loser in the bookies on the understanding they are a good risk.
Diversification is akin to doing the same exercise in all the bookies in your area..._

Albermarle

Lukelo said:

Hello everyone,
What are your thoughts about the future of p2p investment? Do you agree that spreading your investments around more than two or more P2P lenders is a great idea? 
Thanks for your answers!

Having some modest investments still in P2P , I am hopeful that the bulk of it will eventually survive the current crisis.
New institutional investors are coming in ( Metro bank buying Ratesetter for example) to use the established lending infrastructures for their own lending strategies.
However I would not be putting new money in to P2P at the moment.

barnstar2077

From what I have read on these forums in the past the good money in P2P has already been made.  Add to that the current climate and I wouldn't touch it with someone else's barge pole while wearing gloves and being stood on a rubber mat.

longleggedhair

I don’t really understand the level of hatred towards P2P on this forum. I’ve been in P2P for the last ten years and am sitting on a £10,000 profit on an average investment of around £25,000. Its been stable...and has done exactly as it says in the tin. I’ve withdrawn about £10,000 since the crisis began as a cautious measure, however when times stabilise I should have no concern in reinvesting. (I use RateSetter and Zopa)

Bravepants

P2P lending has been likened to picking up pennies in front of a moving steamroller.

Alexland

I didn't realise that p2p had enough of a future to be worth debating. We only ever did it for the cashback and pulled our money out as soon as the terms allowed. Stopped doing it about a year ago when the outlook deteriorated. Problems were building up well before this virus outbreak. I don't like the unpleasant sudden 100% loss scenario and diversification can be better achieved through a mix of cash savings and S&S funds which together offer a more attractive long term risk, return and liquidity profile.

quirkydeptless

Like Alexland, I was only in it for a cashback grab. Whether I come out of the exercise unscathed depends on how much I get back from the unwinding of Growth Street.

I only took a toe dip into the P2P world to get a feel for it. My feeling for it now is that it is like an investment in a junk bond fund. Not that that's a bad thing to do as junk bonds might have a place in someones porfolio if they want that level of risk/reward, and P2P might be a way to diversify their junk bond allocation.

slapPCM

smells trouble...

Lukelo

Thank you for your feedback! Why am I asking about P2P investment? I'm fairly new to investment world and some of my friends told me about P2P investment. So I did my research and found out that during this time it's quite risky to use P2P investment as a source for passive income because many loan originators are failing 

Grenage

longleggedhair said:

I don’t really understand the level of hatred towards P2P on this forum. I’ve been in P2P for the last ten years and am sitting on a £10,000 profit on an average investment of around £25,000. Its been stable...and has done exactly as it says in the tin. I’ve withdrawn about £10,000 since the crisis began as a cautious measure, however when times stabilise I should have no concern in reinvesting. (I use RateSetter and Zopa)

But wouldn't you have been sitting on £25,000+ profit over the same 10 years if you'd thrown it into an ETF?