Octopus Choice

funkey_monkey · 13 September 2018 at 1:11PM

Does anyone on here know much about Octopus Choice?

I've seen one thread about Octopus Investments, but that was specifically about a particular posters circumstances as opposed the investment itself.

I've been recommended it as an alternative home for my £40k cash savings which are currently in a bank savings account at a very low interest rate.

It was recommended by the IFA. I'm concerned about it because it seems to be concentrated solely in the property market.

Is this a better P2P option that the usual options - Funding Circle, Zopa etc?

Thanks.

Linton · 13 September 2018 at 2:01PM

Looking at the Google results:

Octopus Choice is a brand name of a company that is part of the Octopus Group which employs 600 people. The Group has been going for nearly 20 years. Another of their subsidiaries is the advisor to the Medicx IT which owns health centres and surgeries. They are authorised by the FCA.

I notice that the Octopus Choice average return has been just over 4% which may imply that they avoid the riskier end of the business and an average loan of £600K whch is higher than Funding Circles maximum. So it would seem unfair to categorise them as smply another P2P option.

It is purely in the property market but it is in the finance business rather than actually running and owning properties. You have some level of protection in that it was recommended by your IFA.

If you want a better return than cash I think your choice is either this sort of investment for the short/medium term or to go for a proper broadly based investment portfolio which could be more appropriate for the longer term.

bxboards · 13 September 2018 at 2:05PM

Get a new IFA, you are right to be concerned.

Octopus Choice is fine, but its terrible advice for you to be told to just use only 1 P2P company for a lump sump.

Have a look at the big P2P thread

Malthusian · 13 September 2018 at 2:40PM

bxboards wrote: »

Get a new IFA, you are right to be concerned.

Octopus Choice is fine, but its terrible advice for you to be told to just use only 1 P2P company for a lump sump.

The dubious part is that the OP has apparently been told to use this as an alternative home for his cash savings. P2P is a high-risk product and should not be viewed as an alternative to cash.

If on the other hand the OP and their IFA agreed that £40,000 was an excessive amount in cash and they should invest say £20k in P2P, and they already had £500,000+ invested in mainstream shares and bonds, that would be a different matter.

bxboards · 13 September 2018 at 5:33PM

Malthusian wrote: »

If on the other hand the OP and their IFA agreed that £40,000 was an excessive amount in cash and they should invest say £20k in P2P, and they already had £500,000+ invested in mainstream shares and bonds, that would be a different matter.

Regardless of the sum, it's poor advice to suggest investing a lump sum with just 1 P2P company IMHO.

So for your example with 20k to invest, I'd be looking to spread that between 5 to 10 P2P companies, not just one. Helps diversify against platform failure.

If I wanted to put in 40k for 'low risk' P2P, I'd probably be looking at Octopus Choice, Ratesetter, Assetz Capital, Landbay and Growth Street - all of those offer quick assess to money (with usual in 'normal market conditions' caveats), this would also raise the average from 4%-ish from Octopus Choice alone.

firestone · 13 September 2018 at 7:26PM

I am with Octopus choice and have been for 18 months they were my first P2P investment based on the idea and the hope that the parent company was a bigger player running VCT funds etc and so far i am happy(started small but invested more lately)
I have had no problems with drawing money and have been running at about 4.2% and also using their auto invest monthly plan(they also pay out monthly)
And now for the but:) - i would not put in £40000 in a lump sum and except to be able the get the whole amount back in one go because if invested for a while you will get late payments and defaults which means your money could be tied up till reclaimed or even at the worst lost.
You should also note that the way OC,Landbay etc work as a large lump sum may not be spread over many loans so drip feeding could be better
Also as others have said the whole pot in one place is a big risk

masonic · 13 September 2018 at 7:39PM

funkey_monkey wrote: »

It was recommended by the IFA. I'm concerned about it because it seems to be concentrated solely in the property market.

There are few IFAs who would put all of an investors cash reserves in a single P2P platform. But you'd at least have recourse if you suffered a massive unexpected loss.

Malthusian · 14 September 2018 at 3:45PM

bxboards wrote: »

So for your example with 20k to invest, I'd be looking to spread that between 5 to 10 P2P companies, not just one. Helps diversify against platform failure.

If you have to spread between 5-10 platforms then it's not doing the job of a platform. The point of a platform is to make it possible to diversify sufficiently to eliminate specific risk and the risk of total loss, without increasing administrative and time costs. A platform should be about having all your eggs in different baskets but one shed.

I am aware of the reasons for doing it in P2P, and the reason is that P2P blurs the line between investing via a platform, investing in a collective fund and investing in a single company. Returns are partly dependent on the lending decisions of the P2P company (making it more like a fund than a platform) and things can go badly wrong if the P2P company itself goes belly-up (making it more like a single company). This is why diversification is necessary, and partly why I don't invest in P2P.

Spreading £40,000 over 5-10 platforms is an unnecessary time cost for most investors.

But I don't want this to become an argument about whether P2P is good or bad. I respect the views of those who understand the risks and find it meets their needs. What makes me suspicious is that this blurring of lines appears to have resulted in the OP being told to view P2P as part of their cash allocation rather than their fixed interest allocation. If true this is clearly unsuitable, whether you are pro or anti P2P.

aroominyork · 14 September 2018 at 6:46PM

bxboards wrote: »

Regardless of the sum, it's poor advice to suggest investing a lump sum with just 1 P2P company IMHO.

So for your example with 20k to invest, I'd be looking to spread that between 5 to 10 P2P companies, not just one. Helps diversify against platform failure.

If I wanted to put in 40k for 'low risk' P2P, I'd probably be looking at Octopus Choice, Ratesetter, Assetz Capital, Landbay and Growth Street - all of those offer quick assess to money (with usual in 'normal market conditions' caveats), this would also raise the average from 4%-ish from Octopus Choice alone.

Similar but not quite the same as Malthusian, if you are so concerned about platform risk that would deal with 5-10 platforms each holding £2k-£4k, I would suggest P2P isn't for you. Invest in something you have more confidence in.

masonic · 14 September 2018 at 7:13PM

aroominyork wrote: »

Similar but not quite the same as Malthusian, if you are so concerned about platform risk that would deal with 5-10 platforms each holding £2k-£4k, I would suggest P2P isn't for you. Invest in something you have more confidence in.

To be clear the platform risk is a risk with 100% loss potential. This is sector under "light touch" regulation, where there is no FSCS protection. If you aren't willing to diversify among platforms, then I'd suggest P2P isn't for you.

I have my P2P investments spread around 6 main platforms, one of which is currently in Administration. After 6 months, it is not yet clear if it will be possible to recover records of how investor money was used (these were apparently destroyed), the legal status of the agreements made (an attempt to refinance one loan recently was aborted due to legal problems), or to what extent there will be money to distribute after Administrator fees (and the money the directors allegedly removed from the business just prior to filing for insolvency). Fortunately, P2P makes up a little over 10% of my investable assets, and this failed platform makes up less than 2%, so even if I lose the lot it won't be the end of the world.

aroominyork · 14 September 2018 at 7:21PM

masonic wrote: »

To be clear the platform risk is a risk with 100% loss potential. This is sector under "light touch" regulation, where there is no FSCS protection. If you aren't willing to diversify among platforms, then I'd suggest P2P isn't for you.

I have my P2P investments spread around 6 main platforms, one of which is currently in Administration. After 6 months, it is not yet clear if it will be possible to recover records of how investor money was used (these were apparently destroyed), the legal status of the agreements made (an attempt to refinance one loan recently was aborted due to legal problems), or to what extent there will be money to distribute after Administrator fees (and the money the directors allegedly removed from the business just prior to filing for insolvency). Fortunately, P2P makes up a little over 10% of my investable assets, and this failed platform makes up less than 2%, so even if I lose the lot it won't be the end of the world.

I agree with all that. I have 8% in P2P spread over three platforms.

Octopus Choice

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