9.01% fixed rate 5 year high yield bond - too good to be true?

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  • Reaper
    Reaper Posts: 7,283 Forumite
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    OK maybe not the retail product but even looking through the business pages on Funding circle it would be hard to make that sort of return converted to a guaranteed minimum and still make a profit on top. At least not without taking significant risks.

    But perhaps I shouldn't speculate as I have no idea what they are using, it may not be Funding Circle at all.
  • talexuser
    talexuser Posts: 3,499 Forumite
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    bowlhead99 wrote: »
    I assume with some banks paying a tenth of the base rate and these so called 'Flex' accounts allegedly paying ten times the base rate, that this rumour is too good to be true.

    The difference is I've never seen anyone asking if a Nationwide or Santander 5% regular saver is too good to be true. But we do have a regular stream of these types of bonds with the question, often with an implied assumption they are savings products and therefore safe.
  • Ray_Singh-Blue
    Ray_Singh-Blue Posts: 507 Forumite
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    jimjames wrote: »
    This quote on their website:
    "We ensure that your investments are aligned with our interests"
    That's OK then. They'd be marginally more likely to secure my investment if they claimed to be Nigerian princes with a temporary liquidity problem.
  • jimjames
    jimjames Posts: 17,619 Forumite
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    Ray_Singh-Blue wrote: »
    That's OK then. They'd be marginally more likely to secure my investment if they claimed to be Nigerian princes with a temporary liquidity problem.

    On the plus side at least investors who lose money can't say they weren't being honest!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    edited 1 August 2018 at 2:08PM
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    [The post below was in response to a post from an unauthorised Basset and Gold account which has now been deleted.]


    You've only been offering bonds since 2016. If you simply stuck investors' money in the bank earning zero net interest and paid out 9.01% per annum for five-year periods, it would take 20 years before the scheme collapsed if inflows remained constant.

    Why do you think that managing to maintain payments for 2 years means anything?
    If you were to ask our compounding bond investors, they would certainly tell you that it is certainly not too good to be true.
    Indeed not. 9.8% is the least you would expect from an unregulated ultra high risk investment that can lose 100% of your money.
  • poppy10_2
    poppy10_2 Posts: 6,575 Forumite
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    Never seen such a clear cut case for running away as fast you can:rotfl:
    poppy10
  • badger09
    badger09 Posts: 11,210 Forumite
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    poppy10 wrote: »
    Never seen such a clear cut case for running away as fast you can:rotfl:

    I suspect, that MSE forum team have removed the post in question, as they also edited Malthusian's response;)
  • jimjames
    jimjames Posts: 17,619 Forumite
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    badger09 wrote: »
    I suspect, that MSE forum team have removed the post in question, as they also edited Malthusian's response;)

    Maybe Basset and Gold posted after drinking champagne at their day at the races. They must be making a decent sum from the bonds

    basset-gold-ascot-day.JPG

    https://damn-lies-and-statistics.blogspot.com/2018/04/basset-gold-bond-review-too-good-true.html
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Malthusian
    Malthusian Posts: 10,941 Forumite
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    Sounds super. For a company earning a piddling £113,000 net profit (a small but not insignificant number of the forum regulars will have higher income as individuals than this company claiming thousands of investors) they're extremely generous to their staff.
  • dale_cotterill
    dale_cotterill Posts: 134 Forumite
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    A sleeve sponsor on West Ham's 2018/19 shirt as well.

    Not quite as 'too good to be true' as some of the stuff we usually get on here. They seem to be at least attempting a legitimate business model than going for all out fraud.

    I don't get the business model though. They seem to make their money lending to lending platforms.

    You are basically giving money to a company who lends money to the companies who lends money to those who generally are unable to get lending through the traditional source.

    In the event of weakness, I find it hard to believe that these 'assets-backed securities' are worth the paper they are written on.
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