Peer-to-peer lending sites: MSE guide discussion

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  • TheShape
    TheShape Posts: 1,779 Forumite
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    takesyourchances wrote: »
    Good to read your update as well as we were investing over similar periods in P2P. I have been pondering the LISA before I pass the age you can open them, I am 38 now, I like the access the S&S ISA can give if I want to drawn anything at any point before pensions as I already have property so if I was opening an LISA it would be for retirement.

    The lack of bling on Collateral and heavy change into property and some big projects halted recent money flowing into it from me. I recall you signed up to Unbolted for bling etc following the slowdown in Collateral, how have you found it?

    I think I will still be adding to P2P at the moment but slowing the pace down from last year and be open to review things as needs be. I added to my S&S ISA today to some investments that have went down and I am adding weekly into it too drip feeding.

    I've got 11 years to invest in the LISA. That's 11 years that I can use it or lose it. As a basic rate taxpayer, currently contributing to a DB pension I think the LISA could offer some flexibility in funding retirement past 60.

    Ideally I'll continue to fund the LISA, a SIPP and a S&S ISA but I'm going to have to see if I have the funds to continue funding the S&S ISA and SIPP to the same level as currently once funding the LISA. I'm prepared to sacrifice the SIPP and S&S ISA contributions for now in the hope that future salary increases or some further borrowing against my home provides some additional funds for investing.

    Been with Unbolted for approx 6 months. I have only approx £900 invested, partly as the deal flow is very slow and partly because I wasn't topping up the account often enough. I'm topping up more regularly now but only being allocated between £50 and £75 of new loans per week. It's proving more useful for diversification rather than making large investments.
  • TheShape
    TheShape Posts: 1,779 Forumite
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    takesyourchances wrote: »
    That is a very fair point Alan, could regret it after 40 as no option then. I don't have to fill the years allowance right away, might be glad of it in later years for an extra investment home.

    At the absolute minimum you could open a Skipton LISA with £1 before age 40 to keep your options open.
  • Davina40
    Davina40 Posts: 45 Forumite
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    economic wrote: »
    Remember P2P has not been tested in a recession.

    The only one around in the 2008 recession was Zopa and they did ok, positive returns every year. But yes, the p2p marketplace has changed a lot since then.
  • economic
    economic Posts: 3,002 Forumite
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    Davina40 wrote: »
    The only one around in the 2008 recession was Zopa and they did ok, positive returns every year. But yes, the p2p marketplace has changed a lot since then.

    Zopa was a lot smaller then and only starting out. Presumably their u writing standards would have been a lot stricter then now as they played it safe as a new platform. Once competition arrives then it is only natural to loosen underwriting standards to gain market shares. That is why I think risks with these platforms are potentially very understated and something like a recession would show this.
  • Fatbritabroad
    Fatbritabroad Posts: 573 Forumite
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    I personally equate p2p loans with buying individual shares in terms of risk. I assume jn a downturn I could theoretically lose everything I have in them. Most of my loans have less than 100 in them and the most has 400 in the new portfolio loan. I have just under 4k in ablrate and 2k in ratesetter and I'll be taking that out in 29 days time. Ill probably put this back in cash. In contract I have 13k in cash and 25k in stocks and shares and 130k in my company pension so if I lost the lot I'd be gutted but I wouldn't be homeless. Its very tempting to ramp it up but I'm just too risk averse. I'm just reinvesting interest and repaid capital pretty much now
  • Fatbritabroad
    Fatbritabroad Posts: 573 Forumite
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    On another point is something like ratesetter lower risk than ablrate? The interest would appear to say yes but I tend to equate all p2p the same but maybe that's too simplistic
  • msallen
    msallen Posts: 1,494 Forumite
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    Fatbritabroad wrote: »
    On another point is something like ratesetter lower risk than ablrate? The interest would appear to say yes but I tend to equate all p2p the same but maybe that's too simplistic

    As you say the interest rate implies it, but it might not be quite as simple as double the rate, double the risk. Ratesetter and ablrate offer a very different product.

    Ratesetter shields you from individual loans - your money will be lent out on a variety of loans at a variety of rates, all higher than the amalgamated rate paid to you, but has a provision fund to (theoretically) cover defaults, whereas on ABL you are investing in individual loans at their full rate (i.e. full rate available to the investor, obviously ABL charge the borrower more than this) but you stand the risk of the loan defaulting.
    Fatbritabroad wrote:
    I personally equate p2p loans with buying individual shares in terms of risk

    Ratesetter in more analogous to a fund and ablrate is more analogous to individual shares (or moreso bonds)
  • Fatbritabroad
    Fatbritabroad Posts: 573 Forumite
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    msallen wrote: »
    As you say the interest rate implies it, but it might not be quite as simple as double the rate, double the risk. Ratesetter and ablrate offer a very different product.

    Ratesetter shields you from individual loans - your money will be lent out on a variety of loans at a variety of rates, all higher than the amalgamated rate paid to you, but has a provision fund to (theoretically) cover defaults, whereas on ABL you are investing in individual loans at their full rate (i.e. full rate available to the investor, obviously ABL charge the borrower more than this) but you stand the risk of the loan defaulting.



    Ratesetter in more analogous to a fund and ablrate is more analogous to individual shares (or moreso bonds)
    So the logic would be I should be more confident of having a higher sum in ratesetter?
  • msallen
    msallen Posts: 1,494 Forumite
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    Fatbritabroad wrote: »
    So the logic would be I should be more confident of having a higher sum in ratesetter?

    Possibly if you want a fire an forget investment. Personally I don't consider the return from Ratesetter to be worth the risk (its less but still there) so after getting the intro bonus a year or two back have never used them again. I don't invest in any "provision fund backed, amalgamated loans" p2p. I prefer to stick to individual asset backed loans at a far higher rate. That means I have to do some due diligence, and be prepared to accept the occasional default, but (so far) the returns are far batter.
  • takesyourchances
    takesyourchances Posts: 828 Forumite
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    TheShape wrote: »
    I've got 11 years to invest in the LISA. That's 11 years that I can use it or lose it. As a basic rate taxpayer, currently contributing to a DB pension I think the LISA could offer some flexibility in funding retirement past 60.

    Ideally I'll continue to fund the LISA, a SIPP and a S&S ISA but I'm going to have to see if I have the funds to continue funding the S&S ISA and SIPP to the same level as currently once funding the LISA. I'm prepared to sacrifice the SIPP and S&S ISA contributions for now in the hope that future salary increases or some further borrowing against my home provides some additional funds for investing.

    Been with Unbolted for approx 6 months. I have only approx £900 invested, partly as the deal flow is very slow and partly because I wasn't topping up the account often enough. I'm topping up more regularly now but only being allocated between £50 and £75 of new loans per week. It's proving more useful for diversification rather than making large investments.

    Good points on the LISA, I should open one even with a small amount so that I don't lose in past 39. The time passes in quick enough. As I would not be using it for a house, it would be locked I think until 60. I will look into opening to have the option.

    Thanks for the info on unbolted, I opened an account to try it out and I deposited £100. I see today a few small amounts have went into few loans. I set up the auto for prevision trust loans and gold trust loans. With the dry up of these types of new loans on collateral, I will give this a go for some diversification as you said.

    Seems very simple and straight forward the account and the auto.

    I think if I am right the bespoke loans is small business type loans, so I didm't select them as enough business loans in other platforms and wanted something different to property developments and business loans. Accounts open and first money in so see how it works.
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