Peer-to-peer lending sites: MSE guide discussion
Comments
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until what age can one keep topping up the LISA?
AlanP and takesyourchances- LISA is not for EXTRA home investement. you can only use the money for your FIRST house or as pension.Aim to retire by 45.0 -
i have a large holding in p2p. i am selling some and cashing out the interest paid.
not stocking up my shares portion until end of 2018 or 2019.Aim to retire by 45.0 -
I continue to de-risk from P2P. Not aggressively, just letting repayments go back to my bank account. People should be mindful of the fact that the loans are illiquid and maturity upto 5 years for most platforms. P2P has not been tested in a recession. It will take time to exit P2P given the illiquidity so i would run down your P2P portfolio. Hopefully mine will be run down mostly before the next recession.
YOU DO NOT WANT SIGNIFICANT P2P EXPOSURE DURING A RECESSION!!!0 -
I continue to de-risk from P2P. Not aggressively, just letting repayments go back to my bank account. People should be mindful of the fact that the loans are illiquid and maturity upto 5 years for most platforms. P2P has not been tested in a recession. It will take time to exit P2P given the illiquidity so i would run down your P2P portfolio. Hopefully mine will be run down mostly before the next recession.
YOU DO NOT WANT SIGNIFICANT P2P EXPOSURE DURING A RECESSION!!!
probably agree to some extent but depends what type of asset loans you have invested in also..?...I would prefer to be less exposed, but with stock markets so buoyant ( so reluctant to lump in ) and interest rates so low its difficult to ignore what P2P offers at present.Over £2K made from bank switches and P2P incentives since 2016 :beer:0 -
buyhighselllow wrote: »probably agree to some extent but depends what type of asset loans you have invested in also..?...I would prefer to be less exposed, but with stock markets so buoyant ( so reluctant to lump in ) and interest rates so low its difficult to ignore what P2P offers at present.
Stocks even now are a better risk reward long term imo.
P2p is like a cyclical stock - you definately don’t want to own it in a recession.
Yes asset backed loans are better just make sure ltv is low enough. Anything else shojld be derisked. But even asset backed stuff you have liquidity risk as chances of defaults higher and takes time to get back money as you have to sell the asset - in the worst possible time....0 -
Stocks even now are a better risk reward long term imo.
P2p is like a cyclical stock - you definately don’t want to own it in a recession.
Yes asset backed loans are better just make sure ltv is low enough. Anything else shojld be derisked. But even asset backed stuff you have liquidity risk as chances of defaults higher and takes time to get back money as you have to sell the asset - in the worst possible time....
I largely agree, I'm withdrawing gradually with a few exceptions.Over £2K made from bank switches and P2P incentives since 2016 :beer:0 -
buyhighselllow wrote: »I largely agree, I'm withdrawing gradually with a few exceptions.
Out of interest which ones are you keeping and why?0 -
Only bling loans for me these days.0
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YOU DO NOT WANT SIGNIFICANT P2P EXPOSURE DURING A RECESSION!!!
You don't want significant exposure to P2P, in general, you want a balance - it is an alternative, after all. However, I'd generally disagree with your statement.
P2P has proven to provide stable, predictable returns over time. It is uncorrelated, as the underlying assets are not on an exchange so, unlike traditional asset classes, P2P investments don't suffer volatile swings in the market.
Imho, P2P lending will likely perform better in an economic recession than other asset classes. We did see this with Zopa, who weathered the last recession and, while default rates inevitably increased, still printed returns in the region 4% p.a.
This does not mean P2P is not without risk, of course.0 -
Jordan_Stodart wrote: »You don't want significant exposure to P2P, in general, you want a balance - it is an alternative, after all. However, I'd generally disagree with your statement.
P2P has proven to provide stable, predictable returns over time. It is uncorrelated, as the underlying assets are not on an exchange so, unlike traditional asset classes, P2P investments don't suffer volatile swings in the market.
Imho, P2P lending will likely perform better in an economic recession than other asset classes. We did see this with Zopa, who weathered the last recession and, while default rates inevitably increased, still printed returns in the region 4% p.a.
This does not mean P2P is not without risk, of course.
You would say this as you work within the P2P lending industry. So you are biased and your comments should thus be taken as such.
P2P has not been around for a long time in fact it has not been through a recession with the exception of Zopa as you said. However Zopa was much smaller back int he last recession and underwriting standards higher then they are now. After the recession Zopa experienced competition - and the main way to fight competition is to relax underwriting standards. That is why i think you have to be careful now given we are 9 years away from the last recession. No idea when the next recession will be, but we are certainly closer to one and given the illiquid nature, i highly recommend derisking from P2P.
Sure it may not suffer from volatile swings, but at least with stocks if you are diversified they will recover over time. With P2P, a default is a default and all you will get back is recovery - only if the loan was secured in the first place. THE LOSS IS CRYSTALLIZED!!! And the loans will tend to default at the same time.0
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