You may be interested in my experience of p2p investing.
I have been with Zopa for three years and only invested £2K at the start. I had a few losses but they were few and far between so overall I was happy with the risk and return in the first year. In the second year they introduced safeguard which offered a level of safety regarding defaults. Recently they have offered ISA but without safeguard which was phased out. I switched my loans to their ISA product and topped it up with £5k. That’s when it started to go wrong for me. From January this year I started having defaults nearly every month and some months multiple defaulters. Furthermore Zopa had always invested £10 per loan to spread the risk but noted on my loan book that Zopa were now in some cases loaning £30 of my money per loan increasing my risk. I am currently slowly extracting myself from this type of investment by not reinvesting and withdrawing income each month. To sell my loans incurs a 1% charge which I am currently reluctant to pay so the drip feed approach suits me. I do believe that Zopa’s dash for growth and profit has made them accept more risky loans or that the loan market has got more risky this year. What I can’t forgive Zopa for is deciding to increase my risk exposure by loaning increasing amounts of my money to individual loanees

Thanks to Money Saving Expert for updating its information on Ratesetter ref new products available.

Rules and regulations will change later in 2019.
Do NOT invest more than 10% of your available funds in peer-to-peer products, and don't invest with peer-to-peer platforms at all unless you can bear some risk. Minimum investment with Ratesetter is £10.
Interest rates are higher than ordinary bank and building society savings accounts but you may not get back all you invest.

Personally, I am happy with Ratesetter so far because I receive more interest with Ratesetter than with any of my other bank or building society savings products, and I do not pay tax because it's all in an IF ISA.

Ratesetter (FCA authorised and regulated) tell me they will open 3 new products called Access, Plus and Max (all available within an IF ISA) from 3rd October 2019, open to new and existing investors.

From 3/10/19 new investors may only invest in the new investment products. The new Ratesetter products are simpler to understand and I wonder whether Ratesetter developed them partly to comply with new regulations coming in later this year. They are not bad, but one must pay a 30 day interest penalty to withdraw funds from the Plus product, and a 90 day interest penalty to withdraw funds from the Max product. There is no fee or penalty for withdrawing your money at any time from the Access product. RS says there's no guarantee of how long it may take to withdraw funds, as it depends on another investor agreeing to take over the loan(s) your money is invested in.
Existing investors may still choose to operate their existing investment products. Personally, I like the existing products called Rolling, 1 Year and 5 Year, because with these I can set the system to allow repaid loans and/or interest to be paid into my IF ISA Holding Account and from there I can withdraw my funds with no fee and no penalty, or re-invest these funds if I wish.

I am well aware that peer-to-peer lending is riskier than a bank savings account, and they offer no guarantees that you will get all your money back, but I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.

I have been investing with Ratesetter since 2017 and although it took me some time to get my head around the more complicated options and choices, one can choose to invest with them very simply, and not bother with all that complication.

Personally, I like to know how things work. If I wish, I can log into my Ratesetter account at any time, and see what is happening on a minute-by-minute basis. If I prefer, I can just set it to operate automatically, and just look at it occasionally.

I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.

Robo.cash.
Anyone any experience if this,good or bad?
I was thinking of putting something in, short term, it offers 12% for 30 day investments, which would help while I'm looking for a property.

12% annualised is ~1% for a month.

What do you think the chances of a default, or of not being able to access your money, at the end of the month are? Higher than 1%?

Anything that offers 12% is going to come with associated risk. If you can afford to lose the lot then fair enough, thats the question you have to ask yourself.

One of my former tenants was a Chinese student who managed to take out a substantial loan with RATESETTER just before returning to China.

Ratesetter persist in sending letters chasing the money, which is not very effective since he has emigrated. These people are clearly thick.

The banks don't lend to students temporarily in the UK, however it seems the P2P companies are quite happy to lend to such people, even though most return home after their studies.

I cannot imagine what such careless lending does to their default rate and the net return after defaults.


I advise anyone to look carefully at their default rates and lending controls before lending money to RateSetter.

while its not to say it is not worrying - by the amount of debt chasing/bailiffs programmes on tv it would seem that anybody including the banks can be taken for a ride
You would assume RS as they are on comparison sites and work with companies like Giff Gaff are using industry wide T&C such as minimum 3 years UK resident,over 21,bank account with source of income etc

I wrote a brief blog on this as I found it confusing and wanted to work out what those access fees mapped to in terms of reasonable savings.
"ratesetters-access-plus-and-max-offerings-which-should-i-pick" - on medium
Hopefully of some help to people with same confusion.

Tl;DR,
"Access is best until day 121
Plus is best all the way until day 341
The gain tails off as time goes on. The gain from exceeding the above dates is less than the loss from withdrawing early"

What's unclear with these new RS products, is how borrowers are split between this pot, and the old 5 year pot which is still going.

I've had a Ratesetter IFISA since it started and I recently recommended a friend (warning them they could lose their investment!). A few days later I saw that I'd received £50 bonus in my Everyday (taxable) account, as my friend had invested £1000. I wanted it transferred into my IFISA but a member of staff explained when I phoned that I must request to withdraw the £50 but there was no guarantee how long this might take, as it depended on whether another investor was willing to take over my £50 Everyday investment. What actually happened was that I clicked the button to withdraw it, and it took about 4 hours for my money to go into my holding account. OK it's only £50 but reality was better than expected. I could then have withdrawn the £50.03 (including my few days' interest) entirely, but I chose to invest it into my existing 1 year IFISA product, which still operates as before, even though it's unavailable to new investors.

I personally have derisked out of P2P completely and i recommend everyone else do so. There are so many risks with P2P and the returns do not compensate enough for these risks.


Avoid completely.

Whilst I can understand that, it does beg the question, where else can one make money that yields favourable returns? Bank switching deals get used up, 'high' interest current and regular savings accounts watered-down and/or discontinued, and stocks and shares are very long-term. So bar p2p, what else is there?

With Kind Regards

Corporate bonds are the obvious choice - similar to P2P, comparable returns but better regulated and with no platform risk, and the loss potential is lower too in general.

One does also have to look at what inflation is doing and manage expectations. It has never really been possible to earn rates of CPI+5% without taking considerable risk - other than through the bank incentives mentioned above.

Thanks! I shall have to re-read regarding corporate bonds. My knowledge is limited to what I read about them when opening-up my Vanguard LifeStrategy S&S ISA, of which I believe they form part. Perhaps I should look into how I can invest in them as a specific entity, and read more...

With Kind Regards

Corporate bonds have also been "chased" and yields have fallen to record lows considerably. Sure they are a different type of risk to P2P, but one of the main risks, liquidity risk, is still there in corporate bond funds. They are usually open-ended funds, so when a liquidity issue occurs, bond funds could get hit hard - they are currently holding record low levels of liquidity at present according to an IMF study. Also when the cycle turns (recession), these bond funds will get hit along with equity funds. Arguably the bond funds would create more of a permanent capital loss due to defaults (bond funds can be concentrated) whereas a well diversified stock fund may experience a very large draw-down, but in the long run should recover this back.



Personally for short term savings i would just suck it up with the low interest rates as there are literally no alternatives for a safe yet inflation matching yields.

I just can't force myself to accept a guaranteed loss (with 40% tax and inflation), so I can't put anything substantial in a savings account. Because I already have quite a bit in equities, I have invested in some individual corporate bonds with some risk attached providing an average yield of 6%. But I am also looking for a fund or etf for higher amounts, I would be interested to know what other think of this, which provides a 4.99% return:

https://www.hl.co.uk/shares/shares-search-results/i/ishares-global-high-yield-corp-bond-gbp-hdg

The positive is it is a closed-ended fund which would prevent liquidity issues related to OEICs. However it could still have liquidity issues as it appears to have a market cap of less then £100m only?


I imagine the bid/offer could easily widen by a fair bit and stay wide when there are illiquidity issues so something to bear in mind if/when you plan to sell. I also imagine it would do pretty badly in a global downturn so i am not sure i would invest in this at this stage in the cycle. I prefer safety above all else at this stage with fresh capital.


It is very well diversified however so you would take on very little concentration risk. But a general sell-off in hy bonds could prove to be very harmful for money invested in this.

Less risky (IMHO) than your other bond holdings that you mentioned previously. I'd question the GBP hedging - I spent quite a bit of time researching several currency hedged ETFs and my conclusion is the hedging is costly and doesn't give you the protection you think it does. Best to opt for UK:international in whatever proportion suits your spending needs in the future (I buy a lot of things that are not domestically produced and therefore priced).

The good thing about corporate bond funds is that quite a few were around during the global financial crisis of 2008, so one can load them up in Trustnet and see how they fared for an indication of what is possible. No guide to the future of course.

There are also statistics to be found, if one is so inclined, around default rates and losses suffered by investors under different economic circumstances.