Peer-to-peer lending sites: MSE guide discussion
Comments
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Since I was substituting P2P for UK gilts/bonds you could as easily pick a UK gilt or bond index instead of the FTSE, that being most comparable to where it'd have traditionally gone. Still, since I have quite a bit in a GBP-hedged global tracker ETF at the moment, IGWD, in 2016 its after-hedge and charges GBP performance was +8.07%. Vs 16.75% for the FTSE All Share Index total return before charges. Year to date IGWD is up 8.84% and it'll be 13.2% if that performance continues for the rest of the year.
Substituting a hedged global tracker made the target much easier to beat in 2016 than the FTSE100 you criticised me for using. I don't think my P2P investments anywhere did less well than +8.07% in 2016. I don't have easy access to 2015 or 2014 calendar years or I'd have given them as well, feel free to if you can find them.
I could try but since I had a lot in cash for much of 2016 and also much in European and UK smaller companies it's not very easy to pick an alternative equity comparator based on my shifting much of my money out of the high-CAPE US market. Similar to the FTSE is decent enough, since the cash did less well and the small caps did much better and i didn't have beating equities as my objective. Given where my equity money is currently invested it'll be very challenging for P2P to match it if its performance continues: lots of smaller companies (UK, EU and global), emerging markets and Asia-Pacific and much less in global trackers or cash.
Fair enough, I was concerned about the comparator you suggested, like you say there are different approaches and options. I wasn't suggesting that you were selecting favourably, just not necessarily appropriately.
I do have some concerns over p2p defaults as the economy potentially stagnates, given that substantial investments or even simple diversification requires a fair percentage to go into property related loans, whether bridging or development.
Valuation reports are often questionable and trying to successfully hold a valuer to account is a challenge to say the least.
We've had a very good decade in terms of investors that are prepared to put their money into higher risk asset classes, be that debt, equities, p2p etc
I think some of the defaults on secured property could return less than the capital values quoted, so investors maybe getting back half of their capital. In that case being unlucky on a small number of loans with large investments could be painful and well above the postulated 1-2% default rate.0 -
aroominyork wrote: »The graph shows trends, not each minute-to-minute or even hour-to-hour peak or trough.
I'm not doubting it happened, I'm asking where you can find this information on the website. Is there a list of matched amounts somewhere? I've always found the ratetrends page unsatisfying.0 -
Interesting, it's not an asset class that you'd associate with financial advisers. If it's being used as a bond proxy then a 3-5% allocation is questionable as to whether it is actually worthwhile, particularly with rebalancing.
From my experience in the asset class - particularly in trying to bridge the gap between platforms and advisers - advisers, for the most part, are open to P2P and could see it as a fixed income replacement or even a cash plus product...the real issue comes in placing P2P on a risk scale and conducting suitability. There's definitely more to be done, but there is appetite, especially when yield without volatility is hard to come by.0 -
Jordan_Stodart wrote: »From my experience in the asset class - particularly in trying to bridge the gap between platforms and advisers - advisers, for the most part, are open to P2P and could see it as a fixed income replacement or even a cash plus product...the real issue comes in placing P2P on a risk scale and conducting suitability. There's definitely more to be done, but there is appetite, especially when yield without volatility is hard to come by.
Yes, it's just not an asset class that you'd associate with an ifa, no reason for them to exclude it. Advisers suggest equities and bonds, maybe commodities or possibly structured products. Property, p2p and other more bespoke options I'd tend to associate with them less.
That obviously depends on the nature of the investment, it would be unusual for an ifa to recommend some esoteric equity products as the justification would be difficult to achieve, whereas investments in reits or physical property funds are adviser products potentially.
In that manner I'd think successful p2p would be difficult for an adviser, or at least what I'd consider it to be so. Platforms like Zopa or Ratesetter are straightforward but for me they offer to low a rate of return for the risk you're taking on. Alternatively soem slightly higher risk platforms offer better returns but still put loans into baskets and have higher default rates. I'm only in, and would probably consider, secured loans offering over 10% returns, and even then each loan has to be scrutinised and determined whether acceptable, that would be too much work for an adviser, including the need for diversification and the fact that loans are frequently short term.0 -
The hourly rate of an adviser would be justified my be only on really large investments of which there are not many on the market.
Cautionary tale - I started putting money into moneything about last January. I invested in almost all available loans ( with exception of Luton, Bury, Manchester, Putney and Plymouth.) Now 8 months later I have 15 loans I am in , a couple of loans repaid and 2 loans defaulted which represent about 15% of my capital. So if it will be lost a net return will be about -10%. I do not see how I could have done anything different/ better. It does not mean I am selling off - just for information purposes.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
The hourly rate of an adviser would be justified my be only on really large investments of which there are not many on the market.
Cautionary tale - I started putting money into moneything about last January. I invested in almost all available loans ( with exception of Luton, Bury, Manchester, Putney and Plymouth.) Now 8 months later I have 15 loans I am in , a couple of loans repaid and 2 loans defaulted which represent about 15% of my capital. So if it will be lost a net return will be about -10%. I do not see how I could have done anything different/ better. It does not mean I am selling off - just for information purposes.
I'm fairly sure Moneything have generated more than 20 loans in the last eight months.
They've only had the two defaults I believe so in some ways you are unlucky, as well as more loans spreading across more platforms is one potential solution.
Given all their loans are secured then a total loss is somewhat unlikely, recovery may be full but I'd estimate at least 75% and less than 50% would be quite a shock.0 -
I am sure there were even less as a few that came up were further tranches of loans from previous times and/or a few tranches of the same loan.
Re unlucky - I am not sure about that. Unless one would have rejected those loans on DD grounds one was bound to be in them if one used the platform im the last year and with a low deal flow they were bound to represent a significant proportion of one's investment there - that is what I am getting at. Indeed if the recovery is decent it will still be worth it , probably far from the headline rate though, shall report. Yes I am using a few more platforms , what remains to be seen though is whether all of them are going to have similar default rate ; if they do then diversification is not going to help as having 1 loan defaulted in 10 or 10 in 100 is the same.The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
I'm new to all this forum thing, so not sure if I'm "in the right place". If I'm not, please advise where I'm best able to get the information I'm looking for.
I'm looking to invest in a start-up that is raising funds via Crowdcube.
Has anybody had any experience of this operation?
Thanks and regards,
Bob
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Where are you seeing this? On the rate trends page the highest 5 year that I can see matched is 6.0% on 1st Sept.
Sorry for not replying sooner, I've just noticed this post. I discovered it by pure chance by logging in that day to check my holding balance. I deposited a bit extra and manged to get quite a bit lent at 7.3%.0 -
jamesd- apart of isa, do you use ltd company to lower your tax on investment earnings? what is your daily job tax level?Another night of thankfulness.0
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