Peer-to-peer lending sites: MSE guide discussion

Biggles wrote: »

A valid question but one that doesn't concern me too much yet, as my S&S investments go back decades and my P2P is a relatively recent animal. It won't be much help, but my ratios are roughly:-

S&S............50%
Buy To Let.....42%
Bank a/cs.......3%
P2P.............5%

P2P increases slightly as funds become free

Thanks for replying as well, it helps as well, it is interesting that your P2P has overtook your cash now. My S&S ISA is only into it's 4th year but I am sticking to the plan also. I must factor in property as well and my SIPP, it took me a while to lower my cash a bit which went into the P2P mainly and some top up of my S&S ISA.

I am awaiting fresh loans to appear across the higher rate platforms and I will try and top those up.

Many thanks all helps.

masonic wrote: »

I've set myself a limit of 15% for my P2P investments with about 3% per platform. I'm just about at that level now. I hold about 10% in bonds, 10% in REITs and the rest (65%) is in equities. I do hold some cash, but it is all borrowed from a 0% credit card, so I don't count it.

If we have a decent stockmarket crash, then my plan would be to revert to 90-100% equities.

If I include my properties overall my P2P percentage would be low still, I must sit down and get a rough idea of a percentage break up like this.

Interesting with your cash too that way. I am glad I lowered my cash to put it more to work as I didn't need that much easy access cash and chasing bank accounts for small interest amounts, but I have enough cash still withoit having to sell any investments.

Is your P2P more a medium term investment or would you consider investing in P2P long term along with the stockmarket, regardless of markets going up and down in crashes?

It is still early days for my P2P but I feel I would like to stay invested in it long term along with the stockmarket as P2P develops more towards platforms offering ISA's etc.

It is interesting peoples thoughts as many of us maybe are asking ourselves similar questions

takesyourchances wrote: »

Interesting with your cash too that way. I am glad I lowered my cash to put it more to work as I didn't need that much easy access cash and chasing bank accounts for small interest amounts, but I have enough cash still withoit having to sell any investments.

It took me a few years investing to become comfortable reducing the amount I had in cash savings. I think that's quite common to see cash as a safety net initially, but over the long term holding a lot of cash carries risks too - they are just more subtle.

Is your P2P more a medium term investment or would you consider investing in P2P long term along with the stockmarket, regardless of markets going up and down in crashes?

I see P2P as a bit of an anomaly at the moment. Although there is a lot of discussion about it here and in other places, it is by no means mainstream. Therefore, I think in time it will become more popular and as it does it will become less attractive, with rates falling and the quality of loans falling to meet ever increasing demand. If and when that happens I'll move my money elsewhere.

Having said that, I'm happy to include P2P in its current form in my long term portfolio. As a somewhat defensive asset, alongside my bonds, I would tend to increase or decrease the proportion vs equities depending on the prospects for equities - my current situation represents me being the least optimistic about the future returns from equities that I have ever been. So I could end up with almost nothing in P2P in the future, but would probably increase my holdings again if P2P continues to look attractive.

ARandomMiser wrote: »

While I use peer-to-peer there is one thing to remember - getting your money back isn't always a simple task. To get it out 'free' you often have to wait for the loans to be paid back which could mean a drip feed of money for maybe 5 years (if you are invested in the 5 year market), OR you have to pay fees that could wipe out a significant portion of your gains.

It sounds like you are used to platforms like Ratesetter, which are pretty unattractive compared to the higher rate platforms. I used to invest in Ratesetter before I realised the error of my ways, and fortunately managed to extract the last of my cash with a penalty-free sellout when they tweaked the terms of their provision fund to reduce their risk (at the expense of lenders), paving the way for them to lend less prudently.

Most of my loans are for a 6 month term, so I have a steady stream of capital coming back to me (very few loans I hold are amortising). I am diversified in terms of loan security (not all all secured on properties, but all secured on something - I don't do any unsecured lending anymore) and there are no charges on any of the platforms I use for selling early on the secondary market. That said, in a downturn, I would expect a reduction in loans repaying and low liquidity on platforms' secondary markets. Hence I still hold some other defensive assets that can be called upon.

Broken_Biscuits wrote: »

Personally I'm 2 years into using p2p and the only "loss" I've experienced are the sellout fees at ratesetter. I've made the charges back by getting more return on my investment elsewhere though.

In that case you are doing well. I'm in the process of claiming tax relief on about £1,500 of defaulted loans from the previous tax year, although recoveries are still ongoing and I anticipate most of that capital will be repaid.

masonic wrote: »

[P2P] is by no means mainstream. Therefore, I think in time it will become more popular and as it does it will become less attractive, with rates falling and the quality of loans falling to meet ever increasing demand. If and when that happens I'll move my money elsewhere.

"in time" -- that time passed a while ago. Rates on most of the bigger P2P sites have fallen as they strive to be competitive on the lending side, and realise they only have to beat "typical savings account" on the other side.

The risks have also altered. For example, Funding Circle used to offer SME lending (unsecured, with director's personal guarantee = toilet paper security), and asset secured.

Asset secured loans went the way of the dodo. Property loans came along, secured against -- property. But with a massive unwillingness to ENFORCE that security when it goes wrong, and lenders left wondering what is going on.

Some of the loans have become SO long defaulted, that Funding Circle closed their own forum at very short notice, to suppress the mounting evidence being found by lenders as to the real shenanigans behind the loans, and the mounting calls for a proper response from FC management. Not the occasional platitudes and then, ultimately, silence.

In one case, FC took over a year to finally get things under control, and they did so by just handing over to Administrators. Another "SHORT TERM" loan has been in default longer than the original entire loan term.

So loan quality has already long gone down the toilet, with a worrying number of SME loans making 0-2 payments and "unexpectedly" going out of business. I don't touch them any more, and have sold a lot of those I did hold!

You have very much missed the peak of P2P, if you weren't brave and got in at the beginning.