Good news for savers

[AtW]

Well you can lend for 3 or 5 years term,

[DimPrawn]

Bloody hell, who would borrow £50 over 5 years?!

Okay, I'll try and make this simple.

Miss Poor needs £5K to pay back some credit/store cards at 25% APR. She wants to pay back the debt at most over 3 years, but of she can pay more off she'll clear the debt in a year.

Mr Rich has £5K to lend and wants 10% return for his troubles.

Miss poor borrows £50 from Mr Rich and the rest in £50 loans from another 100 lenders.

Mr Rich only has £50 exposure to Miss Poor and another 99 borrowers on his books.

It is all managed transparently (you can see the individual borrowers on your loan book), you just set your rate and that's it.

HTH

[shaunbhoy]

Bloody hell, who would borrow £50 over 5 years?!

HTH

[DimPrawn]

I can sell the loans at any time to another lender, hence I can get all my cash back whenever I want.

I'm actually getting closer to 10% APR, with instant cash out whenever I need it.

Can you beat that with SKA?

[TimberWolf]

I can sell the loans at any time to another lender, hence I can get all my cash back whenever I want.

I'm actually getting closer to 10% APR, with instant cash out whenever I need it.

Can you beat that with SKA?

You believe the official inflation figures then? What do you think you're getting back in real terms?

[DimPrawn]

You believe the official inflation figures then? What do you think you're getting back in real terms?

More than any bank account, ISA included, with almost no risk.

My money is keeping pace with inflation easily.

I've actually cracked the million pound savings/investments barrier now.

[TimberWolf]

More than any bank account, ISA included, with almost no risk.

My money is keeping pace with inflation easily.

I've actually cracked the million pound savings/investments barrier now.

You're probably losing more than 10%/year by holding Sterling. GDP is riskier than Zopa borrowers!

Soon, we'll all be millionaires.

[DimPrawn]

You're probably losing more than 10%/year by holding Sterling. GDP is riskier than Zopla borrowers!

Do you mean GBP?

I don't have all my money in Zopa.

My money is split between Gold (bullionvault - priced in dollars), physical gold (sovereigns - priced in dollars), Zopa, equities (from around the world priced in a basket of currencies, mostly hight dividend yielders too), and some in NS&I inflation linked bonds.

[TimberWolf]

Do you mean GBP?

I don't have all my money in Zopa.

My money is split between Gold (bullionvault - priced in dollars), physical gold (sovereigns - priced in dollars), Zopa, equities (from around the world priced in a basket of currencies, mostly hight dividend yielders too), and some in NS&I inflation linked bonds.

Yes, I meant GBP, I keep doing that.

What do you mean priced in dollars, gold is gold priced in whatever you exchange it for surely?

[AtW]

Ok, what DimPrawn describes sounds very much like sub-prime tulipy market.

Let's revisit that:

1) rich lenders lend to people who can't afford to repay but do so in "chunks" thus in theory reducing their exposure - losses are limited

2) rich lenders think they can resell tupily loans to each other thus having liquidity, ie - they can always have money back (rather than in 3 years as per loan - assuming repayment will happen)

Nothing can go wrong? Maybe not on individual basis but if defaults happen in any large numbers then liquidity to resell this tulipy debts would disappear instantly (like it happened with subprime loans few years ago).

Other than that nothing can go wrong with this scheme to make 10% interest when safe investments pay 0%.

HTH