Finally decided to invest in Zopa

[chopper]

I have a few grand in Ratesetter, I get somewhere between 3-4% on the rolling market which means it is trivial to get it back out within a month. Higher returns available if you tie the money up for a longer period. Ratesetter seems to have less risk of bad debts than other P2P lenders.

[northernladuk]

Don't you pay a transaction fee as well though? Selling loan parts to fairly standard loans takes forever and with the length of some of the loans you aren't going to be able to clear up quickly at all. Although it looks good to pop in and out off IMO it's a very long term solution and will cost quite a bit for someone in your position that needs to get out quick. It's not as viable as an initial look at it would suggest IMO.

[GJABS]

One thing to keep in mind though .... it's easy to loan the money out but a PITA to get it back. For example lots of my loans are 36 - 54 months in duration. So to withdraw the full amount you will need to wait several years ( during which time the money won't be earning anything ).

Slightly off-topic, but I had some company money in Fundingcircle that I wanted to get back out - but it was tied up in a 24-month loan.
I tried putting the loan on the FundingCircle market to try to sell the loan, but after a few days there were no takers - presumably because the loan sales market is rather illiquid.
So to resolve the problem I opened a personal account with FundingCircle, and used that to buy the loan, thus freeing up the cash to my company.

It occurs to me that by using this method it is possible to artificially manufacture profits and losses made by your company by manually setting the sale price of the loan. Which is probably illegal. But what I did was not, I'm sure, illegal, because I put the loan on the market at the market price for it.

[blackeye]

I 'invest' roughly £20k per year in Zopa easy access - all of the money I will owe in personal divi taxes when the self assessment is due. It's the only way to ensure the money keeps up with inflation these days.

As Santander 123 has dropped its rates to 1.5% (-ve 1.5% below inflation), it's going to be boom time for peer to peer lending.

Tracker funds are ok too, but slightly risky for holding money for less than a year. It's plausible that it could fall by 10-15% in a year, just before you need to sell.

[tomtomagain]

I put 1k in to funding circle 3 years ago as an experiment.

So far it's returned about 6.6% per year. After fees and bad debts. I am not entirely sold on the idea, I don't think I would tie up a significant amount of capital in it.

I originally "loaned" the money myself by looking at the companies requesting the loans then putting in a bid. But that was time consuming and it's easy to end up with lots of biases. So I switched to their "auto-loan" facility. As the loan-parts are paid back each month, the money is then re-lent automatically.

One thing to keep in mind though .... it's easy to loan the money out but a PITA to get it back. For example lots of my loans are 36 - 54 months in duration. So to withdraw the full amount you will need to wait several years ( during which time the money won't be earning anything ).

[DannyF1966]

I'm making an average of 4.8% at the moment on it. I put in £500 in August 2016 and another £500 in Feb 2016. Currently got 125 borrowers, no defaulters at present but I have two people in arrears, totalling 97p. I very rarely look at it to be honest, and it was only seeing your post here that made me have a look. I've been spending money on the house this year but now that's pretty much out of the way I'll probably trickle a few hundred a month into it and see how it goes.

[BlasterBates]

Not sure their UI is too great. You have to select which investment type new money loaded should go to, and your default type when moving money. Then when you move or load money it goes to that pot.

Rather than "I'd like to move this money to this product" you have to set your default product, then select to move some money.

Cumbersome, unless I'm missing the point as a noob.


Sounds like they also have a glut of lenders. If I understand this rightly it will take 2 weeks before they find people wanting my cash (I know they split it into microloans to reduce risk)

That glut of cash is a key reason for getting a lower return, that you might expect.

Everyone is piling in so a part of your investment is just earning nothing waiting for a borrower.

[d000hg]

Not sure their UI is too great. You have to select which investment type new money loaded should go to, and your default type when moving money. Then when you move or load money it goes to that pot.

Rather than "I'd like to move this money to this product" you have to set your default product, then select to move some money.

Cumbersome, unless I'm missing the point as a noob.

Access is currently lending out an average £60,041.25 per day with £2,758,802.04 queued.

Sounds like they also have a glut of lenders. If I understand this rightly it will take 2 weeks before they find people wanting my cash (I know they split it into microloans to reduce risk)

[d000hg]

I mean 3-4% is also great

My thinking exactly. If 3% is your 'safe' figure it's better than any cash ISA or saving account.

[BlasterBates]

I've looked into these. The way I see it 20% of the loans go bad, either delayed or completely bad, and with all the charges, money floating around waiting to be parked in a loan etc on average you make 3-4%.

That was just a very rough back of the envelope calculation having read up in the internet on people's experience and was not restricted to Zopa.

I might be completely wrong and if someone is making 7% I would like to hear about it

My feeling is the right way to go about this is put in a small amount and try it out. I mean 3-4% is also great

[d000hg]

Been meaning to for a while and in advance of viewing it as an ISA vehicle from next year I figured I'd best give it a whirl.

Dropped a grand each in the lowest and highest return categories to get a feel for it; enough that it isn't pocket change I don't care about, little enough it doesn't actually matter if it goes titsup.

What categories of lenders do other people here prefer and have you had many defaults? Is their NOT A GUARANTEE default protection fund on the lower classes of risk worth anything?