Started a Ratesetter vs Zopa experiment

If you set your Ratesetter interest rate at the Zopa 'guaranteed' rate the money will fly out in minutes.   Zopa may take days or longer.

Difficult to class this as an experiment but good luck.

Well it's an experiment to my mother!  All she wants to see is how much return she gets. I've suggested that she does exactly what you've said.  So she'll pitch 5 year money on RS initially at 6% tomorrow and then leave automatic reinvestment set at whatever Zopa's monthly 5-year guaranteed rate is: 5.2% as I write.

Obviously she wants the best return possible, but there's also the incentive payments and how fast money gets recycled.  I have an expectation that Ratesetter will prove better, but you never know.  At least it gives both companies a try and gets her into the wonderful world of P2P.

I think setting the RS reinvestment rate equal to Zopa's rate is a bad idea. At the moment it needlessly disadvantages RS, plus if RS's market rate were to drop significantly below the Zopa rate you'd be in trouble. To do a proper experiment, just set RS to reinvest at "market rate". Still slightly sub-optimal, but minimal maintenance needed.

Edit: Also, how long is your experiment going to run and will you be factoring in the cost of withdrawals? Higher on RS I think, especially if you are in the longer markets.

Well, setting the RS reinvestment rate at 5.2% is a bit of a red herring, as the money will go back in at whatever RS's market rate is if that's higher.  If it's lower than Zopa, a rethink may be in order.  Time will tell.  My instinct is that as mum begins to understand that reinvesting is really extending a 5-year term, she may change her mind and decide just to take income from the investment (which of course means the capital reduced too as it's paid off).  Although I've explained the subtleties of P2P to her, I suspect she still has a "5 year bond" mental map.

As to how long the experiment runs, we'll see.  I've already warned my mother that she should consider the £4k involved locked away for 5 years and not immediately accessible, though as we all know, Zopa do offer a rapid return option for a fee.

Anyway, as of this morning:
Ratesetter - £2k "sold" at 6.1% at 11am.
Zopa - Nil sold.  £2k remains on offer.

You can spread 2k around on FC pretty well, in £20 chunks, but it's a lot more work, and risk, than RS, for not much better return. Take a while to get it invested too.

I'm surprised someone thinks the zopa and rs models are the same. Last time I looked I was still in control of the rates on RS,

"...but the average rate on the Zopa portfolio is 6.05% which is a welcome surprise to both mum and me."

Can we assume 6.05% is before fees, and your actual rate is 5.05%, supplemented to 5.2% by Zopa Rate Promise?

Aha, good point oldgrumpy!  I've been away from Zopa for so long I'd forgotten they don't quote the real rate the borrower gets.

Well, we shall still have to wait and see what the actual return turns out to be, not forgetting that - as a newbie - mum gets the cash incentive on each platform (£25 Ratesetter; £50 Zopa).  Of course, so do I for referring her.