agent69
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Post by agent69 on Jun 9, 2018 15:48:19 GMT
Hi all Im selling out of all my loans as Ill need the cash in a few months. Its tempting to leave the cash sat in AS cash account which is currently earning 4.1% in the QAA account. Id rather it earns 4.1% than 0% in my current account. Is this sensible? Is this money diversified across many loans? What if one of those loans default, will I not be able to get that portion of my money out when I need it? Thanks Diversification in the QAA / 30 day account isn't relevant as you only have notional ownership of the underlying investments. If you cash out you will get all of you money back unless there are truly exceptional circumstances (in which case the whole platform will probably be headed down the pan along with the rest of the P2P industry).
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ilmoro
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Post by ilmoro on Jun 9, 2018 16:08:09 GMT
Why not get the extra 1% & invest in the 30DAA account. It's a sub account of the QAA so the same underlying investment across the loan book (you'll basically end up with a % of all AC loans bar those that were already suspended when QAA was launched) If you know when you will need the cash then just diarise to pull the funds 35-40 days in advance (allowing time to transfer away)
Obviously not advice.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 9, 2018 17:02:01 GMT
Your not guaranteed of course as nothing in life is certain but the the way these accounts work is that they retain a) a significant cash buffer to allow liquidity b) a PF which covers suspended loans to allow short term exit pending the addition of funds from new lenders. They are more akin to funds than straight P2P ie all investors are allocated a % of entire loan book, suspended or not.
Caveat emptor etc
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jlend
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Post by jlend on Jun 9, 2018 21:18:31 GMT
Do we know how much of the PF is not already ring fenced to cover existing problem loans?
I think ring fenced is the term AC have been using when talking about the PFs recently?
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angrysaveruk
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Post by angrysaveruk on Jun 10, 2018 4:36:32 GMT
Hi all Im selling out of all my loans as Ill need the cash in a few months. Its tempting to leave the cash sat in AS cash account which is currently earning 4.1% in the QAA account. Id rather it earns 4.1% than 0% in my current account. Is this sensible? Is this money diversified across many loans? What if one of those loans default, will I not be able to get that portion of my money out when I need it? Thanks Ask yourself how much you will make on the money vs the possibility of not being able to access your money when you need it. P2P investing is risky
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pikestaff
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Post by pikestaff on Jun 10, 2018 6:53:47 GMT
Hi all Im selling out of all my loans as Ill need the cash in a few months. Its tempting to leave the cash sat in AS cash account which is currently earning 4.1% in the QAA account. Id rather it earns 4.1% than 0% in my current account. Is this sensible? Is this money diversified across many loans? What if one of those loans default, will I not be able to get that portion of my money out when I need it? Thanks Ask yourself how much you will make on the money vs the possibility of not being able to access your money when you need it. P2P investing is risky There is no guarantee of gettong your money out when you need it. There is a risk of loss (hopefully covered by the PF) but also, more importantly in my view, a risk of illiquidity. If there is a loss of confidence in p2p and everybody wants out at the same time you could be locked in.
The risk of illiquidity is probably higher in the 30 day account because of the notice requirement.
If it's money you MUST have at a particular time, and there's nowhere else you could get it from, stick it in the bank.
If there are other places you could get the money from (even if expensive or difficult), it's down to your risk appetite, weighing the upside (the extra interest) against the downside in the albeit unlikely event that you have to find alternative funds.
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jayjay
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Post by jayjay on Jun 10, 2018 7:33:42 GMT
The illiquidity risk is the one you should be worried about. AC has attracted a lot of short term money and if there are a lot of people like you who suddenly want their money the QAA may hold good loans all paying perfectly but it may simply not have the cash for you to withdraw your money
It is not clear how the queueing to get money out of the 30 day AA and QAA would work in a protracted cash call. I hope QAA would get priority over 30DAA .
A bunch of cash may be leaving on 1 Jul when the 1% bonus ends. Sooner or later these account will have to have queues to leave and that in itself will cause a loss of confidence.
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jlend
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Post by jlend on Jun 10, 2018 7:44:30 GMT
Ask yourself how much you will make on the money vs the possibility of not being able to access your money when you need it. P2P investing is risky There is no guarantee of gettong your money out when you need it. There is a risk of loss (hopefully covered by the PF) but also, more importantly in my view, a risk of illiquidity. If there is a loss of confidence in p2p and everybody wants out at the same time you could be locked in.
The risk of illiquidity is probably higher in the 30 day account because of the notice requirement.
If it's money you MUST have at a particular time, and there's nowhere else you could get it from, stick it in the bank.
If there are other places you could get the money from (even if expensive or difficult), it's down to your risk appetite, weighing the upside (the extra interest) against the downside in the albeit unlikely event that you have to find alternative funds.
If it is a large amount of money you could also park it in natonal savings as a temporary home which as an alternative to a bank. I have done that in the past. www.nsandi.com
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Post by valerieb on Jun 10, 2018 7:58:08 GMT
I have consistently used the 30 day account to park cash awaiting future use elsewhere - no problems encountered although no guarantees for the future. I too would assume the QAA would have priority if illiquidity were to become an issue.
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jlend
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Post by jlend on Jun 10, 2018 8:02:14 GMT
I have consistently used the 30 day account to park cash awaiting future use elsewhere - no problems encountered although no guarantees for the future. I too would assume the QAA would have priority if illiquidity were to become an issue. I have learnt not to assume anything in p2p 😀
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Post by valerieb on Jun 10, 2018 8:06:35 GMT
I have consistently used the 30 day account to park cash awaiting future use elsewhere - no problems encountered although no guarantees for the future. I too would assume the QAA would have priority if illiquidity were to become an issue. I have learnt not to assume anything in p2p 😀 Ha,ha - wise words indeed!
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agent69
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Post by agent69 on Jun 10, 2018 8:24:50 GMT
nothing in life is certain
Death, taxes, England batting collapse, rain on a bank holiday weekend. The list is endless.
Getting back to the QAA/ 30 day account, they are fine while there is confidence in the platform, but as we have seen elsewhere confidence can disappear very quickly. I wonder what the situation would be for MT if they operated similar accounts.
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puddleduck
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Post by puddleduck on Jun 10, 2018 8:53:20 GMT
I use QAA and 30DayAA as a float for any property purchases I make via auction - I need to complete in cash and within 28 days typically.
I queue 30DayAA withdrawals about 4 days before the auction - if unsucessful in my bidding, I cancel the 30DayAA sell out order and the money stays there til the next month.
This has always worked well for me, and I feel pretty confident I can always access my money, having done so a few times in the past. I am aware this may not always be the case, but it beats sitting in the bank for me.
I personally keep most of my P2P in fairly liquid accounts - if I wasn't liquid, I could end up being on the wrong end of high cost bridging loans to complete within 28 days,
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SteveT
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Post by SteveT on Jun 10, 2018 8:57:58 GMT
Many lenders used to treat Saving Stream / Lendy loans like an instant access savings product, assuming there'd always be an immediate buyer for anything they sold. The transition from "super liquid" to "seriously constipated" was rapid when lender confidence dipped.
The risk of losing money on QAA / 30DAA investments is undoubtedly much lower but "normal market conditions" should never be relied on if rapid access to funds is critical. The downside of marketing a financial product whose primary feature is instant access (with a commensurately lower rate of interest) is that a large proportion of its investors will be spooked at the first hint of this instant access being jeopardised and will seek to withdraw simultaneously. Thus a transition from "normal" to "abnormal" conditions could take just hours and, if/when this happens, I can't see "normality" being restored for a very long time.
The QAA and 30DAA are excellent for parking cash awaiting investment opportunities elsewhere and for lower risk / lower return investments where ease of access is advantageous. But I wouldn't dream of using them just to make a few extra pounds on time-critical funds. As others have recommended, use an FSCS-protected bank account or NS&I product instead.
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angrysaveruk
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Post by angrysaveruk on Jun 10, 2018 9:39:21 GMT
I use QAA and 30DayAA as a float for any property purchases I make via auction - I need to complete in cash and within 28 days typically. I queue 30DayAA withdrawals about 4 days before the auction - if unsucessful in my bidding, I cancel the 30DayAA sell out order and the money stays there til the next month. This has always worked well for me, and I feel pretty confident I can always access my money, having done so a few times in the past. I am aware this may not always be the case, but it beats sitting in the bank for me. I personally keep most of my P2P in fairly liquid accounts - if I wasn't liquid, I could end up being on the wrong end of high cost bridging loans to complete within 28 days, I did a similar thing on a recent cash property purchase on the 30 day access account, mainly to take advantage of the 1% bonus rate - I couldnt resist it and the interest I earned paid for my solicitor  Was a bit of a gamble but that is part of the fun.
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Was a bit of a gamble but that is part of the fun.