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Post by jamespond on Sept 14, 2015 18:04:45 GMT
I know there's a large "piece of string" component to this question, but please excuse me if it's silly or obvious – I've searched past posts as best I can... I've got a low six-figure sum sitting in instant access savings accounts doing nothing, because I'll need to access it with under a month's notice when an investment opportunity (property development) comes along. From doing some reading around, I know that certain P2P services have secondary markets, making it possible to exit loans early. So the question is...how feasible would it be to sell off one's entire loan book and have the cash back in the bank within a month? Assumptions: - Some kind of "auto-sell" functionality would need to be present on all platforms diversified across, to cut down on hassle.
- Wouldn't be concerned about incurring fees or maximising rates, as the alternative is 0.75% in a savings account.
It seems like it'd be too good to be true so I'm reasonably sure the answer is "can't be done", but thought it was worth checking. Many thanks in advance for any guidance. |
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Post by batchoy on Sept 14, 2015 18:35:59 GMT
Its not just an issue of the secondary market but also the state of the loans that you hold which will control and withdrawal from a platform. I am now some 10 months into an active withdrawal from the AC platform, not just letting investments run down but actively selling them, however the suspension of trading in various loans has prevented a full withdrawal and probably will continue to do so for months if not years to come.
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bigfoot12
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Post by bigfoot12 on Sept 14, 2015 18:40:38 GMT
There are some investments with a month time frame, you might want to consider one of those, such as invoice discounting. Market Invoice and Platform Black are two of the biggest, but I've not invested in either. There are other short term accounts out there too.
If you invest in a loan that has some sort of credit event you might be prevented from selling it at all. Different platforms have different standards on how much of an event is needed before a loan is suspended.
As for liquidity it does seem to go in short cycles depending on how much new stuff is being issued and whether or not a large high profile loan on the platform has just got into difficulty. If you were unlucky you might find an exit very slow. Some platforms allow selling at a discount so you might be able to exit those more easily, but at a cost.
Edit: Crossed with Batchoy, I am in a similar position with Funding Cirlce. Without offering things at much of a discount I have sold about 75% in six months, some I won't be able to sell and some I am going to have to discount. Selling on FC is very painful if you do it manually. Offers have to be renewed every 14 days.
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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 Sept 14, 2015 18:43:21 GMT
I know there's a large "piece of string" component to this question, but please excuse me if it's silly or obvious – I've searched past posts as best I can... I've got a low six-figure sum sitting in instant access savings accounts doing nothing, because I'll need to access it with under a month's notice when an investment opportunity (property development) comes along. From doing some reading around, I know that certain P2P services have secondary markets, making it possible to exit loans early. So the question is...how feasible would it be to sell off one's entire loan book and have the cash back in the bank within a month? Assumptions: - Some kind of "auto-sell" functionality would need to be present on all platforms diversified across, to cut down on hassle.
- Wouldn't be concerned about incurring fees or maximising rates, as the alternative is 0.75% in a savings account.
It seems like it'd be too good to be true so I'm reasonably sure the answer is "can't be done", but thought it was worth checking. Many thanks in advance for any guidance. Doable but possibly would need a bit more hands on than you want to commit to. I would consider SS which is currently highly liquid (250k cleared in under a day) though it has no auto tools its a fairly simple process to sell loans. If you invest in new loans then its relatively simple with the new prefunding though demand is quite high so not so easy to invest a large sum (couple of big loans due very shortly which will help). Less likely to have cash stuck in defaulted loans as interest is retained at drawdown so a recent 12 month loan would have a significant time span before any potential issues AC is also reasonably liquid for selling and has automation to assist, plus it has an account paying 3.75% for uninvested funds. Again issue would be investing the cash in first place, though in theory should be some opportunities over coming weeks. FC has full automation available and if your were willing to sell down at a discount would probably be fairly liquid. Zopa similiar and funds protected by Safeguard PF against default Wellesley has a 30day access account paying ~3.5% which is pretty liquid, their longer terms also offer the chance of cashing out early with penalty (subject to demand for your loans but generally thats good) Ratesetter offers monthly investments with a provison fund. You can set it to reinvest repayments until you want the cash and then switch it off when you need it Those are a few of the obvious ones. The risk with all of course is that a credit event will prevent the liquidation of part of your holdings but there are platforms included above which mitigate this to some extant Edit: forgot Fruitful which is supposed to offer easyish access (again subject to demand for your loans) with minimal penalty. Quite small & an unknown quantity when it comes to managing loan issues, probably the closest to a standard savings account in operation... if any paid 6%, that is, with PF (invite only currently)
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Post by ablrateandy on Sept 15, 2015 16:48:29 GMT
In my experience anything offered on our secondary market at 100p in the pound goes very quickly. We aren't the biggest guys but I reckon you could sell 5 blocks of twenty grand in a couple of weeks at no loss assuming no credit events (none so far!!)
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SteveT
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Post by SteveT on Sept 15, 2015 16:58:17 GMT
In my experience anything offered on our secondary market at 100p in the pound goes very quickly. We aren't the biggest guys but I reckon you could sell 5 blocks of twenty grand in a couple of weeks at no loss assuming no credit events (none so far!!) I'm sure ablrateandy will be delighted to give you 1% Cashback too on the current 11% "energy from waste" loan (for investments over £1k), which now looks quite attractive (IMHO)
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am
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Post by am on Sept 15, 2015 17:25:18 GMT
RateSetter has a one month product (rate fixed for the loan, but variable between roughly 3% and 4%). Wellesley (IIRC) has a 30 day notice account (hand in your notice immediately) paying something similar. You're not guaranteed to get your money out of RS (and I've seen the actual loan terms vary from 3 to 7 weeks, so even if the market doesn't break there's a risk of tieing up your money for longer than you intended). I don't know off hand what guarantees you have with Wellesley.
I was told that one of the other companies (Lending Club?) has a similar account.
The best "instant access" rate I know is from Virgin Money (3 withdrawals allowed per year, IIRC, but if you intend just the one withdrawal of the whole amount that's not a problem). Premium bonds are better, but not for ultra-short term investments because of dead time, and there's a £40,000 limit. (If you stuck £40,000 in now and withdrew it at the start of November, you could expect a return £25 or £50, but the actual return could be anything from £0 upwards. My monthly returns have been £25, £25, £50, £75 and £100, which puts me ahead of the game. According to the gambler's fallacy I'm due a £0 monthly return.)
This is not advice. Do your own research. (I.e. read the terms and conditions on the accounts and understand them.)
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webwiz
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Post by webwiz on Sept 15, 2015 18:07:12 GMT
You can now hold up to £50K in premium bonds.
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Post by jamespond on Sept 15, 2015 18:21:50 GMT
Wow, thank you so much everyone for the great replies - what a brilliant community!
I assumed this would be a non-starter but it actually seems like there are a lot of potentially viable options to investigate – all involving some degree of effort and risk of course, but that's to be expected. It'll take a while for me to go through all the suggestions in detail and assess them further, but I'll post the outcome here once I have done in case someone wants to achieve something similar in the future.
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registerme
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Post by registerme on Sept 15, 2015 18:25:47 GMT
One thing that nobody has mentioned, and should be considered, is the "state of the market". Yes, SavingStream, FC and others are, at the moment, highly liquid. But, if something happens, for instance a major spike in interest rates or a major platform failure, it's possible that lots of people will head for the door at the same time. In such a situation forced sellers are going to take some pain. aka "liquidity risk". Think 2008 and regular (and not so regular) banks.... You'll have to factor in how likely something like this is to happen, and how likely it is to happen when you need to access your funds, and what the impact would be were you not to be able to access (all of) your funds. This can be... challenging  . |
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adrianc
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Post by adrianc on Sept 15, 2015 18:31:30 GMT
Right now, there's £700k+ on SS's secondary, because of a very big new loan this morning. It's already gone down £400k today, so there's still liquidity there. At 12%, I'd be seriously thinking of putting a good chunk that way.
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am
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Post by am on Sept 15, 2015 19:05:52 GMT
You can now hold up to £50K in premium bonds. Thanks. They don't seem to have told me when they increased it, and I've got money that will need a temporary home when I extract it from my lowest paying building society account.
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am
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Post by am on Sept 15, 2015 19:11:40 GMT
Right now, there's £700k+ on SS's secondary, because of a very big new loan this morning. It's already gone down £400k today, so there's still liquidity there. At 12%, I'd be seriously thinking of putting a good chunk that way. A problem with SS would be getting the money in - when PBL58 has filled it might be a while before anything else with sufficient capacity comes along - the two Hackney loans are too small and will get soaked up by prefunding. Another problem with PBL58 is that it's so large that everyone who wants any can get some, so it might be harder to sell in a month's time than the general run of loans.
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adrianc
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Post by adrianc on Sept 15, 2015 20:21:05 GMT
Right now, there's £700k+ on SS's secondary, because of a very big new loan this morning. It's already gone down £400k today, so there's still liquidity there. At 12%, I'd be seriously thinking of putting a good chunk that way. A problem with SS would be getting the money in - when PBL58 has filled it might be a while before anything else with sufficient capacity comes along - the two Hackney loans are too small and will get soaked up by prefunding. Another problem with PBL58 is that it's so large that everyone who wants any can get some, so it might be harder to sell in a month's time than the general run of loans. Maybe, maybe not. There's a few more big loans in the pipeline, and a few due or overdue for repayment. I think the next few weeks are going to see more supply than of late, but what that does to the SM in the medium term... well, if I had THAT good a crystal ball...!
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markr
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Post by markr on Sept 15, 2015 21:43:30 GMT
Something to remember is that there's always a risk, maybe very tiny but a risk, that your return of capital will be delayed. This is especially true if you are relying on a secondary market to liquidate your loans, but even monthly products like RS and Wellesley come with a caveat that return of funds depends on having other investors to take the loans. You need to consider whether the month's interest is worth the risk of losing your property investment. I would say if you need to have the money available on a given day or else the deal is off, I'd be nervous, but if there's a bit of leeway on the timing of your next investment, you should be fine.
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