Post by vaelin on Feb 24, 2018 16:08:38 GMT
Edit: I didn't start this thread. For some reason the top post has disappeared.
Zopa was the first P2P lending platform. It was founded in 2005 and survived the 2008 economic meltdown.
Assetz Capital and other regulated P2P platforms have to stress test their loan books according to the 2016 Bank of England stress test. You can see the projected losses according to those tests here: www.assetzcapital.co.uk/key-investing-information/defaults-and-losses/
The provision fund covers 3x projected losses, so if an economic crisis that mimics the BoE stress test were to occur, you would not incur losses.
There is some discussion on the 4thway.co.uk regarding the quality of BoE stress testing. They believe that the BoE stress test does not really go far enough. They have developed their own stress test which mimics the 2008 crisis and assumes a fall in property prices of 55%. These types of recessions are supposedly rare, but it is plausible that they could become more common. You can read about their stress test here: www.4thway.co.uk/guides/the-safest-peer-to-peer-lending-websites/
According to their stress test, you would lose about 11-12% in the value of your AC portfolio were that to happen, which would be recovered in less than 2 years.
Everyone needs to assess their own risk tolerance, but in my view that is pretty good. If you were holding stocks through 2008, you would have dreamt of only making 12% losses. Any investment so far above the base rate is bound to have downside risk of at least 10%.
If you're anticipating a significantly worse economic crisis than that, it is probably worthwhile investing in arable land.
Zopa was the first P2P lending platform. It was founded in 2005 and survived the 2008 economic meltdown.
Assetz Capital and other regulated P2P platforms have to stress test their loan books according to the 2016 Bank of England stress test. You can see the projected losses according to those tests here: www.assetzcapital.co.uk/key-investing-information/defaults-and-losses/
The provision fund covers 3x projected losses, so if an economic crisis that mimics the BoE stress test were to occur, you would not incur losses.
There is some discussion on the 4thway.co.uk regarding the quality of BoE stress testing. They believe that the BoE stress test does not really go far enough. They have developed their own stress test which mimics the 2008 crisis and assumes a fall in property prices of 55%. These types of recessions are supposedly rare, but it is plausible that they could become more common. You can read about their stress test here: www.4thway.co.uk/guides/the-safest-peer-to-peer-lending-websites/
According to their stress test, you would lose about 11-12% in the value of your AC portfolio were that to happen, which would be recovered in less than 2 years.
Everyone needs to assess their own risk tolerance, but in my view that is pretty good. If you were holding stocks through 2008, you would have dreamt of only making 12% losses. Any investment so far above the base rate is bound to have downside risk of at least 10%.
If you're anticipating a significantly worse economic crisis than that, it is probably worthwhile investing in arable land.
