Does Zopa offers better return than banks?

Not sure your flogging a dead horse on this quite legitimate and interesting question.

In our case we are happy with the 5 year on Zopa and would only sell out if absolutely necessary. We are mostly getting good 4-5% rates so far but we re-investing in the ISA side. That said Mrs Aju's ISA does seem to be posting a 3.28%, mine is better at about 4.5% but I have a 0.5% bonus. We have taken quite a hit on our loans of late in terms of defaults but looking at our returns levels it does look quite stable. The end of the year will hopefully give a better picture but we have muddied the water on the ISA with our increase in investment from each of us transferreing in external ISA's.

I would say I have recently discover RS and it seems a slightly better prospect that Zopa where we are again working on a 5 year program rather than the shorter terms. We are moving Invest stuff out of Zopa into Mrs Aju RS primarily as there are tax advantages for me to move my invest to Mrs Aju. no0t sure what we will do when the ISA period is up though, whether we will keep in Zopa or spread some of it to RS ISA still thinking about that one, the rates seem better and the PF is very inviting but we'll see. By then also we make have an answer on that dreaded Brexit conundrum.

Sorry I cannot offer a better answer I'm sure there will be few who have a lot worse scenarios than us and I don't consider ours to be that bad of a situation. There must be some on here who have pulled out of Zopa in those timescales.

Edit: For reference on our 5Y the Xirr for this year so far from Apr 2018-Feb2019, (1) is me (2) is Mrs Aju. Mine has 0.5% early adopter support.

Invest(1) 5.08%
Invest(2) 4.72%
ISA(1) 4.85%
ISA(2) 3.82%

Mrs Aju has considerably more SG cover than mine but apart from that they seem consistent although Mrs Aju does have less in her ISA than me and therefore less £10 loan spread but that's still being tested.

If you are getting 4% on Zopa that's 8% over two years take off 1% and that's 7% divide by 2 you get 3.5%. But how much extra will the rate adjustment be? Maybe nothing. Selling after 5 years Zopa would give 3.8% with no rate adjustment fee. Letting it run down you save the 1% (and any rate adjustment) and continue getting interest on the dwindling amount, but you might have a long wait to get your money back. And at least some lenders are reporting Zopa rates well under 4%. So it all rather depends... 

I've never done this, if I did would I get this notification before I said yes and have an option to back out?.

I've tried a lot of options on Zopa but in the past some have not had an "Are you sure you want to do this" approach - perhaps it's more user friendly now - it was years ago when I experimented with all the options on zopa and I know a lot of the systems have changed sometimes on a daily basis. The latest interface I am getting is not very intuitive I feel but its probably just because it's new.

These days I struggle to remember what I am doing sometimes it's so damned slooooooow! and so many damned levels - whatever happened to User I/F standards. I guess they are no longer relevant in the toys (tabs/phones) market!. 

Over the last two years I've averaged about 4.3%/annum on both my Investment and ISA accounts, so 4%/annum seems a reasonable assumption.

Oh I see what you mean now you were just averaging for want of a better term.

At that time, I notice the fee was slightly higher, not sure the exact amount I was trying to sell, it was a fire sale to me, it still took many days. I could not remember the exact amount I was trying to sell, because there were a few times some the sale request didn't at all nor sell much less than the amount I wanted.

I felt like it's better to sell it quick and fix it later rather than telling zopa about it then later the loan cannot be sold. 9% rate adjustment fee does not make sense to me and there were reported issues zopa selling loans too slowly back in 2017, that's the reason I complained. I can't remember Zopa raised borrowers by 9% rate for the same risk market.

If I was trying to sell Zopa Classic and noticed the high fees like 10%, I would definitely ring up zopa about it and not pressing the sell button. If I remember correctly, rate adjustment fees varied between loans. Some attract almost no fees. I even lowered the amount I requested for sale to avoid higher rate fees, but I didn't notice it was as high as 9% until I saw the march 18 statement.

Having read through this thread I was a little surprised by some of the Market Rate Adjustment (MRA) fees being mentioned, so I thought I would investigate my own account.

Firstly, in case it's not clear from the thread, you can get an estimate of the MRA fees you are likely to pay without actually initiating a sell. If you go through the selling process you get to a page where you can enter the amount you want to sell and hit the "Get Estimate" button for likely costs. You can then cancel, and try a different amount if you wish. I found that I could sell a large proportion of my loans with a predicted zero MRA fee.

I'm currently withdrawing from Zopa after a 1 year trial. I'm doing this by switching off reinvestments and withdrawing capital and interest as they come in as I don't need immediate access to my cash and don't want to pay the quick withdraw fee. It's not that I had any particular problems with Zopa, it's just that I have achieved better returns with other platforms with what I perceive to be a similar risk. Though, ultimately, this largely comes down to a gut feel, as quantifying risk in a way that can be compared across platforms is like trying to nail fog.

All of my loans were in Plus as the stats indicated that it would return a higher rate than Core after adjusting for forecast defaults. I felt that I shouldn't trust them with my cash if I couldn't believe their stats. I was obviously swimming against the tide here as most posters on here seem to prefer Core.

My XIRR was 5.53% when I switched relending off after exactly one year of investing. 3 weeks later it has risen to 5.74%. My whole investment was deposited on day 1 (no additions or withdrawals of capital through the year).

If I wanted to seem sell my whole portfolio today it would attempt to sell 96.2% of the portfolio for a total fee of 1.023% (1% quick withdraw fee plus 0.023% MRA fee). Leaving 3.8% of my portfolio to the mercy of Zopa's recovery team.

So, in answer to the OP, if I sold out quickly today I would have made 0.917% (5.74 - 1.023 - 3.8), which could rise to up to 4.7% depending on recoveries. So, whether or not my 1 year experiment will end up more profitable than having cash in a bank will also depend on recoveries. Having said that, comparing any IFISA account with that of an FSCS protected bank account MUST BE VERY HEAVILY COLOURED BY THE PROTECTION OFFERED BY THE FSCS.