pom
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Post by pom on Jun 10, 2015 12:40:49 GMT
Hi folks Firstly thanks for all your help so far - have been lurking here a month or so and your discussions have saved me from a few newbie errors and led me to platforms I might not have otherwise discovered. The question I'm debating now is just how much to invest. Having had some unexpected windfalls in a short period of time I've been struggling to find homes for it (nice problem I know), and not knowing much about p2p orginally, I initially allocated ~10% to "gamble" with, on the basis that it would't really hurt if I lost all of it. I haven't yet finished investing that, but now that I know a lot more about p2p (and so don't see it as quite so much a blind gamble), and have already diversified across more platforms than I originally expected I've realised that I could easily afford to invest more, although am still a little wary of perhaps getting a bit carried away (maybe it's a novelty that will wear off but so far I can see that adding more could get quite addictive!). But I also still have about 30% I've not fully decided what to do with (haven't yet decided on BTL) So I'm curious as to how you all decided how much to invest in p2p, how strict you are with yourselves etc. If you set an overall limit when you first started investing, have your experiences caused you to significantly change your strategy? And I've seen a couple of mentions in other threads of people having maybe 10 or 20% in p2p - anyone gone higher? I realise individual circumstances, time available to manage, risk appetites based on current need for income etc may well be very different from mine but would be interested to hear any views as I don't personally know anyone in anything like my position. Thanks  |
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Steerpike
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Post by Steerpike on Jun 10, 2015 12:55:07 GMT
Hi folks Firstly thanks for all your help so far - have been lurking here a month or so and your discussions have saved me from a few newbie errors and led me to platforms I might not have otherwise discovered. The question I'm debating now is just how much to invest. Having had some unexpected windfalls in a short period of time I've been struggling to find homes for it (nice problem I know), and not knowing much about p2p orginally, I initially allocated ~10% to "gamble" with, on the basis that it would't really hurt if I lost all of it. I haven't yet finished investing that, but now that I know a lot more about p2p (and so don't see it as quite so much a blind gamble), and have already diversified across more platforms than I originally expected I've realised that I could easily afford to invest more, although am still a little wary of perhaps getting a bit carried away (maybe it's a novelty that will wear off but so far I can see that adding more could get quite addictive!). But I also still have about 30% I've not fully decided what to do with (haven't yet decided on BTL) So I'm curious as to how you all decided how much to invest in p2p, how strict you are with yourselves etc. If you set an overall limit when you first started investing, have your experiences caused you to significantly change your strategy? And I've seen a couple of mentions in other threads of people having maybe 10 or 20% in p2p - anyone gone higher? I realise individual circumstances, time available to manage, risk appetites based on current need for income etc may well be very different from mine but would be interested to hear any views as I don't personally know anyone in anything like my position. Thanks I went through a similar process some years ago and now have just under 30% of my investments (excluding home and pensions) in P2P, across 16 platforms. About half of the P2P total is with 3 platforms that might be considered safer and with lower rates than are available elsewhere. One pitfall is aiming for the highest returns and forgetting about liquidity. I have rather more in 3 to 5 year terms than I am entirely happy with because it restricts the freedom to invest elsewhere.
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registerme
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Post by registerme on Jun 10, 2015 13:19:23 GMT
I was wondering about similar questions pop . fwiw I currently have about 10% of liquid assets in p2p. That might go higher, as I see how things play out (I've only been doing it for a month or so). I'm particularly interested to see how the p2p space fairs when interest rates rise..... |
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pom
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Post by pom on Jun 10, 2015 13:39:32 GMT
I have rather more in 3 to 5 year terms than I am entirely happy with because it restricts the freedom to invest elsewhere. Hmm that's one aspect of liquidity that hadn't occurred to me (had only been thinking of would I need any of the capital in the next 5yrs), guess it's something to bear in mind as I get more invested - thanks!
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adrianc
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Post by adrianc on Jun 10, 2015 14:04:44 GMT
3- and 5-year loans aren't quite as illiquid as they first appear, since you get part of the capital returned every month as well as the interest. Of every £20 60-month part, you'll have had £10 or so back by 30 months. Same for 36mo after 18mo.
They're certainly nowhere near as illiquid as 3- or 5-year fixed term savings products, where you don't see a penny until the end of the term.
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Steerpike
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Post by Steerpike on Jun 10, 2015 14:11:00 GMT
3- and 5-year loans aren't quite as illiquid as they first appear, since you get part of the capital returned every month as well as the interest. Of every £20 60-month part, you'll have had £10 or so back by 30 months. Same for 36mo after 18mo. They're certainly nowhere near as illiquid as 3- or 5-year fixed term savings products, where you don't see a penny until the end of the term. That depends on platform
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rogerbu
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Post by rogerbu on Jun 10, 2015 14:21:47 GMT
If it helps. These are my plans.
Small company shares EIS & SEIS etc have the potential to give great returns but most will fail completely. After tax refunds & reliefs, an individual (S)EIS may return a loss of 80% or a gain of x20. But across a portfolio of about 30 companies, I would hope to achieve an annual return of about 10%. Ultimatley their driver is the UK economy.
I'll give them a risk rating of 20
The general stock market (including Unit & Investment trusts) have a long term return of about 8%, but this can vary from -15% to +25% in any one year -
I'll give it an arbitrary risk rating of 15
Venture Capital Trusts have given me a long term return of 7-9% - mainly from Tax Free dividends along with the initial 30% tax refund. Their range has been 4-12% pa over 15 years. They do not appear to reflect stock market changes very much -
Risk rating 4
P2P are new, but appear to be returning around 8%. Diversification across platforms, asset types and loans is vital. Long term stability is an unknown. Again, their driver is the economy.
I'll give this a risk rating of 5
Cash accounts (Inc Cash Isas) - dreadful returns and in many cases negative returns in real terms, but safe. Say a risk rating of 3
My current situation and plan is:
Cash - Current 13%, target 10%
P2P - Current 20%, target 30%
VCT - Current 13%, target 20%
Shares - Current 52%, target 35%
EIS etc - Current 2%, target 5%
My plan is therefore to continue to gain an overall return of about 8% but with a reduced short term risk from stock market variability but a greater exposure to a risk from the UK Economy failing.
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pom
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Post by pom on Jun 10, 2015 15:19:24 GMT
It all helps, thanks |
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Post by betterthanworking on Jun 10, 2015 15:31:27 GMT
Plans are all well and good, but I often find that opportunities arise or decline unexpectedly, and that has quite a bit of influence on where my money moves.
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hendragon
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Post by hendragon on Jun 10, 2015 15:42:16 GMT
If it is of any help assessing risk, Zopa was the only game in town in 2008 and was little affected by the down turn/credit crunch. I doubt that this would hold true for the p2b sector, or the property lending sector, in the event of a serious downturn in the economy, or property market.(sorry got carried away with the commas)
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Steerpike
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Post by Steerpike on Jun 10, 2015 17:00:33 GMT
Another important factor is investor age.
I hold very few shares outside of pensions as the pensions are mostly shares and I hold a lot of secure cash because I remember the 30% fall in the stock market and the failure of the Icelandic banking system.
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Post by Deleted on Jun 10, 2015 17:30:19 GMT
My own view is you have to construct a tight little spreadsheet to keep an eye on stuff. Partially because it is so hard to stay fully invested you need to manage your "investment efficiency" as well as your "interest rate". In my first 6 months I targeted 3% of my capital into P2P (achieved) and by the end of the first year I will be at 5% (ahead of target) During this time I've focused on selecting the highest quality loans with some very strict principles (if you follow my name you can see the grand list) and I've mainly kept to them. I've used 5 portals which helps spread the money out and I aim to hit 10% interest after defaults by the end of that period. I don't yet intend to drive beyond 5% as there are other great opportunites out there that offer better pickings
There is a learning curve, there is a need for patience (both with the portals and with yourself) and yet you also need to drive yourself forward so by choosing 5 portals you can always push forward with one while the others are gone a bit dry. I've discovered that I have neither the time nor the skill to flip loans so I need good solid investments with sound reasoning behind them. I have made a bunch of mistakes but by keeping the loans spread over 300 or so borrowers, the mistakes are drowned in the volume. So far one default is identified and being worked on. Touch wood.
Once you have chosen a portal, read loads of stuff on this site, then make some small loans and review your tracking system and your notes from this website. Does it make sense? If not start again. Once you have the basics for one portal sorted move on. Roughly I'd look at one portal a month. Yes that sounds slow but some of these loans could last 5 years.
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Post by westonkevRS on Jun 10, 2015 17:43:24 GMT
Excluding my personal employment and illiquid assets, I have around 4% in P2P spread across 4 platforms. My wife has around 20% in one platform (guess who!). I would have more, but I use equity ISAs predominantly, have around 35 building society accounts (terrible investment, but I like to keep tabs on their operations) and ultimately shouldn't have all my eggs in the same basket as employment. But P2P is my fastest-growing investment category. @ westonkevRS |
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jun 10, 2015 18:04:03 GMT
I don't yet intend to drive beyond 5% as there are other great opportunites out there that offer better pickings Hi @bobo, You are very active on this forum (good to see) so I am surprised you have only 3 to 5% invested in P2P. Personally, I have over 50% of my saving investments in P2P. Perhaps I should be reducing my holdings. What are these other great opportunities out there that offer better pickings ?
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Post by Deleted on Jun 10, 2015 19:44:03 GMT
Lots of funds out there offering 15% to 20% year in year out and, of course, easy to fit in ISA or SIPP.
I see P2P as a way of dragging up bank interest at 1.4%
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