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Post by yorkshireman on Oct 5, 2015 13:53:25 GMT
Interesting to see that AC are perceived to be more risky than SS.
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shimself
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Post by shimself on Oct 5, 2015 13:57:45 GMT
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Post by p2plender on Oct 5, 2015 13:58:16 GMT
Perhaps now is not the time to say this (with the additional work forum members think they have to do to optimize returns), but wow. Members really do like to work hard and squeeze every penny. It's amazing when you compare this effort to the £billions left in zombie accounts. westonkevRSI don't do it myself but used to think the same. There again everyday several million people in the UK will spend at least an hour a day watching 'soaps' or maybe uploading pointless useless pictures or information to their Facebook accounts. So perhaps a few minutes a day shuffling your dollars around for a few extra dollars isn't so bad... In fact seen as I don't use FB or watch soaps I might join em!
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Post by Deleted on Oct 5, 2015 14:16:52 GMT
the danger here is to assume that money in a bank at 0.5% interest is safe while your personal inflation is say 1.5%.
I suspect that even at 12% interest at, let us say, a silly 5% default rate it will be safer at MT/SS than with HSBC.
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Post by webbski9 on Oct 5, 2015 14:30:39 GMT
The problem with this thread is that it doesn't include many p2p companies that we all use.
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webwiz
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Post by webwiz on Oct 5, 2015 14:36:32 GMT
Gulp, I had rated Wellesley as one of the safer platforms, what have I missed? Sorry, with Wellesley the issue is not absolute risk. Rather that I think the provision fund is vulnerable to a downturn and lenders are not paid enough for their risk. Plus Wellseley withdrew from the P2PFA which makes me uncomfortable. I agree. W is a bit safer than some other platforms IMO, but they have chosen to chase growth by spending money on TV advertising instead of paying a higher rate to lenders to compensate for the risk. Consequently their risk:reward ratio is not good. I would rather get treble the interest and accept a slightly higher risk which is mitigated by diversification. This is a reasonable strategy at this stage of the economic cycle as there is every chance of amassing an interest war chest to pay for the inevitable loss(es).
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pikestaff
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Post by pikestaff on Oct 5, 2015 15:40:23 GMT
I thought Wellesley had to withdraw from the P2PFA because they lender leant to a fund which in turn lent to basket of companies. I have not taken much interest as I am prepared to stand a higher risk of default in return for a significantly higher rate.
I think that's half right. AFAICS their p2p offer is direct lending to the underlying companies, but they also borrow through the platform which is unacceptable to the P2PFA. www.altfi.com/article/0561_change_afoot_at_the_p2pfa
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pikestaff
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Post by pikestaff on Oct 5, 2015 15:45:00 GMT
the danger here is to assume that money in a bank at 0.5% interest is safe while your personal inflation is say 1.5%. I suspect that even at 12% interest at, let us say, a silly 5% default rate it will be safer at MT/SS than with HSBC. Another danger is to assume a 5% default rate is silly. The last few years have been pretty benign. Having said that, I don't expect default rates to skyrocket (with the possible exception of property lending if/when the market crashes). I consider a good chunk of the premium to be for liquidity risk.
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Post by brokenbiscuits on Oct 5, 2015 16:53:56 GMT
I can get 5% in a bank account at tsb on £4000. I could get 5% on £2500 at nationwide for a year. What happens when those are full? I could look at the 4% and 3% accounts or I could try p2p. Once the high return bank accounts are filled, the next level of risk is the safest perceived p2p platform. I wouldn't have bothered with p2p if tsb allowed you to save an unlimited amount at next to no risk with a 5% return. I definitely wouldn't be here if my high interest accounts were not at the limit. Saying that, I'm very happy with the level of risk at ratesetter and have branched out into other more risky platforms, although some of that I see as more play money at this stage. I am in exactly the same position. The hassle of setting up multiple bank accounts was probably more than the modest gains were worth, but I have done it now. Even Santander 123 has lost it's sparkle with a 150% fee hike. Have the 123 account with the missus but just keep the minimum in there of joint money.. Where all the bills are paid from too. Personally each pay day I have to bump £500 into both my tsb accounts, pull it out 2 mins later and then pop back and syphon the interest every 2nd of the month. Not too much hassle for £15 or so a month. With access to a pay cheque, £4000 of tsb money and about 2% of the ratesetter money per month without penalties there shouldn't be any surprises that would phase me? I come across like an alien talking about savings etc to most I know.. So I just don't bother. Nice to find like minded savers here... What did we do before the internet??
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james
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Post by james on Oct 5, 2015 17:29:37 GMT
Members really do like to work hard and squeeze every penny. It's amazing when you compare this effort to the £billions left in zombie accounts. A couple of facts that some have found interesting: 1. RBS charges overdraft interest on the balance in the account at 3:30PM on business days, not certain of exact time. They pay interest on the balance at 6:30PM. You can withdraw on an overdraft at 6:31 on a Friday and place it into an account paying interest until at least 3:30PM on the following Monday without paying any interest or charges. If it's an RBS group account using the same time rules it won't get any interest because it'll use the same rule, but not all banks ignore weekends. 2. Banks tend to pay interest on balance in the account at a specific time of day. The time of day varies by bank. You can have money in account 1, move it to account 2 and move it to account 3 later and get interest paid on it by all three banks. If it's HSBC-based you will also get your current account closed when they notice it and your offset mortgage, if you have one, converted to non-offset; they also modified their account T&C to say that interest is payable only for the time the money is in the account. But they are the only bank I know that reacts strongly negatively to this activity. I don't do daily moves, finding P2P investing more profitable and less work.
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webwiz
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Post by webwiz on Oct 5, 2015 17:56:48 GMT
Members really do like to work hard and squeeze every penny. It's amazing when you compare this effort to the £billions left in zombie accounts. westonkevRSWe have been driven to it (and also to taking on extra risk with p2p) by years of pitiful interest rates.
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mikes1531
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Post by mikes1531 on Oct 6, 2015 18:26:27 GMT
Of course I don't consider Zopa to actually be the lowest risk because there is no security for their P2P loans. : Are you forgetting Zopa's Safeguard Fund? Or do you not consider it to provide significant protection?
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james
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Post by james on Oct 6, 2015 19:00:54 GMT
Of course I don't consider Zopa to actually be the lowest risk because there is no security for their P2P loans. : Are you forgetting Zopa's Safeguard Fund? Or do you not consider it to provide significant protection? Security is a completely different degree of protection to the small percentages covered by protection funds, the difference between low single digit levels of protection and 80-100% protection depending on LTV and how accurate it is. Protection funds are very significant, but hugely more limited in the degree of adverse circumstances that they can cover. Compare Zopa to say Wellesley: 1. Property security at decent LTV in markets selected in part for decent liquidity. 2. If there's a shortfall on sale of the security, Wellesley and/or its directors take the first 5% of any losses. 3. Then there's a protection fund behind all of that. The combination of security, 5% own money at risk and protection fund could potentially survive even something as extreme as a 100% default rate without retail investor loss. There are quite a few others out there that provide high levels of protection via a combination of security and buyback or protection funds. Consider say the Just ABL loans available from some platforms that have security and also have Just ABL taking first loss, replacing a defaulted loan in the package with a non-defaulted one so that there is no retail lender loss expected unless Just ABL itself also fails. That's just two examples of how others have structured things using security to provide much greater depth of adverse event protection levels. None of this means that Zopa or the similar RateSetter models are bad, it's just about how much adversity they can deal with in sustained bad times.
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webwiz
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Post by webwiz on Oct 7, 2015 8:54:46 GMT
james: Are you forgetting Zopa's Safeguard Fund? Or do you not consider it to provide significant protection? Security is a completely different degree of protection to the small percentages covered by protection funds, the difference between low single digit levels of protection and 80-100% protection depending on LTV and how accurate it is. Protection funds are very significant, but hugely more limited in the degree of adverse circumstances that they can cover. Compare Zopa to say Wellesley: 1. Property security at decent LTV in markets selected in part for decent liquidity. 2. If there's a shortfall on sale of the security, Wellesley and/or its directors take the first 5% of any losses. 3. Then there's a protection fund behind all of that. The combination of security, 5% own money at risk and protection fund could potentially survive even something as extreme as a 100% default rate without retail investor loss. There are quite a few others out there that provide high levels of protection via a combination of security and buyback or protection funds. Consider say the Just ABL loans available from some platforms that have security and also have Just ABL taking first loss, replacing a defaulted loan in the package with a non-defaulted one so that there is no retail lender loss expected unless Just ABL itself also fails. That's just two examples of how others have structured things using security to provide much greater depth of adverse event protection levels. None of this means that Zopa or the similar RateSetter models are bad, it's just about how much adversity they can deal with in sustained bad times. I don't disagree with any of that, but to be fair in your post of 3.10 you did say: Of course I don't consider Zopa to actually be the lowest risk because there is no security for their P2P loans.
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james
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Post by james on Oct 7, 2015 10:00:19 GMT
I don't disagree with any of that, but to be fair in your post of 3.10 you did say: Of course I don't consider Zopa to actually be the lowest risk because there is no security for their P2P loans. Yes, I did. A useful protection fund and high quality underwriting but no security taken.
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