Q & A

It's a pity you feel like that. I for one want to hear all, good and bad. I suspect I am still at a very naïve stage and I am finding it hard to see how I could lose money here. A true story of how people did would likely cool me down a little, which might not be a bad thing.

I believe this to be an overstatement and one that could damage the platform and the industry.  There are many situations that could cause a loss but most are statistically unlikely and certainly don't warrant the "very easily" tag.  Threats appear to be of three kinds:

Global and economic issues: changes in outlook, interest rates, war, etc.  All of these could reduce the likelihood of a loan being repaid. These could affect all platforms and all loans within a platform.  However, the same applies to shares.  Solution? buy gold - but please don't take that as investment advice ;o)

Platform issues: fraud, insolvency, mismanagement etc.  These could affect all loans within a platform.  When a loans company goes bust, the debtors don't hurry to pay back their loans.  Also, you might lose all your interest as well, Over-reliance on a single platform doesn't increase the risk but it does increase the potential impact of failure.  Solution? Platform diversification.

Loan issues: default, extensions ad nauseam etc. These can result in losses and illiquidity. Solution: loan diversification.

There is a fourth threat, of course - ignorance.  Educate the living daylights out of yourself before taking on a P2P commitment.

To be honest, I have lost far more on stocks and shares than I have on P2P and I've had a lot of blue chips in my time.

In short, I know you were trying to be cautious but "very easily" sounds more like one-arm-bandits than P2P, where independent, professional valuations provide the bedrock of a disclosed position.  I can't normally get that much out of a PLC whose shares I'm about to buy.

I also think the statement  "You could lose money very easily" is hard to reconcile with the actual performance of bridging loans in the p2p sector when looking at AC, TC, W&Co, FS as well as SS and that is just mentioning the platforms I have experience of.   As of today none of those 5 platforms have written off a single penny of a bridging loan. W&Co have one in default going through recovery with no write off expected. SS have had one default with a full recovery, TC & FS haven't had a single bridging loan default. AC has several defaulted, but most should make close to a full capital recovery (albeit most with loss of some or all accrued interest).

That said, one of AC's bridging loans has the potential for a significant capital loss (Kent) by virtue of a planning decision after the loan drew down which could not reasonably have been forseen. There remains some ambiguity whether the written planning decision means what it says, but if it does the value of the security is now much lower than when the loan drew, and a significant capital write off on that loan would be inevitable.

I've said numerous times, on different forum threads that to expect more than 6 to 7% return after capital losses is fantasy. Capital losses will occur.  But short of global armageddon of the financial services industry, providing adequate diversification of loans and platforms is undertaken it is IMO very hard to see how you could lose money easily.

For this to work you need to be well established on that platform. If I take SS as an example and limit myself to £100 per loan, how many loans do I need to be invested in to earn £100 in one or two months? Let us say £5,000 or £10,000 which mean 50 or 100 loans. Hemmmm. Have you seen this many loans on SS?

chielamangus:  I don't think you'd be breaking any Ts&Cs, but I understand your caution.

However, inasmuch as the question(s) were yours, there should be no issue posting it/them here.  Then we can look at it/them and decide whether we'd like to know the answer(s).  If we would, then we could ask SS ourselves.

Is that a reasonable compromise?