SIPP Experience

Hi Colin

I invest on RebS via a SIPP I set-up and administered by Greyfrairs Asset Management LLP, whom I was referred to by SIPPclub.  The SIPP itself was relatively easy to set-up, but there was a 1-2 month wait for transfers out of some of my previous SIPPs which I had used to invest in equities.  I'm charged a flat fee of £1,250 for the SIPP and you can invest in almost anything that qualifies and meets HMRC requirements (ranging from equities, P2P loan and property (although separate fees are chargeable by the SIPP administrator to cover the costs of the latter).  At the time of setting up my Greyfrairs SIPP 1-2 years ago, the offering by Greyfrairs was by the cheapest and best value.  However, you probably need to invest a minimum of £75k for the flat fee of £1,250/pa to make sense.

My sole use of the SIPP to date has been some of my pension funds on to RebS (as it one of few platforms that are SIPP eligible).  Greyfrairs set-up my SIPP account with RebS on my behalf and it is operated directly by me just like any other investor account (I already invested on their platform outside my SIPP), with the exception that cash withdrawals are directed to my SIPP bank account.  My net return on my investments on RebS is running at just over 17%pa over the 1-2 years I've been investing.  However, my true return on cash is probably around 10-12%pa because of the time it took to get fully invested and the cash drag in the interim.  How that I'm approaching full investment, I'm expecting a steady net return after all fees and bad debt of about 15%pa +/- 1%.  I believe this to be readily achievable without to much risk.  In my experience, the biggest risk is credit concentration, ie investing over to little loans and trying to be too selective in loans.  I quickly concluded that trying to select good borrowers at the expense of concentrating investment in a smaller number of borrowers adds a lot more risk than using a scatter gun so to maximise diversity (but avoiding loans which appear to be complete donkeys).  However, this can mean it will take a long time (more than a year) to build up a reasonably diverse portfolio unless you buy on the secondary market and give some of the value away to sellers who sell at a premium (although premiums in the SM have been falling).  Overall, my experience has been very positive and my P2P SIPP investments have easily consistently outperformed my other pension investments

In a nutshell, if you have £75k+ that you are looking to invest on P2P platforms and other alternative investments, I think it is very attractive and I certainty hadn't had any regrets.

I hope that helps.

Nick