poppyland
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Post by poppyland on Apr 3, 2016 11:42:01 GMT
I've noticed that lots of SS investors also seem to invest with RS. But RS interest rates are much lower than SS, so what's the attraction. Is RS safer or something?
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stokeloans
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SS vs RS
Apr 3, 2016 11:49:50 GMT
via mobile
Post by stokeloans on Apr 3, 2016 11:49:50 GMT
It's partly the old adage "don't put all your eggs in 1 basket" at least for me
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pom
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Post by pom on Apr 3, 2016 13:33:01 GMT
I've noticed that lots of SS investors also seem to invest with RS. But RS interest rates are much lower than SS, so what's the attraction. Is RS safer or something? Well RS certainly like to think they're safer, and maybe they are, only time will really tell (which is why personally I'm invested in a lot of different platforms) . Mostly though they're different - different loan types, different model...and one of the biggest platforms, so most people diversifying across a larger number of platforms are likely to be with them.
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poppyland
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Post by poppyland on Apr 3, 2016 13:48:16 GMT
Thanks for the replies. It seems that Ratesetter is viewed as a good reliable workhorse of P2P, and most people use it a bit for the sake of diversity. I'll think about it....
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duck
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Post by duck on Apr 3, 2016 14:12:28 GMT
There is also the 'legacy issue', where investors like myself who have been in P2P/P2B for a fair number of years and who started out with zopa then FC & RS. Whilst a number of long term investors move/have moved away from FC & zopa (usually when changes have been made) 'boring old RS' just keeps delivering in the same old way.
It's minimum effort for a fair return delivered at the expected time ...... which in my world is good.
That said I also have a fair amount of money tied up in SS and other higher risk/effort platforms. Yes the rates are higher and in good times (for example when you can sell instantly on the aftermarket) life doesn't get much better .... assuming you can buy loan parts in good loans. There will be down times and you will be wondering 'why?' ..... then the attraction of RS will become more apparent.
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kaya
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Post by kaya on Apr 3, 2016 14:18:45 GMT
One perhaps concerning issue re RS is that you do not know who you are lending to. Should it be worrying that RS make large loans to SME's with our money?
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Post by cpaken on Apr 3, 2016 14:21:05 GMT
It really depends on how much you have to invest. If it's mid x,xxx then RS is probably not the best option unless you go for the 5 year option. There are current accounts out there that offers 5% return and they are much safer than RS.
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Post by GSV3MIaC on Apr 3, 2016 17:29:41 GMT
5% current accounts mostly have limits, requirements, or other forms of hassle. RS 5 year market has been 6%+, no limits, hassle free, although the changes to 'my rate' reinvestment are now a pita.
Boring, safe(ish), boring. A nice baseline to stick exciting (SS), unpredictable (FC), or plain wild-ride (ReBS, Lending Crowd, or whatever) on top of. YMMV.
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mikes1531
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Post by mikes1531 on Apr 3, 2016 21:20:56 GMT
RS 5 year market has been 6%+, no limits, hassle free... I'm not in RS so what I write below is based on what I discovered when I considered investing in RS a few years ago, so it could be out of date. Could someone currently investing in RS please either confirm the situation is unchanged or provide updated info? Anyone considering investing in RS -- and particularly the 5-year market -- needs to make sure they understand how RS calculate the fees for exiting loans before maturity. The fees are significant, so investors need to plan on leaving RS investments until maturity, or expect to pay a penalty for any early withdrawal.
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Post by mrclondon on Apr 3, 2016 21:44:48 GMT
I've noticed that lots of SS investors also seem to invest with RS. But RS interest rates are much lower than SS, so what's the attraction. Is RS safer or something?
The main thing you are missing is that you will suffer capital losses on SS from time to time. The provision fund at SS will help reduce but not eliminate losses, where as the provision fund at RS should, apart from in a financial Armageddon, cover capital losses. Overall returns across a full economic cycle from both (and indeed from most p2p platforms) are are likely to be 6 to 7% pa, but whereas RS will likely be +/- 1% of that band, SS will likely be +/- 3% of that band.
Platform diversification is as important as loan diversification on a given platform. RS is predominately consumer loans and the rest SME business loans, whereas SS is predominately property bridging loans and the rest property development loans. All four of those groups will behave differently at different stages of the economic cycle.
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am
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Post by am on Apr 3, 2016 21:46:26 GMT
RS 5 year market has been 6%+, no limits, hassle free... I'm not in RS so what I write below is based on what I discovered when I considered investing in RS a few years ago, so it could be out of date. Could someone currently investing in RS please either confirm the situation is unchanged or provide updated info? Anyone considering investing in RS -- and particularly the 5-year market -- needs to make sure they understand how RS calculate the fees for exiting loans before maturity. The fees are significant, so investors need to plan on leaving RS investments until maturity, or expect to pay a penalty for any early withdrawal. This has been discussed several times on the RS board. A problem is that the fees are can't be predicted. Another problem is that if you are reinvesting money in the 5 year market, it gets reinvested in small chunks which are then amortised down to below £10 outstanding capable, at which point they are not allowed to be sold. I don't know if anyone has looked into what proportion of you money gets tied up that way. If I recall correctly there have been two changes. The Adminstration Fee is now variable, and is only used to bring the total fee up to a minimum of 0.25% (previously fixed at 0.25%). No charges are now made for withdrawals from the monthly market - but we don't know how the possible requirement for an Assignment Fee is always avoided (if it is always avoided).
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Post by Deleted on Apr 4, 2016 0:03:36 GMT
I've noticed that lots of SS investors also seem to invest with RS. But RS interest rates are much lower than SS, so what's the attraction. Is RS safer or something?
The main thing you are missing is that you will suffer capital losses on SS from time to time. The provision fund at SS will help reduce but not eliminate losses, where as the provision fund at RS should, apart from in a financial Armageddon, cover capital losses. Overall returns across a full economic cycle from both (and indeed from most p2p platforms) are are likely to be 6 to 7% pa, but whereas RS will likely be +/- 1% of that band, SS will likely be +/- 3% of that band.
Platform diversification is as important as loan diversification on a given platform. RS is predominately consumer loans and the rest SME business loans, whereas SS is predominately property bridging loans and the rest property development loans. All four of those groups will behave differently at different stages of the economic cycle.
I fully agree on this. RS has a very very very strong provision fund, which has reliably and will reliably cover any predicted loss (and much more) and is growing steadily. Its lending criteria are also very strict, so the effective default rates are very low (1/5 of FC roughly....). Also the Platform it toally automatised and the lenders don't need to do any due diligence or any effort. I see it as a substitute for a savings account. SS instead is an active investment channel with risky loans and lots of work to be done to manage the currents and avoid the future sure perils to come. So they are two completly different beasts.
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poppyland
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Post by poppyland on Apr 4, 2016 4:55:27 GMT
Thanks for all replies. I'm beginning to see why people use RS - safe, tried and tested, very low chance of loss. SS is perceived as much more risky, which I suppose it is, though to date no one has ever lost a penny of interest or capital. But I do accept that everyone believes this can't last forever.......
Duck's comment about the legacy issue playing a role is interesting. It seems that barring major changes people continue to use platforms which have worked for them in the past. This could potentially be risky if a P2P platform had deteriorated and investors didn't wake up to it quickly enough. That's why this forum is so great - one of the more cautious investors is likely to alert the rest of us.
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Post by meledor on Apr 4, 2016 6:58:30 GMT
One perhaps concerning issue re RS is that you do not know who you are lending to. Should it be worrying that RS make large loans to SME's with our money?
I know nothing of RS but if it is true you do not know who you are lending to then it is not true P2P. Look's like there is a fair degree of intermediation in which case how is it different from a bank?
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Post by brianac on Apr 4, 2016 7:24:56 GMT
I know nothing of RS but if it is true you do not know who you are lending to then it is not true P2P. Look's like there is a fair degree of intermediation in which case how is it different from a bank?
If the brown stuff hits the fan, Government ( taxpayer) won't bail them out. Brian
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