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Post by stevefindlay on Jun 5, 2016 20:27:27 GMT
Ok. A few more. Can these "receivables" be treated as regular P2P loans as regards tax treatment. I.e. Interest, bad debt and recoveries with the new tax rules for offsetting bad debt for individuals? Is there a tax report on the site? Does BM ever buy sell at a premium or discount - I.e. Do any transactions give rise to (reportable) capital gains/losses? Is there the usual protections around changing the receiving account I.e is it difficult to change the account to withdraw to? Or do you just change the account number and sort code and press save? paul123 - thank you for the detailed questions. I've responded below, with some additional background. Please note *none of this should be treated as advice, and we (BondMason) accept no liability with respect to your own personal tax matters etc, please see our T&Cs.* However, in the interests in trying to be helpful: Background: Please note, 15-20% of P2P Platforms use Receivables (e.g. LendInvest, MarketInvoice, etc), so the issue of the correct tax treatment for Receivables is fairly common across the market. Nonetheless, there isn't clarity, so we wrote to HMRC at the end of last year to confirm these exact issues. It took them some time to respond, but we received a response last month. It is also worth noting that HMRC are continuing to evolve their rules, so if you are reading this post in the future, it is worth reviewing latest guidance etc. Right, on to the tax questions: - Bad debt and recoveries: you should be able to offset these as per standard P2P agreements - Greenwood2 [I've added your question here]: structuring the admin fee to make it deductible: sadly, we've explored this and not found a way for it to be deductible as yet. Although we will continue to explore this (as we feel it should be), and please see my point regarding Limited companies below... - Tax report: we provide annual statements for use in your tax return - (Reportable) gain or losses arising from trading on the BM platform: no, this doesn't happen in the ordinary course. Only if a loan is in default, and a specific arrangement is made amongst 2 clients of BM to sell & purchase at a loss. But we don't expect this to be a regular occurrence. On the flip side, we don't enable clients to sell at a Premium to one another (i.e. make a profit from buying & selling positions on BM). Further on tax: a number of our clients invest through Limited companies; this can provide certain benefits. Also, we can also accept SSAS funds (via a SSAS administrator) Separately, paul123, you've asked about withdrawals and the security of funds. We have a number of protections with respect to this process. But I'm sure you'll understand that we don't want to share those processes on a public forum! Very happy to answer specific questions in this regard in a call or email.
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Post by propman on Jun 6, 2016 7:25:31 GMT
You forgot in #2 that there is severe platform risk as risk-averse investors face losses (at least in the short term). In RS's case the whole platform is closed down (resolution event).
the upside is reduced volatility. Many investors value this and so require a lower IRR.
- PM
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Post by stevefindlay on Jun 6, 2016 10:50:10 GMT
You forgot in #2 that there is severe platform risk as risk-averse investors face losses (at least in the short term). In RS's case the whole platform is closed down (resolution event).
the upside is reduced volatility. Many investors value this and so require a lower IRR.
- PM
propman Agreed! Worst case #2 can be very bad if it results in P2P platform failure! Agreed again: the price of lower volatility is (usually) lower return. However, when we compare our returns the listed P2P funds, we actually deliver a much higher Sharpe ratio (return adjusted for volatility). So you don't always have to sacrifice IRR for reduced volatility. A protection fund tends to provides reduced volatility if: (i) the loss ratio (default) stays within the parameters set for the provision fund; or (ii) an investors' holdings aren't sufficiently well diversified to negate the impact of the (expected) loss ratio in returns.
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Post by stevefindlay on Jun 6, 2016 12:06:43 GMT
I don't really believe in security by obscurity. To become a replacement for multiple other platforms, BM will need to be at least a secure as the best. paul123 We discuss our approach to protection and security on website in a number of places, for example our FAQs page . However, your question was specifically around our process for changing and validating a Client's bank account details - I'm sure you understand why we wouldn't disclose this publicly. Needless to say, we review withdrawal requests and have appropriate measures in place to ensure clients' funds are returned to their owner. I agree that we should be seek to best-of-breed with respect to our security and protection.
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Post by eascogo on Jun 8, 2016 17:18:33 GMT
"BondMason launched in 2015, and opened to the public in October." "Here's a quick review of 2015 in numbers 8.6% p.a. - return to investors £6,287 - average amount invested per investor £0 - losses 5 - days until full liquidity 11 - P2P platforms approved by BondMason 87 - loans approved and invested in 15.4% - highest rate of interest on a loan 6.75% - lowest rate of interest on a loan" ( www.bondmason.com/best-p2p-investment-savings-isa-rates/how-bondmason-targets-70-pa-return) I expect that the data above are not the latest but BondMason's offering of diversification across loans/platforms as well as monitoring money invested is a service worth considering, particularly for investors/savers lacking the time or the inclination to research and monitor money invested. I expect this to be carried out more efficiently than is the case with DIY investors. I am retired, have plenty of time to do DD (however inexpertly), and am well aware of the risks of insufficient loans/platforms diversification. However I cannot resist hunches and personal preferences. The results: my investments are largely concentrated on only three platforms and some loans are way in excess of a healthy 1% or 2% loan concentration. BondMason would surely correct this weakness of mine. However I like to minimize cash drag and many P2P platform offer immediate returns. BondMason says "when you first add funds to your BondMason account it can take 7-28 days for these to be fully deployed". Many people on this forum would be concerned by such lags. Although BondMason, by default, specifies a 2% concentration [investor can alter this at any time] I feel that a taper function could be implemented to allow a higher initial concentration. Instead of distributing the initial investment piecemeal over 50 loans the lag could be cut to near zero by temporarily investing in one or two locations, with a gradual dilution over time to end up with the desired concentration. This may well entail BondMason assuming temporarily the risk of default until the investment is fully spread. But they should know which loan/platform is a safe bet!
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Post by harvey on Jun 8, 2016 17:36:34 GMT
When do investors get paid their interest with Bond Mason. Does it just get rolled up as you go along and then you get your capital back with the appropriate amount of interest at the time you decide to withdraw?
In other words does the interest get automatically reinvested as you go along or can it be held in your available balance for separate withdrawal without withdrawing your capital.
Thanks.
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Post by eascogo on Jun 8, 2016 18:26:39 GMT
When do investors get paid their interest with Bond Mason. Does it just get rolled up as you go along and then you get your capital back with the appropriate amount of interest at the time you decide to withdraw? In other words does the interest get automatically reinvested as you go along or can it be held in your available balance for separate withdrawal without withdrawing your capital. Thanks. Yes you can opt to have the interest automatically reinvested. Put your feet up and snooze! Long live the black box!
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Jun 9, 2016 6:58:55 GMT
The projected return is meant to include lag time on initial investment.
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Post by stevefindlay on Jun 9, 2016 8:31:44 GMT
The projected return is meant to include lag time on initial investment. Greenwood2 That's exactly right - the 7.0%+ p.a. target caters for 'cash drag' from the initial investment period as well as reinvestment. Please see further detail here
Please note, there is an assumption that the funds are invested for 3-6 months+ (although there is no tie-in period). Thanks!
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Post by eascogo on Jun 9, 2016 11:31:49 GMT
The projected return is meant to include lag time on initial investment. Greenwood2 That's exactly right - the 7.0%+ p.a. target caters for 'cash drag' from the initial investment period as well as reinvestment. Please see further detail here
Please note, there is an assumption that the funds are invested for 3-6 months+ (although there is no tie-in period). Thanks! stevefindlay I read your comments, thank you, but the fact that lag is factored in does not deal with my suggestion that new money could be invested straightaway as a lump sum at a rate close to investors' averaged return. The lag would thereby be nullified. Is my assumption unrealistic?
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Post by stevefindlay on Jun 9, 2016 13:05:47 GMT
Greenwood2 That's exactly right - the 7.0%+ p.a. target caters for 'cash drag' from the initial investment period as well as reinvestment. Please see further detail here
Please note, there is an assumption that the funds are invested for 3-6 months+ (although there is no tie-in period). Thanks! stevefindlay I read your comments, thank you, but the fact that lag is factored in does not deal with my suggestion that new money could be invested straightaway as a lump sum at a rate close to investors' averaged return. The lag would thereby be nullified. Is my assumption unrealistic? eascogo You make a very good point; and it is something we are working on: minimising cash drag. Obviously, if we can reduce it further, then our clients should be able to even better than the 8.6% p.a. net that they've achieved over the last year. The difficulty with guaranteeing investing everything straight away, is ensuring you have a stock of loans available to meet all investor demand. Specifically, more than 50% of our loans are only invest-able at the primary point of offering - i.e not through a secondary market - so we are always having to project the growth in our client base vs. the availability of good quality new loans. That being said, we are working on an initiative (which we hope will be ready in the next 3-6 weeks) which should reduce the ramp-up period, from the current level of 7-28 days down to: 1-2 days for investors investing less than £10k; and 7-10 days for investors investing £10-50k. And we should be able to improve this further later in the year, with something else that's in the pipeline... I hope this is helpful. Many thanks
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Post by eascogo on Jun 9, 2016 13:25:55 GMT
stevefindlay I read your comments, thank you, but the fact that lag is factored in does not deal with my suggestion that new money could be invested straightaway as a lump sum at a rate close to investors' averaged return. The lag would thereby be nullified. Is my assumption unrealistic? That being said, we are working on an initiative (which we hope will be ready in the next 3-6 weeks) which should reduce the ramp-up period, from the current level of 7-28 days down to: 1-2 days for investors investing less than £10k; and 7-10 days for investors investing £10-50k. And we should be able to improve this further later in the year, with something else that's in the pipeline... stevefindlay If/when implemented this initiative would indeed remove a major weakness (imo) of investing with BondMason. If, say, I invest a 4-digit sum every month the combined loss of interest through drag would make investing far less attractive than investing same directly in P2P. I am glad that you are working to address this.
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Post by jordan on Jun 9, 2016 14:24:21 GMT
Hello and welcome Steve Although not had a look yet at your site but just from reading these posts would you be offering an ISA in the future as that might be of more interest to people on here. Hi Ben, We recently created an infographic on the Innovative Finance ISA at Orca Money. It's a work in progress as platforms become regulated by the FCA and seek permissions from HMRC to offer IFISAs, but for now this may be of help to you: www.orcamoney.com/ifisa-infographicWe also wrote a review on BondMason some weeks ago: www.orcamoney.com/blog/Bond-Mason-Review-2016Cheers,
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Post by stevefindlay on Jun 9, 2016 21:13:41 GMT
That being said, we are working on an initiative (which we hope will be ready in the next 3-6 weeks) which should reduce the ramp-up period, from the current level of 7-28 days down to: 1-2 days for investors investing less than £10k; and 7-10 days for investors investing £10-50k. And we should be able to improve this further later in the year, with something else that's in the pipeline... stevefindlay If/when implemented this initiative would indeed remove a major weakness (imo) of investing with BondMason. If, say, I invest a 4-digit sum every month the combined loss of interest through drag would make investing far less attractive than investing same directly in P2P. I am glad that you are working to address this. eascogo You are right - the ramp-up cash drag will be worse for those that are topping up their investments every month*. That being said, this only really impacts monthly investment amounts of £5-10k+, and even then, those investors should still be able to target c.3-4%+ p.a. return in the 1st month (on their way to the 7.0%+ p.a. target overall). Monthly investments of c.£1,000-2,000 per month are generally allocated reasonably quickly. As an aside, I'd suggest that are very few (any) other P2P platforms where you can target 7.0%+ and get 50+ loan investments within a month. So hopefully we aren't too ' weak' here ;-) Nonetheless, we look forward to continually improving this over time.* *Monthly investing: There is an interesting sub-point here: every client has a target of a minimum 50+ loan investments. However, if we know that you are looking to invest every month, then there should be an approach where you can still get the right level of diversification without each monthly investment requiring 50 new loan investments. I.e. month 1: 20 loan investments; month 2: 20 loan investments; month 3: 15; month 4: 10; etc. etc... We'll give this some thought. Thank you for raising this very interesting point.
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dermot
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Post by dermot on Jun 23, 2016 23:38:58 GMT
I dipped a toe in the water with a modest £1k to test.
30% invested in a day, diversified in £20 chunks and earning 8.12% average so far.
If it matches a bit more in the next few days, I'll be tempted to sling some more in, from funds that are earning only 3 or so % at the moment.
I had a minor issue that was dealt with promptly, so seems like a reasonable 'fire and forget' home for some cash.
The dashboard is very clear.
I'm mostly aiming for supplementing my pension income, rather than capital growth and I'll probably make BM one of my income streams.
How popular does a P2P site need to be to get its own subforum?
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