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Post by steve1 on Jan 26, 2017 11:02:55 GMT
Hi Guys,
I am new here and to P2P so firstly let me say hello.
Like all newbies I need to tread with care to ensure that I know what I am doing. I have a Zopa plus account with 1k invested since September 16 and Zopa classic account with £650 invested since December 16, I have just opened a BM account and have shipped 1k to it. I first heard about P2P from MSE and since then i am working through this site for more info and hence this post.
My back ground. I am 57 so retire in 10 years, I am mortgage free have 60K spread across 3 x Santander account which as you know where earning 3%; I have disposable income of £500-£1300 a month. I am currently drawing 2 pensions, an Army one and a small teaching one and I work.
So I need to get my 60k and my disposable income working for me and it seems logical to aim for a 10 year plan to retirement with the idea of drawing down from this pot to supplement my pension income if needed . If I throw some basic numbers into a calculator, I figure if I can turn my 60k to 150 K by retirement this would give me at 3% interest an income of 4.5k subject to tax of course.
So I am really looking at suggestions of how to get my 60k working for me. Also for you guys to point out any obvious glaring errors a newbie like me could make.
I am by nature willing to take some risk but balanced with some security too. Looking at how much of ones worth people invest it appears to be between 10-30%, I was perhaps thinking of 50% in P2P (30K) and 50% (30K) in secure banks , i.e. 2k here, 3k there, chasing 3/5% for a period and moving around as needed. Is that generally viewed as too much of my pot at risk?
I would find it difficult to have 30K say earning 1.5% in Santander whist 30K is earning well on various P2P platforms say earning 6/7/8+ %.
With my 30K in P2P would I be better with 10 accounts with 3k or 6 accounts with 5K or any other combination, looking at maximum risk spread.
Whist I accept that P2P comes with risks, how risky as a business is it? I understand Z has been going 10 years plus so that should indicate that this is not a fad and therefore reasonable safe?
If one platform went bust could we be confident that this would be in isolation and not have a domino effect on all other platforms which result in all money lost?
I would welcome ant thoughts on any of the above.
Many thanks
Steve
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Post by steve1 on Jan 26, 2017 13:12:10 GMT
TY, I did not know that. I have no stocks and shares, so is this the same for interest received via P2P ?
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gurberly
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Post by gurberly on Jan 26, 2017 13:28:57 GMT
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james21
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Post by james21 on Jan 26, 2017 20:21:06 GMT
Hi Guys,
I am new here and to P2P so firstly let me say hello.
Like all newbies I need to tread with care to ensure that I know what I am doing. I have a Zopa plus account with 1k invested since September 16 and Zopa classic account with £650 invested since December 16, I have just opened a BM account and have shipped 1k to it. I first heard about P2P from MSE and since then i am working through this site for more info and hence this post.
My back ground. I am 57 so retire in 10 years, I am mortgage free have 60K spread across 3 x Santander account which as you know where earning 3%; I have disposable income of £500-£1300 a month. I am currently drawing 2 pensions, an Army one and a small teaching one and I work.
So I need to get my 60k and my disposable income working for me and it seems logical to aim for a 10 year plan to retirement with the idea of drawing down from this pot to supplement my pension income if needed . If I throw some basic numbers into a calculator, I figure if I can turn my 60k to 150 K by retirement this would give me at 3% interest an income of 4.5k subject to tax of course.
So I am really looking at suggestions of how to get my 60k working for me. Also for you guys to point out any obvious glaring errors a newbie like me could make.
I am by nature willing to take some risk but balanced with some security too. Looking at how much of ones worth people invest it appears to be between 10-30%, I was perhaps thinking of 50% in P2P (30K) and 50% (30K) in secure banks , i.e. 2k here, 3k there, chasing 3/5% for a period and moving around as needed. Is that generally viewed as too much of my pot at risk?
I would find it difficult to have 30K say earning 1.5% in Santander whist 30K is earning well on various P2P platforms say earning 6/7/8+ %.
With my 30K in P2P would I be better with 10 accounts with 3k or 6 accounts with 5K or any other combination, looking at maximum risk spread.
Whist I accept that P2P comes with risks, how risky as a business is it? I understand Z has been going 10 years plus so that should indicate that this is not a fad and therefore reasonable safe?
If one platform went bust could we be confident that this would be in isolation and not have a domino effect on all other platforms which result in all money lost?
I would welcome ant thoughts on any of the above.
Many thanks
Steve
Steve you should be able to derive a conservative 7 to 9% from a diversified number of platforms, go for property, with first charge as security, forget SME's, forget anything over 2 years
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Post by steve1 on Jan 26, 2017 20:46:10 GMT
Thank you for your replies.
SME's Secondary market?
No longer the 2 years as we don't want our capital tied up for any longer ?
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am
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Post by am on Jan 26, 2017 21:31:43 GMT
If one platform went bust could we be confident that this would be in isolation and not have a domino effect on all other platforms which result in all money lost?
I would welcome ant thoughts on any of the above.
I don't see any reason why one platform going bust (and platforms have already gone bust) should have a direct effect on other platforms, but the indirect effects of a high-profile failure could push a platform over the edge. But, absent fraud, the failure of a platform shouldn't result in all money lost. Platforms should have "living wills" where there's a nominated organisation to run off the loan book, repaying capital and interest to the lenders. We haven't seen how it works, and whether anything can go wrong (e.g. money disappearing in administrative charges, borrowers trying to get out of paying), but it's supposed to pay off capital and interest, less a degree of bad debt.
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gibmike
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What is a cynic? A man who knows the price of everything and the value of nothing.
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Post by gibmike on Jan 26, 2017 22:30:58 GMT
Welcome steve1, I am not an expert or advisor but I will give you my two penneth of "noob" advice: 1) Be careful with the number of P2P sites you use, having 10 on the go might be quite time consuming. I have 4 and that takes management with new loans, reinvestments etc. 2) Assess the risk within each P2P site also. For example, I divide my sum down by to 3% per loan, this gives me 33 loans per P2P, some people do 65 loans (1.5%). This spreads risk. 3) Put risk levels on each P2P site. For example, I am for different returns from each platform, 7% target for LendInvest for example. This gives you a benchmark and maybe help you put £5k in a 7% average P2P site and only £3k in a 10% P2P site. Hope this helps, if anyone can add to this and help me at the same time feel free!
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james21
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Post by james21 on Jan 27, 2017 7:30:19 GMT
SME = small medium sized enterprises, judge for yourself whether some ideas they come up with will last! and what assets do they offer if any
2 years? why tie money up longer for the same rate you can get for 6, 12, 18 months?
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james21
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Post by james21 on Jan 27, 2017 8:00:41 GMT
another reason to go for short term is the Inovative Finance ISA comes in for the new tax year and some p2p will offer this, I have seen some already but not researched this as yet because they dont start till after April, but they will allow £20k tax free to be put in
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pom
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Post by pom on Jan 27, 2017 9:50:31 GMT
1) Be careful with the number of P2P sites you use, having 10 on the go might be quite time consuming. I have 4 and that takes management with new loans, reinvestments etc. As someone with way more than 10 I'm going to disagree with that. So long as you don't try and join them all at once it's not really much more work once you get going, just gives you more loans to pick and choose from so you don't feel under pressure to invest in everything a platform offers to get your diversity up. And whilst everyone will have an ideal number of platforms in their mind, even once you've picked some to try you won't really know what you think of them until you've been using them for a while - even if you were completely happy with them they may suddenly slash rates, change the types of loans on offer, or there just may not be sufficient deal flow for it to be worthwhile. And then it's a lot easier if you already have enough alternatives you know well to redistribute the funds around and find further potential replacements at your leisure than it is to find something totally new and take the risk of investing too quickly. Edit PS - tho admittedly with the OP's 60k, a large number of platforms might make less sense...all depends really how big you like your baskets to be...my personal view is never invest more in a platform that at the very least you can cope with being tied up indefinitely in red tape if a platform fails (and potentially lose entirely)
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kulerucket
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Post by kulerucket on Jan 27, 2017 10:19:54 GMT
I also disagree. I have 14 and most of them run themselves with little or no management from me. Some like Mintos need tweaking a lot if you want the absolute highest rates on offer at the time, but by setting your targets a little lower you can just let it run. SS and MT are the only ones that really need regular manual labour from me. I do accept more risk by only doing rudimentary DD on loans, but I do not invest enough for it to be a valuable use of my time.
Having said that I am of course an addict and login to have a look over and over. But my point is that they are self-sufficient and I don't need to do this.
With 60K, I would want at least 10 in order to earn enough interest to cover a total platform failure in a shorter amount of time. With 4 you need to get 33% total return (3-4 years?). With 20 only ~6% (4-6 months). You can always ramp down as time goes on.
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Post by sayyestocress on Jan 27, 2017 11:09:18 GMT
I don't think anyone has mentioned collateral yet who are essentially a p2p pawnbroker. You get 12% for all loans and are typically 6 months, and for the most part the security (jewellery, watches, cars etc.) are held in a secure location by collateral so in the event of a default the security can be sold off quickly (in theory). The grouped asset and property loans are a bit different though and are less appealing (to me). They also claim they have buyers lined up committed to purchase of the security at a given price before the loans go live (don't think this applies to the property or group asset loans though). They are young and their IT isn't the best but if you can be available at 10am (when loans go live) they're a great shout and one of my favourite hands on platforms at the moment.
Also if you want to use up some more dividend and capital gains tax free allowance you can always invest in crowdfunded property equity. Check out the house crowd, property partner and property moose sub-forums for more info.
Do you have a stocks and shares ISA? If not I'd bung a chunk into some of the passive index accumulation funds, then switch to income paying funds near retirement.
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Post by steve1 on Jan 27, 2017 11:13:42 GMT
Brilliant folks thank you for every one who has taken the time to reply.
You can tell how new I am by the questions I ask but... the 1.6 k I have across Z as an experiment is just invested in £10 chunks and they decide if its a 12/60 month loan, so on that platform i have no choice correct? I accept that I can sell a loan if needs be but I am pretty sure that is not a good play. So if I reinvest profit, which I am, this just becomes a compound thing. At some point say I wish to pull the plug but do not want to sell loans I have no choice but wait for every £10 loan to mature correct ?
So as mentioned on here 2 years seems to be a the loan period as Datum, I assume then that I have to seek platforms who have the options to chose loan terms after which I can cash out and reinvest or spend as needed.
Thanks again, most appreciated.
Steve
BTW I also have an addictive personality and have no issue constantly monitoring.
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pom
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Post by pom on Jan 27, 2017 11:53:19 GMT
Brilliant folks thank you for every one who has taken the time to reply.
You can tell how new I am by the questions I ask but... the 1.6 k I have across Z as an experiment is just invested in £10 chunks and they decide if its a 12/60 month loan, so on that platform i have no choice correct? I accept that I can sell a loan if needs be but I am pretty sure that is not a good play. So if I reinvest profit, which I am, this just becomes a compound thing. At some point say I wish to pull the plug but do not want to sell loans I have no choice but wait for every £10 loan to mature correct ?
So as mentioned on here 2 years seems to be a the loan period as Datum, I assume then that I have to seek platforms who have the options to chose loan terms after which I can cash out and reinvest or spend as needed.
Thanks again, most appreciated.
Steve
BTW I also have an addictive personality and have no issue constantly monitoring. Yes that's how Zopa works... as for the 2yr advice I think it's largely a matter of choice - I have quite a lot of longer term stuff so I'm not reinvesting quite so constantly. Besides on many sites you can often sell before term (so long as the SMs stay liquid) and anywhere where the loans are amortising you're not investing it all for the full term anyway.
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nick
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Post by nick on Jan 27, 2017 11:59:12 GMT
IF you have £60k and a 10 year investment horizon, I would put no more than 50% into P2P and the balance into equity funds. I wouldn't maintain any cash holdings unless you think there is a reasonable risk that you will may need to call on the funds at short notice, otherwise you could make losses in real terms after inflation.
In a 10 year period, I would expect the total return on equities comfortably exceed the return on p2p debt. I would invest £30k in equities over 6 funds (£5k each) that cover a good spread of sectors/markets so to be reasonably diversified. The choice of funds is obviously very wide and there can be great debate of relative merits, but a number do stand out with managers that have a long established track records and are common recommendations on 'best fund lists' - I would stick to these rather than being tempted into any niche currently fashionable fund. For information and as an example, my long term core holdings are Fundsmith Equity, Invesco Perpetual European Opportunities, First State Global Listed Infrastructure, Stewart Investors Asia Pacific Leaders, Unicorn UK Income, and Standard Life Investments Property Income. I would look to invest via ISAs and you should be able to invest the full amount within 1-2 years given this year's allowance is £15k rising to £20k next tax year starting 6 April 17.
In respect to P2P, given the amount you are looking to invest, £30k, I would maybe look to invest via funds such as FC's SME fund and P2P Global which have the added benefit of being to able to hold tax free in an ISA (less relevant when platforms start offering IFISAs, although building up a portfolio across a number of platforms would take time given restriction on the number of new providers you are allowed to invest through each tax year). However, the main benefit of investing via a fund is it will minimise the amount of time you would need to otherwise dedicate in investing over several platforms where your overall return may be better, but the risk higher due to lower diversification. I currently have a sizeable investment spread across 7 platforms and look to invest no more than 5% in any loan with 1% being my target - that's over 100 loans. I find that I spend more time than I like reviewing and maintaining my p2p portfolio, which becomes a bit addictive, but I can just about justify given the amount I invest. The time you could spend investing on individual platforms could easily be disproportionate to actual returns on a £30k investment.
Ultimately your risk appetite should be governed by how much you would be affected if you lost your capital. It sounds like your £60k is a nest egg, but isn't essential and you have a 10 year investment horizon so putting 50% into P2P in my view is not excessive if managed well. Whatever you decide, you should minimise your p2p risk by diversifying as much as possible across both platforms and loans - the risk of a platform failing or a few loans defaulting in small portfolio in my view, are by far the biggest risk facing any investor in p2p debt. Zopa and BM that you have currently invested operate pooled investment models and thus largely eliminate loan diversification risk found on other platforms such as SS, MT and FC so you have already made a relatively low risk start.
Obviously just my own views, but I hope it helps, good luck!
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