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Post by steve1 on Jan 27, 2017 13:12:43 GMT
Wow Nick thank you very much for the reply and it certainly gives me food for thought. I am going to take time to digest it. Ty Sir
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littonowl
Member of DD Central
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Post by littonowl on Jan 27, 2017 14:08:50 GMT
Another couple of P2P related Investment Trusts to check out, that can also go in a S&S ISA would be Ranger Direct Lending RDL and Honeycomb Investment Trust HONY.
RDL is appealing as it offers the diversity of loans in The States, so is currently benefiting from exposure to the dollar, which has also meant the yield is approaching 10%. It also currently sits at a decent discount to NAV. I hold P2P Global too, and conversely its performance has suffered due to the pound weakness, as it has a pretty disastrous hedging policy in place which has negated gains from its loan portfolio. Management have now started a buyback programme here so the discount to NAV should reduce, but imo it's not a Trust that's performed at all well for its shareholders and probably should be wound up.
Honeycomb is under the radar, but performing very well, and is paying over 8% yield all covered by its loan interest.
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Post by Deleted on Jan 27, 2017 14:27:33 GMT
P2P; I'd start with a max of three sites and run them for 3 months or so. Then review, you may decide you need to close one or stick with what you have. Once you have experience you may want more.
P2P assets; you really need to ensure that the borrower puts up things that have real value. So personal guarantees are worthless as are most boats etc etc
Equity; I hold a lot of equity but I've grown that over 40 years experience. I'd start with a library for general advice and either read the "naked trader" series or similar. He is not perfect (at all) but it gives you an idea of what you are getting into.
Funds; if I had to recommend anyone to do anything, then put something in "fundsmith", every year I get roughly 20% return. You should be able to access the trust via an equity portal (Hargreaves Lansdown, Fidelity, iii) etc but you can also go direct (at lowest charges) at fundsmith.co.uk I'd make this the core of any life time investment. You just let it ride.
Compound interest, Einstein thought it was wonderful. 20% over five years gives you almost 150 percent growth so £20k->£50k.
WARNING Your original plan is to convert 60k to 150k over 10 years which means you need to hit 10% after tax.
So going with Zopa, Ratesetter, and low interest bank accounts is not going to cut the mustard. Given the low levels you are seeking a lot of the benefits fall into tax free areas, but you need your money to work hard.
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Post by Financial Thing on Jan 27, 2017 17:21:43 GMT
Aside of your £60k, do you have other assets or savings?
Although it's unlikely, you have to ask yourself how you would feel if your £60k went up in smoke? At 55 you have less time to recover from that loss vs a 25 year old. If the £60k isn't a life changer for you, consider the 12% return sites and hope for the best.
While it's tempting to look at Santander and say, how can I watch one investment earn 1.5% while p2p is earning 6% or 12%, you have to factor in risk.
Personally I stick to a diversified game-plan involving savings, p2p, and unit trusts.
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Post by justdabbling on Jan 30, 2017 8:26:36 GMT
Depending on your circumstances it might be worth considering investing some in a pension, especially if your income takes you just across the limit between basic and higher rate income tax, or higher and the £150 k level. This would preserve the tax relief on interest at a higher level and in some cases could preserve rights to child benefit.
If the rules stay the same it could be worth investing up to all your earnings via a pension in the last year before you retire especially if you are dropping from a higher rate of tax to a basic rate. This would mean investing say £60 and then drawing out £85 even if the fund has no investment gain. Also it is worth checking whether you or if applicable, your wife would benefit from paying missed National Insurance contributions to gain access to full rate state pension.
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Post by steve1 on Jan 30, 2017 10:07:25 GMT
steve1 , can you clarify something for us, please? In you original post you wrote: Are you looking to turn £60k in £150k in ten years? Or are you looking to turn £60k plus (some) disposable income into £150k? If the latter, then you really only need to keep adding £750p.m. to your exiting £60k to reach that £150k figure and look to get, say, 3% along the way to hedge against inflation. That hedging should be reasonably easily achieved in some of the more mainstream vehicles already discussed which might offer FSCS cover to boot. That leaves anything up to £550p.m. to do something more exotic with and you can be as 'risky' as you please, safe in the knowledge that your primary objective is pretty much taking care of itself.Happy for disposable income to work and accept I will have to if I am to reach 150K
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Post by steve1 on Jan 30, 2017 10:08:28 GMT
Thanks for the reply, happy to get my DI working for me, in fact I know I have to.
Steve
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Post by steve1 on Jan 30, 2017 10:11:04 GMT
Aside of your £60k, do you have other assets or savings? Although it's unlikely, you have to ask yourself how you would feel if your £60k went up in smoke? At 55 you have less time to recover from that loss vs a 25 year old. If the £60k isn't a life changer for you, consider the 12% return sites and hope for the best. While it's tempting to look at Santander and say, how can I watch one investment earn 1.5% while p2p is earning 6% or 12%, you have to factor in risk. Personally I stick to a diversified game-plan involving savings, p2p, and unit trusts. I wouldn't want to burn the money obviously  , but know I can survive on the existing pension I have if the worst came to the worst.
Thanks for the reply
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Post by steve1 on Jan 30, 2017 10:12:33 GMT
Sorry other assets the only other thing I have is I own 50% of a house, which is due to be sold in 7 years and on todays terms I would come away with about 20K
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Post by steve1 on Jan 30, 2017 10:15:55 GMT
Just a general shout out to thank all of you for your replies, it has given me so much food for thought and in so many areas I knew/know nothing about. This stuff should be on the school curriculum. I wish that I had looked at this stuff 20 years ago,
Cheers all.
Steve
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Post by Financial Thing on Jan 30, 2017 16:31:22 GMT
Sorry other assets the only other thing I have is I own 50% of a house, which is due to be sold in 7 years and on todays terms I would come away with about 20K In your circumstances, I would definitely consider the risk factor of p2p and tha various platforms and place your money accordingly.
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will
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Post by will on Jan 30, 2017 19:10:41 GMT
Funds in a stocks and shares ISA will generally return more than a P2P site - although the stock market is more volatile. With a P2P site, you need to remember you'll be suffering from defaults and tax. So a headline 12%, if you're a 40% tax payer, you'll be lucky to get 6% in your pocket. As a 20% tax payer, you'll be doing well to get 8%. If you're not a tax payer, then P2P would quite possibly give better returns than an ISA. With the ISA you have no tax to worry about.
For calculations, I assume a return of 7% from funds - that said, in the last year my ISA has returned 22%, but as I said, it can be volatile.
Good luck!
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xtab
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Post by xtab on Feb 3, 2017 20:44:10 GMT
I'm currently invested in 12 P2P Platforms and the amount of time needed to keep things ticking over varies greatly between them. I have about 10K less than the amount you plan to invest. Some platforms have auto-invest features that mean you don't need to do anything if that suits you; at the other end of the scale, others require you to be able to bid at a certain time - and their loans can be fully subscribed very quickly. So you have a great deal of flexibility in how you spread across platforms, based on your time available and how involved you want to be.
Over time I've changed my approach to loan types. When I started, I invested across just about all loan types. Now I have only a very small proportion in SME business loans and unsecured personal loans. (And I'm slowly unwinding from those). The unsecured personal loans are all with platforms that have some kind of contingency fund. Even secured loans can have hiccups but I've found them the least troublesome overall.
My total investment is currently standing at an average of 8.7% return after bad debts (minimal so far) but before tax. That's less than I made in a good year with the same amount invested in shares, but it's a lot less volatile and the cash flow is more manageable.
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stevio
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Post by stevio on Feb 4, 2017 7:11:15 GMT
Not for interest but for dividends. It depends how your returns are classified. I have found ones on Abu and on their site they have a table showing you how different returns are classified. Only some investments there have the returns classified as dividends. Read the FS board re the SM and tax - that is where I got some clarity from. Buy on the PM, sell on the SM later in the loan giving a discount (enough to compensate a 25% taxpayer for inheriting your income tax liability) and you still get nearly 4% return at 4-5 months but it is classed as a capital gain. FS only pay interest at the end. Selling at a premium on ABL means that you can get returns that are interest and a bit of capital gain. You get the interest accrued prior to sale. I am new to Abu. Everything on their SM is at a premium. some investments only pay a return 6 monthly so the accrued return needs factored into the price as the buyer will inherit it. They have confirmed that the buying/selling difference is classed as a capital gain. Other platforms have SM with variable pricing but I am not familiar with them. Purchase on the PM and consequent sales on SM on FS are NOT classed as a capital gain - The Accrued Interest is considered a 'payment' from the buyer equivalent to the accrued interest up to the sale point. www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2450 Where a person sells interest-bearing securities ‘cum dividend’, in other words he or she does not receive the next interest payment due on the securities, he or she cannot be taxed under general principles on the element of the sale price that relates to accrued interest (Wigmore v Thomas Summerson and Sons Ltd, 9TC577). However, the Accrued Income Scheme (SAIM4000 onwards) allows the transferor to be taxed on the accrued interest, with corresponding relief for the transferee. Interest on securities taxable under the Accrued Income Scheme (AIS) is exempt where the interest is covered by accrued income losses.The premium is considered an 'incentive for sale' - www.fundingsecure.com/invest-with-us/secondary-marketSecondary market transactions are considered to be purchases / sales of the original loan. As such they are not liable for capital gains tax. Any premium or discount paid / received is considered as an incentive, not as a profit or loss.
If you buy and then resell the same loan part on the secondary market you may be considered by HMRC to be a TRADER and be potentially liable for CAPITAL GAINS TAX
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Nomad
Member of DD Central
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Post by Nomad on Feb 25, 2019 9:30:18 GMT
Another couple of P2P related Investment Trusts to check out, that can also go in a S&S ISA would be Ranger Direct Lending RDL and Honeycomb Investment Trust HONY. RDL is appealing as it offers the diversity of loans in The States, so is currently benefiting from exposure to the dollar, which has also meant the yield is approaching 10%. It also currently sits at a decent discount to NAV. I hold P2P Global too, and conversely its performance has suffered due to the pound weakness, as it has a pretty disastrous hedging policy in place which has negated gains from its loan portfolio. Management have now started a buyback programme here so the discount to NAV should reduce, but imo it's not a Trust that's performed at all well for its shareholders and probably should be wound up. Honeycomb is under the radar, but performing very well, and is paying over 8% yield all covered by its loan interest.I noticed this company mentioned in a P2P newsletter today. Does anyone have recent experience with them?
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, but know I can survive on the existing pension I have if the worst came to the worst.
