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Post by gidoppp01 on Jun 1, 2017 2:29:07 GMT
I am pretty sure RateSetter boasts about earning from 2.8%. However, the 1 year market has dropped below 2.8% since 18th May, and now it has been stuck @ 2.0% since 24th May.
Surely Ratesetter is selling a product that is not as described, right?
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ashtondav
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Post by ashtondav on Jun 1, 2017 6:53:04 GMT
You can earn 2.8% in the rolling account, so the headline is fair and accurate.
The fact that RS allow dumb and desperate people to "invest" in the one year market at 2% is a disgrace, that any decent company would address with some urgency. The use of MR to "encourage" the ignorant into sub inflation returns by default is irresponsible.
It astonishes me that there is a medium risk product that, after tax and inflation, is guaranteed to lose the "investor" money in real terms.
Someone needs to get to grips with these distortions - quickly, but at the end of the day I would expect the dumb money to be flushed out soon and then the calamitous miss-pricing of risk will end.
On the bright side returns seem to be creeping up in the 5 year market.
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oik
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Post by oik on Jun 1, 2017 14:34:51 GMT
I am pretty sure RateSetter boasts about earning from 2.8%. However, the 1 year market has dropped below 2.8% since 18th May, and now it has been stuck @ 2.0% since 24th May. Surely Ratesetter is selling a product that is not as described, right? Perhaps more questionable is the use of a quote by a happy user: "The Provision Fund is a good feature that ensures that savers' money is protected". www.ratesetter.com/invest/everyday-accountThat may well be the intention but there's no certainty about it and if the happy user thinks there is then she's mistaken.
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ashtondav
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Post by ashtondav on Jun 1, 2017 16:49:06 GMT
No one would lend at 2% for one year unless they believed they were protected. The fact that they are not is sad.
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rick24
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Post by rick24 on Jun 2, 2017 9:54:17 GMT
People will be losing money relative to inflation but they will be losing less money than they would if they had it in a bank account. In a different arena: investors are also prepared to invest in government bonds with negative yields, which guarantee that they will lose money. They do it because they think it will lose them less money than the alternatives or to balance out riskier parts of their investment portfolio. In both cases, one hopes, investors will make the judgement on the basis of the risk/return profile and as part of a portfolio matched to their risk appetite.
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ashtondav
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Post by ashtondav on Jun 2, 2017 15:14:47 GMT
As I understand it RS PF would not be able to cope with the bad debt Zopa experienced n 2008. And at that time zopa was being much more selective about their borrower quality. P2p is risky. How risky? Well I can tuck away £60,000 in Santander between the three of us at 1.5%, instant access no penalty. RS one year is 2% with a penalty to withdraw. There is no way RS compensates for the extra risk compared to a BS. I think it's Miss-selling, but if not it is insane miss-buying.
Fools and their money....
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jlend
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Post by jlend on Jun 2, 2017 15:30:30 GMT
As I understand it RS PF would not be able to cope with the bad debt Zopa experienced n 2008. And at that time zopa was being much more selective about their borrower quality. P2p is risky. How risky? Well I can tuck away £60,000 in Santander between the three of us at 1.5%, instant access no penalty. RS one year is 2% with a penalty to withdraw. There is no way RS compensates for the extra risk compared to a BS. I think it's Miss-selling, but if not it is insane miss-buying. Fools and their money.... I wouldn't invest at 2% also. I have been a lender with ratesetter since 2010 and am happy with my portfolio of 5 year loans paying on average 6.3% at the moment although I'm not reinvesting at the current rates. Appreciate that many forum members clearly don't like ratesetter, they have served me well over the years.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Jun 2, 2017 15:35:52 GMT
"they have served me well over the years."....I'm in the same boat jlend, and your use of the past tense is highly appropriate! 
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Post by WestonKevTMP on Jun 2, 2017 19:42:51 GMT
As I understand it RS PF would not be able to cope with the bad debt Zopa experienced in 2008.... Not quite true. The Provision Fund coverage is to cover capital and expected interest. If bad debt increased to levels of 2008, the the first line of defence is a reduction of interest with capital intact. This is what happened with Zopa's in 2008/2009, and is probably what would happen with RateSetter. Bad debts would have to deteriorate hugely for the Provision Fund to be depleted, interest to be lost, and capital lost. I think this unlikely, although admittedly possible. Kevin
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ashtondav
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Post by ashtondav on Jun 2, 2017 20:50:46 GMT
Agreed Kev, but that's not the issue. The issue is the risk premium in the 1 year market. It is clear the dumb money is being fleeced - and that is unacceptable. Because it's DUMB.
should dumb money be allowed to invest in dangerous derivatives - NO! RS is safer, yes, but even so.....
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registerme
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Post by registerme on Jun 3, 2017 21:50:29 GMT
Currently and allowing for the current inflation rate of ~2.5%......
Leave it under the bed? - ~2.5%
Leave it in your current account? - ~2.5%, but with no fire risk, and with FCSC protection.
Stick it in a bank savings account? - ~2%, but with no fire risk, and with FCSC protection.
Stick it in RS (as I type) - 0% rolling, -0.5% 1 year, 2% 5 year, but with no FSCS protection.
None of the above are necessarily "dumb". But imho using RS "market rate" is dumb.
* Those - above are meant to be read as minus signs.
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ashtondav
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Post by ashtondav on Jun 4, 2017 8:11:20 GMT
I'm sorry, but investing in a risk asset class for a guaranteed negative post tax post RPI return is not sensible. Especially as there is no guarantee you can actually withdraw your money on demand.
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Post by BrianC on Jun 11, 2017 8:46:49 GMT
As I understand it RS PF would not be able to cope with the bad debt Zopa experienced n 2008. And at that time zopa was being much more selective about their borrower quality. P2p is risky. How risky? Well I can tuck away £60,000 in Santander between the three of us at 1.5%, instant access no penalty. RS one year is 2% with a penalty to withdraw. There is no way RS compensates for the extra risk compared to a BS. I think it's Miss-selling, but if not it is insane miss-buying. Fools and their money.... Once you factor in Santanders £5 monthly fee the rate is only 1.2% and that's only if you leave the full and exact £20,000 in. Yes there's cash back but that wasn't worthwhile to me. I recently switched my current account away from Santander due to their rate cut. Even at 1.5% it's hardly great. Far better places for your cash out there (not RS).
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ashtondav
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Post by ashtondav on Jun 11, 2017 13:15:58 GMT
Cash back is worth it for me. Once you've maxed out on the current account offers, 1.2% instant access is about the best and 1.8% 1 year fix. RS 1 year at 2% is disgraceful.
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