P2P Investing
- Thread starter snappyfish
- Start date
Soldato
Hargreaves Lansdown have just dropped plans for their own P2P network today.
So I got another one of these reinvestment emails this morning from ratesetter which prompted me to ring them and ask how its possible.
The above represents just over 50% of my investment as an FYI, so way too large to be a complete fluke that a large number of loans were repaid early.
So, I rang them and the answer is quite simple. Your investment isnt necessarily chopped down into small chunks to borrowers, its just as likely it went to a single individual borrower. This is what happened above. Basically 1 borrower repaid the whole loan early which then gave me my money back, and the system has now reinvested it.
The obvious question I asked is what happens if that 1 borrower who has 50% of my investment defaults. The simple answer is that the investor gets paid out by the provision fund, and you dont lose a penny. The provision fund ratesetter have is 120% of the total loan book, so unless there is a complete financial meltdown it should be OK. Its still an investment however! down as well as up etc etc.
The way to check is to goto your portfolio > investment > on loan. You can see from here who has your money and how much.
Ill be interested in zopa do this, and I think funding circle has a setting which ive got at 1% to ensure its diversified; although i dont believe they have a provision fund.
Soldato
From December, Zopa are binning their Safeguard or provision fund so it's a little unclear what would happen if a loan after that time defaults. I suspect Zopa would attempt to recoup the money lent but ultimately, it’s a loss, Your loss!
Soldato
Anyone got any tips on what divident yield to go for I think I read earlier in this thread you should go for 3% and lower I have some earnings been stacking up and looking to invest again on Property Partner.
Edit: Just to add from Property partner tax section on there website it got this
So what happens if you have a property that over 3% dividend yield do you pay tax then and what about the new property being offered for 5% fixed income for 2 years?
Edit: Just to add from Property partner tax section on there website it got this
So what happens if you have a property that over 3% dividend yield do you pay tax then and what about the new property being offered for 5% fixed income for 2 years?
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The yield isn't directly related to the tax you pay, they're just giving an example of how much you could have invested at 3% while remaining under the current £5k dividend allowance. The allowance reduces to £2k for 2018/19 tax year so then it'd only be ~£66k before you'd be over the allowance at 3%.
Usually a compromise between the yield and expected growth so depends on your outlook. The current 5% offer is very generous and has lead to the last few listings being 2x oversubscribed.
Soldato
Thanks for the info
Don
Aye, at least they're transparent about it.
Don
Hah, I cashed out last year because the rates were poor.
Don
Dammit. Funding Circle are removing manual lending and introducing "Balanced" - ~7.5% or "Conservative" ~4.8% auto bidding options only.
Means you'll no longer be able to bid on high risk loans (band E) only (giving ~10% returns).
Means you'll no longer be able to bid on high risk loans (band E) only (giving ~10% returns).
Soldato
I imagine credit risk is rising quite sharply, forcing them to have auto blending. Zopa issued a warning this week.
*edit* Hm, just spotted something interesting...
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Associate
Was exactly my thought.
Soldato
*sighs* all indications are another consumer debt crash is in the pipe-line. 
Associate
Sounds very similar to my account at Ratesetter. Slowly removing mine, whilst trying not to incur any further fees.
Don
Rates are upto 4.6% on 1year bonds at Ratesetter now.