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Peer to Peer - experiences and risk?

Any other investment discussions eg. peer to peer lending
Sobraon
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Re: Peer to Peer - experiences and risk?

#166123

Postby Sobraon » September 13th, 2018, 5:10 pm

David Stein is an American who writes and narrates a podcast which I really enjoy called 'Money for the Rest of Us'*. Although very USA oriented David talked about P2P in episode 216. David's analysis found that some US P2P companies were "packag(ing) loans and sell(ing) them as asset-backed securities to institutional investors" and engineering 'credit enhancement' (where have we seen this process before?). He suggests that individual investors should probably now avoid P2P. I have no idea if this process is going on in the UK (yet) but the reduced interest rates available and this concern has meant that I have withdrawn from P2P

S
* Stein's Podcast is at https://moneyfortherestofus.com/. I really wish I could be as laid back as him!

Clitheroekid
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Re: Peer to Peer - experiences and risk?

#166124

Postby Clitheroekid » September 13th, 2018, 5:20 pm

Sobraon wrote:He suggests that individual investors should probably now avoid P2P.

I can't help wondering whether this is behind the decision to float Funding Circle. It seems to me that all too many IPO's take place when the owners of the company realise that the best years are behind them and that it's time to cash in.

Of course the punters will only see the historic figures and will assume that the company will continue in the same vein. They have none of the inside knowledge needed to realise that these figures are never likely to be reproduced once the company's gone public.

It's interesting that two US P2P lenders, OnDeck Capital and Lending Club IPO'd in 2014. Since doing so, shares in Lending Club have dropped by around 75%, and those in OnDeck are down 60%.

uspaul666
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Re: Peer to Peer - experiences and risk?

#166215

Postby uspaul666 » September 14th, 2018, 8:18 am

formoverfunction wrote:
uspaul666 wrote:“Rebs” is pretty much universally regarded as a running joke on the p2pif...
Mind you, there’s quite a seismic adjustment of attitude and expectation going on for p2p generally IMHO.


"there’s quite a seismic adjustment of attitude and expectation going on for p2p generally" would you explain what adjustment? Thanks.

Collateral’s demise, zopa’s flatlining, Lendy’s secondary market and refusal to be open. AC look like they have made some colossal mistakes with some loans and borrowers. Thincats has practically told retail investors to go elsewhere. Even MoneyThing doesn’t look as wonderful as it used to. The IFISA explosion has turned out to be a damp squib. The rise of direct lending (via an IT) rather than traditional P2P. Doesn’t seem to be any good news really.

formoverfunction
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Re: Peer to Peer - experiences and risk?

#166271

Postby formoverfunction » September 14th, 2018, 11:34 am

uspaul666 wrote:
formoverfunction wrote:
uspaul666 wrote:“Rebs” is pretty much universally regarded as a running joke on the p2pif...
Mind you, there’s quite a seismic adjustment of attitude and expectation going on for p2p generally IMHO.


"there’s quite a seismic adjustment of attitude and expectation going on for p2p generally" would you explain what adjustment? Thanks.

Collateral’s demise, zopa’s flatlining, Lendy’s secondary market and refusal to be open. AC look like they have made some colossal mistakes with some loans and borrowers. Thincats has practically told retail investors to go elsewhere. Even MoneyThing doesn’t look as wonderful as it used to. The IFISA explosion has turned out to be a damp squib. The rise of direct lending (via an IT) rather than traditional P2P. Doesn’t seem to be any good news really.


Aren't these just examples of failing platforms rather than a failing sector? I had to Google most of them, excluding Zopa, and Thincats, but I almost surprised that was around, given that it looked to have lost the race even a few years ago.

By AC, do you mean Assetz Capital? Haven't they just won an award for being amongst the UK's fastest growing companies. If it is Assets could you provide something to illustrate the news source for "look like they have made some colossal mistakes with some loans and borrowers". Is it just personal experience?

I haven't spent a lot ot time looking at Zopa, the last time they'd just opened their data to AltFi Data (that doesn't initially sound like a company trying to hide something) when you say they are "flatlining" do you mean in terms of loan book growth?

Here's the latest free stuff I could find from AltiFi:

https://www.altfidata.com/marketdata/

https://www.altfidata.com/commentary/si ... e-lending/

"via an IT" Investment Trust?

Sorry for so many questions, the sector interests me. I've had a Zopa account for over a decade, not much in it, just a couple of 000's.

Thanks.

formoverfunction
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Re: Peer to Peer - experiences and risk?

#166282

Postby formoverfunction » September 14th, 2018, 12:05 pm

I see from your previous posts AC does mean Assetz Capital.

uspaul666
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Re: Peer to Peer - experiences and risk?

#166511

Postby uspaul666 » September 15th, 2018, 8:24 am

Don’t really want to get in to a long conversation on a forum for equities but...
Re sector vs platforms yes I guess my experience is mostly from what i’ve been involved in but I’d say the whole feel of the P2P forum has changed over the last year as reality took over from youthful enthusiasm.
AC: AC’s automated accounts have been a bit of a disaster for some with 80% of some peoples “diversified” investments lent to one borrower that then went south. Plus all the usual cockups, with some of the blame on them, w.r.t. valuation, non-existing security, connected loans, etc.
Collateral: FCA looking awful on this administration. False details on FCA’s register on FCA website, FCA aware that they were operating illegally for ages yet did nothing. Realisations that people running p2p lending platforms and their borrowers often have backgrounds in sub-prime, failed ventures, etc. Collateral originally appointed administrators now under criminal investigation themselves and under administration.
Lendy: the only signs of any activity from lendy seems to be in removing critical angry reviews from trust pilot, drinking champagne at lendy cowes week and trying to get the rich to put money in the new lendywealth product. Meanwhile, some of my very few loans that I am allowed to sell have £700,000 worth of other people also trying to sell in front of me in the selling queue and to add insult to injury, lendy pocket all of the interest on those loans while we are selling them and carrying the risk that they will default before they do.
Zopa: I don’t lend here anymore but I hear that returns for some are around 2%

Lending via an IT:
the first point, for me, is that p2p can prevent you from getting access to your cash, any of it, for years or more. There is a lender on thincats where of four directors that gave a personal guarantee, one made a settlement for about 50%, one is going to pay a monthly amount over the next eleven years and the other two are still disputing three years later. This is not atypical. During this period, it’s not possible to sell at *any* kind of discount. as such I have considerable amounts stuck on TC, FC, AC, etc that are not going to clear for a very long time.
Secondly, most of the 12% platforms are going to return about 7%, 8%, 9% after cash drag, bad debt, etc. With a good direct lending IT 6% or 7% yield is typical so why put yourself through all that aggravation?
Thirdly, I have learned, the hard way, that I cannot pick the good loans, either because I am incompetent or because I don’t get enough information so I move towards automated accounts like Funding circle (which I quite like) that offers about 7.1% but then why not just buy their IT instead?
ITs like VSL, RDL, HONY, FCIF, SQN.

formoverfunction
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Re: Peer to Peer - experiences and risk?

#166832

Postby formoverfunction » September 17th, 2018, 9:06 am

uspaul666 wrote:Don’t really want to get in to a long conversation on a forum for equities but...
Re sector vs platforms yes I guess my experience is mostly from what i’ve been involved in but I’d say the whole feel of the P2P forum has changed over the last year as reality took over from youthful enthusiasm.
AC: AC’s automated accounts have been a bit of a disaster for some with 80% of some peoples “diversified” investments lent to one borrower that then went south. Plus all the usual cockups, with some of the blame on them, w.r.t. valuation, non-existing security, connected loans, etc.
Collateral: FCA looking awful on this administration. False details on FCA’s register on FCA website, FCA aware that they were operating illegally for ages yet did nothing. Realisations that people running p2p lending platforms and their borrowers often have backgrounds in sub-prime, failed ventures, etc. Collateral originally appointed administrators now under criminal investigation themselves and under administration.
Lendy: the only signs of any activity from lendy seems to be in removing critical angry reviews from trust pilot, drinking champagne at lendy cowes week and trying to get the rich to put money in the new lendywealth product. Meanwhile, some of my very few loans that I am allowed to sell have £700,000 worth of other people also trying to sell in front of me in the selling queue and to add insult to injury, lendy pocket all of the interest on those loans while we are selling them and carrying the risk that they will default before they do.
Zopa: I don’t lend here anymore but I hear that returns for some are around 2%

Lending via an IT:
the first point, for me, is that p2p can prevent you from getting access to your cash, any of it, for years or more. There is a lender on thincats where of four directors that gave a personal guarantee, one made a settlement for about 50%, one is going to pay a monthly amount over the next eleven years and the other two are still disputing three years later. This is not atypical. During this period, it’s not possible to sell at *any* kind of discount. as such I have considerable amounts stuck on TC, FC, AC, etc that are not going to clear for a very long time.
Secondly, most of the 12% platforms are going to return about 7%, 8%, 9% after cash drag, bad debt, etc. With a good direct lending IT 6% or 7% yield is typical so why put yourself through all that aggravation?
Thirdly, I have learned, the hard way, that I cannot pick the good loans, either because I am incompetent or because I don’t get enough information so I move towards automated accounts like Funding circle (which I quite like) that offers about 7.1% but then why not just buy their IT instead?
ITs like VSL, RDL, HONY, FCIF, SQN.


OK thanks. I get the picture. Cheers.

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Re: Peer to Peer - experiences and risk?

#166858

Postby BrummieDave » September 17th, 2018, 10:16 am

Agree with the sentiment above.

I was previously on 5 platforms, now down to just 2 (FC and Zopa) and not reinvesting on FC, preferring to take my capital out when individual loans are repaid. The days of the headier returns were good, and I got all my money out without much delay, but reality has definitely set in. What I now have in the two remaining platforms is 'spare cash' and not anything that forms part of my core investments.

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Re: Peer to Peer - experiences and risk?

#166864

Postby puffster » September 17th, 2018, 10:27 am

uspaul666 wrote:ITs like VSL, RDL, HONY, FCIF, SQN.

SQN has been a rollercoaster of incompetence, I would suggest one avoids it.

Regards, Puffster

formoverfunction
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Re: Peer to Peer - experiences and risk?

#166870

Postby formoverfunction » September 17th, 2018, 10:37 am

VLS, they are the most exposed to P2P, that's what they invest in!

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Re: Peer to Peer - experiences and risk?

#178176

Postby argoal » November 5th, 2018, 10:28 am

It does lookas though default rates on Zopa have recently climbed quite steeply.

I have been investing in the platform since its early days and check the balance (~10K) roughly monthly.

This month I have seen the first decline in the value of the portfolio in all the time I have been investing.

Looking more closely at the defaulted accounts it looks like there are a lot of bad debts on loans that were made in 2017 i.e. soon after the safeguard insurance was removed.

There also seem to be a number of loans in arrangement status which may become defaults in due course.

I suspect my true returns this year will be well below the advertised target returns.

I don't think I will be putting any more money in the platform at the moment.

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Re: Peer to Peer - experiences and risk?

#178244

Postby StepOne » November 5th, 2018, 2:23 pm

I joined Funding Circle in January and put in £5,000 in their 'riskier' plan. As of today it's worth 5,188. So that's 3.7% with 3 months to go until the end of the first year. They are showing my annualised return as being 5.4%, well below their estimate of 7.4%, although there is always a bit of a drag at the beginning as it takes a while to get the full amount lent out.

For the first three months it went great, then the defaults started appearing at a faster and faster rate. Just to domonstrate, there have been 5 notes raised in the first few days of November; Defaulted, Defaulted, Defaulted, 50 days late and Downgraded. Not very re-assuring reading!

I was going to leave it for the year and see how it got on, but I'd be surprised if things get any better. Maybe time to cut and run? I could be getting 3% by off-setting against my mortgage with no risk.

StepOne

formoverfunction
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Re: Peer to Peer - experiences and risk?

#178262

Postby formoverfunction » November 5th, 2018, 3:15 pm

StepOne wrote:I joined Funding Circle in January and put in £5,000 in their 'riskier' plan. As of today it's worth 5,188. So that's 3.7% with 3 months to go until the end of the first year. They are showing my annualised return as being 5.4%, well below their estimate of 7.4%, although there is always a bit of a drag at the beginning as it takes a while to get the full amount lent out.

For the first three months it went great, then the defaults started appearing at a faster and faster rate. Just to domonstrate, there have been 5 notes raised in the first few days of November; Defaulted, Defaulted, Defaulted, 50 days late and Downgraded. Not very re-assuring reading!

I was going to leave it for the year and see how it got on, but I'd be surprised if things get any better. Maybe time to cut and run? I could be getting 3% by off-setting against my mortgage with no risk.

StepOne


I'd always go for paying off mortage before investing beyond a pension. Irrespective of a few percentage points.

JohnB
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Re: Peer to Peer - experiences and risk?

#178282

Postby JohnB » November 5th, 2018, 4:11 pm

I have decided to withdraw all my p2p funds, but it will take a long time. FC was giving 5.1%, but at least I could get my money out of them quickly. It will take a lot longer for other providers.

The reason: too much time making micro decisions and reading forums about each p2p platform. I'm going back to index investing in equity.

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Re: Peer to Peer - experiences and risk?

#178570

Postby gbjbaanb » November 6th, 2018, 4:27 pm

I put a small amount of cash (couple of k) into each of Zopa, and FC nearly 7 years ago, and Thincats 6 years ago.

I closed Zopa a while back when they stopped the "direct" lending option and made it just a simple return with no control, or insurance. Over the 6 years it took me to get all my money out, I received £388 return on a £3k initial investment. Not so great, but a lot of that was down to the nature of P2P - as you take out the money, slowly, you get reduced return. So after 3 years I was down to a £1k balance. So that 12% total return would look better as an annualised figure, but its irrelevant as its what you get back that matters.

Thincats, I'm still somewhat invested but it returned a more acceptable return: £10k in, £4.3k out with a balance today of just over £9k. That did a lot better than anticipated which is why it has not been withdrawn.

FC, have been closing this down for a little while, £4k in, £1450 balance today with £4300 taken out so far, the majority of which has been over the last 2 years.

So all in all, FC seems to have done the best which is surprising as its had the most bad debt, I guess the extra cost of those loans matter, but both TC and FC have been much more invested since the beginning unlike Zopa where I steadily drew down the investment 2 years after it started.


So if I was suggesting a P2P platform, it'd be FC. Zopa - I don't see the point, you can get more return a lot easier elsewhere. Thincats - their website is so bad, so truly bad, I haven't a clue what's going on with my investment. FC for all the nervousness about it, turned out to be a good platform with clear summary, fee and tax statements and although a lot of (expected) bad debt, earnings made up for that.

However, even FC's return is (apparently) 6% annualised. I have boring funds that return that much without hassle - iShares Sterling Corporate Bond has returned 5.1% annualised and I can sell that in 5 minutes if I need the money.

A P2P might be a good bit of diversified income alongside, say a HYP, if you set it up in an ISA and just take out the interest. I might be interested in that as part of a retirement plan, but they're not amazing investments even if they're not all useless ones either. I would stick with FC as the only provider I'd consider today as the others don't return enough or are horrible to use.

A sidenote. When these first started you were a lot closer to the lender and bad debt became a factor - as I saw the reports coming in on FC I'd be shouting at the screen 'tell em who they are so I can go round there with a pointy stick and a 10p piece to drop in front of them, lets see if you take my money now you b****ds", but after a while you begin to realise its just part of the game. The P2Ps have all gone further away, making the decisions who to lend to away from the investor and as far as i'm concerned have become riskier building societies. I think they might go further in this regard, taking investment money from us and running everything without any of our involvement soon. Possibly seeing this already happening with their fundraising issues.

StepOne
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Re: Peer to Peer - experiences and risk?

#180277

Postby StepOne » November 14th, 2018, 3:33 pm

Just a quick follow up, I have 'sold' my Funding Circle loans - I expected this could be a slow process, but in fact it only took a few minutes between my clicking 'sell' and getting an email saying all loan parts had been sold - £4,970 worth.

This appears to leave me with £5,027 in cash, plus another £196 of outstanding loans, almost all of which are classed as 'Bad Debt' or 'Late' and therefore cannot be sold. One or two have only one payment remaining and also cannot be sold.

So some of these loans will come in , but it's not clear yet how much - I guess not that much.

So at the moment my £5,000 investment has turned into £5,027 after ten months, with the possibility of a few more payments to come. Not a great return, although I accept I have probably cut things short quite quickly.

StepOne.

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Re: Peer to Peer - experiences and risk?

#181120

Postby toofast2live » November 17th, 2018, 5:49 pm

I think you cut it very short very quickly. FC P2P, for 5 year loans, is a five year product - whatever maybe implied generally or specifically by the site. You do not stand a prayer of achieving "average returns" on a site like FC unless you invest and re-invest capital and income for five years. I reckon the sweet spot for FC is to have between 800 and a thousand loans, so dont even think about it if you haven't got 10K to invest. Any lower than that and any less time than five years and you're banking on luck - maybe you get a higher return, maybe you get a lower return. With about 20k invested I am getting about 6.5%, and happy.

For more predictable loan returns head to Ratesetter. There you set the rate you want and you are "protected" by a provision fund. On RS recently I have been getting money lent out at 6.0% to 6.7%. Another "protected" site is LendingWorks - currently overing 6.5% with provision fund and redundancy insurance.

For near instant access i use Assetzcapital's 30 day account currently offering about 5.2% (i think). It also operates a "provision fund".

I used to like ZOPA but am now put off by their low rates - only about 5% in their higher risk account. But like FC you won't get anywhere near the average return with a small wedge over a short period of time. See the rates for short term money on assetzcapital above and go there

As for the 12% plus sites like Funding Secure - the less said the better! Unless you get lucky you won't clear more than 6.5% to 7%, after their appaling bad debt.


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