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Post by masquedefer on Aug 3, 2014 9:15:59 GMT
Thank you once again for answering my previous query.
I am thinking of investing more money with FC, taking my investment up to about £100k. Whilst I would of course minimise risk (as FC recommends) by not investing more than 1% in any one loan and having 100+ separate loans, and doing my own financial analysis and DD on each borrower, does anybody have any opinion on the likelihood of FC failing?, OR recommendations about other stable P2P lenders?, OR any other suggestions for prudent risk management in the field of P2P lending?
The £100k would represent 25% of my pension pot, the rest being in what i perceive to be "higher risk" equities.
Also any views on whether the UK Government will soon allow P2P loans to be SIPP/ISA sheltered. And, if so, would FC allow me to transfer across cash in an existing SIPPDeal Plan and then let me transfer my current non-SIPP loan portfolio across - e.g. using the loan part sales process (i.e. a 0.25% transfer fee seems reasonable). I assume this would make the interest earned tax-free.
Hope this makes sense.
Thanks
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Post by marek63 on Aug 3, 2014 9:43:56 GMT
I would suggest you look at Assetz, ratesetter and TC and saving stream to spread platform risk. Then decide whether getting 6-7% or so with little DD at low risk (rate setter) or doing DD is worth the time/money equation.
Your own tax position is key as well since losses are not tax deductible, a 40% taxpayer needs to do brilliantly well to beat a guaranteed no loss rate of 6-7%
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Post by davee39 on Aug 3, 2014 9:53:36 GMT
You appear to have a remarkably high tolerance of risk.
My entirely subjective view is that 25% of total assets is enough in P2P - I have reached 26% but will be drawing down Zopa to supplement my pension.
FC is far too risky to be plunging in tempted by high C- loan rates. I would suggest putting a large chunk into Ratesetter 5 year, and then putting the repayments into FC.
You also need a few months dabbling with a smaller sum to see how it works.
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agent69
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Post by agent69 on Aug 3, 2014 9:56:33 GMT
a guaranteed no loss rate of 6-7% If only such a thing existed
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Post by marek63 on Aug 3, 2014 9:59:59 GMT
Agree with pp - if you do some analysis on what happens to your returns if a few loans default it can be quite scary. The ''100 loan 1k' profile always sounds good but takes significant time to create and monitor. Also p2p resale liquidity is not anything like as good as equities etc.
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unmadem
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Post by unmadem on Aug 3, 2014 10:46:39 GMT
I wouldn't put that much in a single P2P platform and if I did it wouldn't be FC as the loan there are mostly unsecured and as you start to get defaults it can have a large impact on actual returns. Look at the ones @marek63 suggests. Currently Assetz are around 9.5% to 10% secured mostly on property and saving stream 12%.
Lots of good information on this forum and helpful people. Take your time to get used to the sites before committing that much.
If you do commit large sums to FC be aware it is much more difficult to sell a £1000 loan on the secondary market than a £20 one.
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oldgrumpy
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Post by oldgrumpy on Aug 3, 2014 11:00:31 GMT
...and it takes a hell of a long time to invest £100K on FC if you check out each offering and aim for wide diversification. I wouldn't put £1000 on any single unsecured loan on FC.... more like £100 (my portfolio there is a modest 5 figures). The secured fixed rate A+ property loans (12-14 month, not the three year ones) with 2% cashback probably merit a bit more, but you still end up with around 8.5-9% after fees.
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j
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Post by j on Aug 3, 2014 11:09:36 GMT
Some great advice there from other investors. It all depends on your risk tolerance. If you are more risk-averse, FC certainly isn't the platform I'd use. SS or AC are much better. Even AC with their very good DD have had some issues lately with a few loans (though no official losses as yet). If you want riskier loans, you're still better off at AC/SS as their 'secured' loans still offer par or better returns. The stock market offers another dimension if you're so inclined too
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wysiati
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Post by wysiati on Aug 3, 2014 12:36:11 GMT
The loan part resale process is currently the only way for ordinary investors to transfer loans between accounts, although FC notably did allow its whole loan trial customer to transfer across to a new entity without having to resell via the secondary market - another example of its increasingly two-tier service.
If you do use the resale process be aware that there are plenty of active automated buying bots on the secondary market so you would be advised to add a premium (you will only be paying yourself (plus the sale fee to FC)) to attempt to ensure that the loan parts are not the most attractive for a particular loan (both the % buyer rate and the % premium may be factors in a bot automated purchase decision). If you have an A rated loan part at 14%, for example, then there may be no way to guarantee that you can out it up for sale, even at the maximum 3% premium, and still buy it back yourself, even if you attempt to do so seconds later. The days when I transferred large chunks of portfolios between accounts in the early hours of the morning are now long gone!
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Post by masquedefer on Aug 4, 2014 12:16:02 GMT
Thank you very much for your most helpful replies which I shall certainly put to good use. I will definitely spread my investment money across several of the suggested lending platforms.
I have a follow-on question regarding the best method for sifting out the good from the poor quality loan requests on FC, but will post it in a separate message.
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