I put 1% of my savings into Linked Finance in order to avail of a tiered benefit (company discount from a company that I was already a customer of) which I've utilised, while also receiving repayments each month. This has been reinvested in smaller amounts with other companies as the funds have come back to me.
This is a sum of money that wouldn't materially impact me if it disappeared tomorrow but I wouldn't be comfortable putting a significant sum into P2P.
The title says it all really. I'd be interested to here how may people have taken the plunge with P2P lending and what percentage of your portfolio (if any) it represents? Are you planning on increasing, maintaining or decreasing this percentage this year?
Unless I knew who was doing the credit checks when lending on the money to companies, I'd would not put a penny on such platforms. For example, how do you know what margin you should receive if you don't know the risk within the company that is getting yours and others' monies through such a platform. Should the margin be 1%, 3% or 5%? If you or the platform can answer that question fair enough! If not, avoid like the plague.
5% is easy to get in non-investment grade corporate bond funds listed on stock markets. Yes, they carry above average risk - i.e. when compared to government bonds or investment grade corporate bonds, but a 5% margin pays you for this risk. And non-investment grade corporate bonds are heavily vetted by professional credit analysts before they can raise monies by issuing a bond.
Zero, I can tolerate moderate risk but this would not be for me unless I knew the operator and business well, 'twas too hard come by to take on this level of risk.
On Linked Finance, up until recently you bid for the loan and you got to choose an interest rate (up to 15%), there was some financial statements you could review for the business and base your bid on that. It has changed recently and Linked Finance decide on the interest rate based on their credit rating (how they rate the business isn't very transparent). Most bids are handled by an auto bid function and some loans have been filled in seconds - meaning you have no chance to review any info on the business. Essentially, if you use autobid, you are lending blindly. If you don't you'll never get to lend.
I had small amounts in Linked but am winding it down. I also have small amounts in Twino and Mintos (only loans with Buy Back guarantees). Not large enough amounts to trouble me if they disappeared.
I think I will have to re-evaluate my P2P investments and aim for a 15%+ gross return to justify the risk and I will consider reducing the overall percentage of my portfolio that it represents.
The title says it all really. I'd be interested to here how may people have taken the plunge with P2P lending and what percentage of your portfolio (if any) it represents? Are you planning on increasing, maintaining or decreasing this percentage this year?.
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