Friday, 2 June 2017

Peer to peer experiment - month 1

I've kept away from peer to peer lending as I don't like the downside - namely, if one of the companies you've lent to stops paying, the amount anyone would pay you to take that debt off your hands is going to be negligible. It's pretty much a sunk cost once invested, until the happy day the final repayment is made.

That said I have dipped a toe in the water and haven't suffered any failures yet...

With markets riding high, hinting at lower returns in the future, I turned to Funding Circle to capture some of those juicy returns promoted on their site.

I've topped the account up to £2k and set the automatic selector to go for anything other than those companies with the worst rating. This will mean when either enough interest and repayments accrue, or new cash is added, to hit £20 (I know, high roller!) the auto-bid function will select a new debt to invest in.

At the moment there are 76 loan parts making up the total £2k invested at a gross interest rate of 10%, so in theory good diversification of different companies in different sectors doing their thing, but how will it perform?

I'll post the main features - total invested, any new cash added, income, fees and losses etc. I'll ignore tax (for this experiment anyway) because it's different for everyone and I think the interesting thing is the performance of the investments and Funding Circle as a platform and the companies who go there, not how much the government can bite off for themselves.

In case anyone is interested, this is all my own cash and I haven't been asked to do this by FC or anyone else - my cash, my mistakes!

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