Peer to peer lending with Ratesetter
I like many others started off my peer to peer lending Investments on Ratesetter, lured in by what seems to be a relatively low risk investment with a small but decent interest rate and added £100 bonus for investing at least £1000 for a full year. This means that by investing £1000 on the one year market you stand to make a return of 13% at the 3% market rate of today. Comparing this to the current interest offered by the many
banks and building societies it seems like a no brainer to take a chance on investing your money.
banks and building societies it seems like a no brainer to take a chance on investing your money.
Whilst there may be higher interest rates available by going to other peer to peer lending platforms, Ratesetter does have an ace up its sleeve in the form of a provision fund. This fund aims to cover any of the loans which go into default and so far it has worked very well as no lenders so far have lost even a penny. In my opinion this makes Ratesetter one of the safest peer to peer lending platforms out there and it would take quite a catastrophic amount of loans going into default to dry out the provision fund and cause any issues.
Once upon a time there were four markets to lend to on Ratesetter, these were as follows
The Ratesetter lending markets
- One month rolling
- One year fixed
- Three year income
- Five year income
In 2016 a decision was made to remove the three year market which I found a shame as I didn't want to tie up my money for 5 years but wanted a better rate than the fixed 1 year returned. However I could have still taken the 5 year and sold my loans if and when I needed my money due to the platform having great liquidity, albeit at the cost of an early fee.
It was at this point that I decided to draw down on my Ratesetter lending funds and move onto some other peer to peer platforms. I still have my £1000+£100 bonus sat in the rolling market earning around 3% per annum with easy access.
Final thoughts on P2P lending with Ratesetter
I really like Ratesetter as a platform. It is easy to navigate and very quick to get all of your funds invested if you are willing to accept he going market rate. If you have time and patience you can set your own rates in the hope that interest rates will rise and this allows investors to achieve better returns.
I like that fact that there are a variety of different markets to lend in giving more choice of timeframes And interest rates to lenders depending what they want to do with their money. The fact that it is all backed up by a really steady provision fund makes it a much better investment for the investor who does not like to take too much risk and also wants to be able to sit back and forget about it.
If I personally was starting out again I would invest the £1000 minimum to get the £100 bonus at the end of the year. I would use the one year fixed market leading to roughly 13% return.
If you would like to try Ratesetter and want the £100 bonus this is my referral link.
Thanks
I hope this blog post helps some of you to make your first steps into peer to peer lending and I look forward to answering any questions of or comments.
*this blog post represents the authors own opinion and should not be taken as financial advice.
One thing about Ratesetter that makes it stand out is the way you can set automatic withdrawals at weekly or monthly intervals. This is very useful if you want an income stream to supplement your income (a home to put in a chunk of pension lump sum, for instance).
ReplyDeleteRS is the only (I think) platform that supports it - I top it up from time to time as larger capital sums mature in the other P2P platforms I invest in.
Thank you very much for taking the time to comment it is very much appreciated. Your totally right it is a great feature and one that other platforms would benefit from implementing
DeleteI started with Ratesetter for the £100 bonus, but never put more in, as I found the rest of the p2p market much more generous. I do wonder about their business model, as they must have many multiples of that £100 to pay out. Their provision fund is all very well, but if you can get 8-12% on loans secured against property elsewhere, it would take a huge crash to wipe them out, and then RS's fund would fail anyway.
ReplyDeleteHi thanks for the comment. I also used Ratesetter for the £100 deposit and have just left it all in there now on the monthly rolling. I do favour the better returns of elsewhere but Ratesetter does feel a bit safer for parking a little bit of the money and it is quite easy access to it.
DeleteRatesetter is a great place to make your first peer to peer Investments but after a while you will find that there are more achievable rates elsewhere.
ReplyDeleteIt is definitely worth it for the first year with a 1k investment as with the bonus you are getting a 13-14% return.
DeleteWIth regards to vicrage, it would not take that much to wipe the value out of property. Suprisingly most borrorowers needing to borrow at these rates are not the most moral of individuals and most would not just hand keys over. Fees will soon rack it up, the reality is although a propety is vauled at something how often do you pay full value unless it is highly sort after and if it was highly sort after chances are a main stream lender would lend for much less. Property offers more in returns for a reason.
ReplyDeleteMy main concern is the fact that Ratesetter does not make a profit and therefore platform risk has also got to be considered (despite back up arrangements in case of failure). Moreover, the default rates for 2014 were higher than expected, despite the benign credit conditions, and the rates for 2015 and 2016 have yet to crystallize. Remember, you will be bailed in (through a reduced interest rate and, in extremis, a capital reduction) if the provision fund approaches exhaustion.
ReplyDelete