Would you Zopa?

[ChimpMaster]

Could be a good investment for all that money you have stashed away under the mattress....

http://uk.biz.yahoo.com/12092006/389...er-lender.html

[_V_]

At the time of writing, Zopa lenders are achieving an average return of 6.8% gross (after Zopa's 0.5% fee but excluding tax) but some lenders have recieved as much as 14%. Then there is the transparency - lenders can see exactly who they are lending to and what those borrowers are doing with the money. Reasons for borrowing have ranged from publishing a sci-fi trilogy to IVF treatment, solar heating for a bungalow, Newcastle United season tickets, funeral expenses and lots of weddings.

The top return is only 14%. You could buy a house instead and within a few hours it will have doubled in value.

HTH

[BlasterBates]

...aha the retirement plan becomes a bit clearer

You need to check out bonds, there you have the possibility to find you're own risk level. I think you'll find a similar return ranging from Government risk free (I think 4-5%), to emerging market company bonds; if you want risky bonds otherwise known as "junk" bonds you can probably get 14%. I think you'll find on this website that the 14% is for a risky lend.

[tim123]

I find this report incredible. Average returns of 6.8% and a high of 14% (is that on all of their funds or just on some of it?).

I subscribe to a financial board and there are comments there that the lending rate of 5% through Zopa is too high for 'normal' borrowers. Only high risk or short term borrowers are interested in borrowing on terms that make investing through Zopa worthwhile and then you have to allow for the bad debts.

I can't believe that there is anyone investng a sizeable amount through Zopa and making a good return, on ALL of their deposit, ALL of the year.

tim

[ASB]

I've just put the £30 sweetner they rang me up and offered me the other day onto the market. I offered this looking for 6.5%. I'll be interested in whether it gets taken up and what happens. It seems difficult to:-

1) Find out general offers. It seems you just say "this is what I want".
2) Find out general bids, i.e. the terms borrows are indicating they would expect.

Seems like a completely crap way of actually making a market. As to whether it is a viable market or not who knows.

Edit: I take it back. I've discovered the riught buttons to press. I've adjusted my offer to try and get a 4.5% return after fees (i.e. a touch less than I get from current deposit account). This results in:

12 months A* 5.50%
6 months A 5.50%
12 months A 6.40%
6 months B 6.00%
12 months B 7.80%
12 months C 13.50%

The only one of these that is in the borrowing market is 12 months A* so it doesn't look too likely anybody will be interested in taking it up.

Don't see what's in it for me. Lend money to get less and have a different risk profile.

[ChimpMaster]

ASB I think the idea is to invest a set amount and have that amount spread over the various risk/return profiles.

So as Tim123 says, you wouldn't earn the same interest rate on the whole of your investment over the entire year. You might earn 8% for 3 months and 5% the next 2 months etc and on different portions of your total, until at the end of the year you end up with a return greater than what the banks pay. Zopa are indicating 6.8% average I think.

The max you can lend is £25k.

Also if you lend less than £500, all that money will go to 1 borrower. So your 30 quid ain't going far mate!

[ASB]

ASB I think the idea is to invest a set amount and have that amount spread over the various risk/return profiles.

Yes, but the point I was making was that if you look for the same return as a reasonable deposit account you are offering at too high a rate for anybody to accept it.

So as Tim123 says, you wouldn't earn the same interest rate on the whole of your investment over the entire year. You might earn 8% for 3 months and 5% the next 2 months etc and on different portions of your total, until at the end of the year you end up with a return greater than what the banks pay. Zopa are indicating 6.8% average I think.

Quite, but I don't know if this takes into account the associated costs etc. Certainly if I aim for 6.8% in any market the gross rate that is required of the punter is way off beam and unlikely to be ever accepted.

Also if you lend less than £500, all that money will go to 1 borrower. So your 30 quid ain't going far mate!

I don't think that's right. You stipulate the maiximum you will lend any 1 borrow and it gets mopped up from the pool.

Of course it's not MY 30 quid. It's theirs. I've got lend it to somebody before I can get it out though.

[ASB]

Well, I have lent the 30 quid on a 12 month contract on the "C" market at 10.50%.

If it gets paid back then I receive back the grand total of 31.63. Approx 5.5%.

Seems like I'm taking a huge risk for a 1% premium over the deposit account.

Good job it was free money to start with.

[tim123]

Well, I have lent the 30 quid on a 12 month contract on the "C" market at 10.50%.

If it gets paid back then I receive back the grand total of 31.63. Approx 5.5%.

Seems like I'm taking a huge risk for a 1% premium over the deposit account.

Yep. This idea is supposed to be taking over the world of finance. I don't think so.

tim