P2P – 2 Year Update

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Following on from my last review, another 12 months have gone by so here’s an update on my peer-to-peer (P2P) lending.

P2P image

Around this time last year, my P2P portfolio stood at £2,098.15.

As at June 2016, it totalled £2,437.20.

£226.88 came from referrals and a bit of new investment (a whole £26.88!), so actual increase was £112.17 (5.3%).

This increase compares favourably to the 4.9% I achieved in 2015 as I continue to reinvest my money in loans with higher interest rates.

Here’s my P2P portfolio:

Funding Circle – £1,050.11
FundingKnight – £105.18
LandBay – £204.09
Lending Works – £355.55
RateSetter – £730.02

Defaults

In December, I suffered my first P2P loan default. Since then, there has been a second default. The above 5.3% increase includes both defaults (both of which were with Funding Circle). Most of my loans are very small and spread out (I have over 80 loans with Funding Circle), thus hopefully, minimising the impact of defaults.  Had I not had those defaults, I would have seen an increase of 6.4%.

Administration

P2P does have its risks. It’s not covered by the FSCS so there is the chance that you may not get all your money back should things go belly up.

In June, FundingKnight went into administration.  The first I heard about it was when I received an email stating that it had been acquired by a company called GLI Finance. I don’t have much loaned via FundingKnight but some lenders may indeed be trying to get their money back in a panic. I can see on the website that there are lots of loans on the secondary market and not a lot of new loans (if any). What I’m going to do is to withdraw repayments made and recycle them into one of my other P2P accounts – I’m not going to try to cancel down my loans or sell them.

This does mean that I’ll not really be keeping to my P2P diversification plan, but my funds will still be spread between the other accounts.

So, whilst I’m not currently intending to add any new funds, I will continue to reinvest and of course, will monitor my portfolio closely.

10 thoughts on “P2P – 2 Year Update”

  1. I am currently involved with Twino and it does appear to show a decent ROI. Although i have a short track record. Have to see how recent changes effect the market (they have implemented loans without buyback guarantee but with higher interest). It al depends on the amount and number of investors.

    Good luck with your progress!

    • Hi Mr MB
      That’s interesting about the buyback guarantee, not heard of that before. Thanks and good luck with your progress too!

  2. Hi Weenie,
    Good to hear that P2P seems to be working out for you. As for the diversification bit – well, I think as with anything else you’re doing, i.e. investing etc., one needs to be flexible and adapt when circumstances change. Maybe you can find another P2P platform you’re comfortable with to replace FundingKnight?

    I’ve only put a starter amount of £100 into Funding Circle in December 2015 – just to see how it works and what all the fuss was about, really. So far it goes well: no defaults as yet, 1 loan already repaid in full and re-lent, and some regular tiny, tiny sums of money coming in each month.

    I would consider putting more money in but am waiting for the ISA to come – not having to pay tax does have great appeal!

    Regards, Pinch

    • Hey Pinch

      I’m going to spread the repayments from FundingKnight among my other P2P accounts to keep those ticking over.

      For something slightly different, I have now diversified into property crowdfunding (post to follow) to see how that goes.

      All the best with your investment with Funding Circle and when the P2P ISAs finally come out, I’m likely to convert my FC account into one.

  3. Hey Weenie,

    I’ve still not tried P2P lending yet. It’s on my list to have a go at, but I’m simply too busy at the moment. It’s good to see the healthy 5.3% interest you’ve achieved, hopefully you’ll get no more (or very few) defaults…

    OR

    • Hi OR

      Yes, you have a lot on your plate at the moment and hope all’s going well in your new home!

      I hope to see higher interest rates with my P2P but need to balance that out with the risks – don’t want to be too greedy!

  4. Hey Weenie,

    A return of 5.3% seems great considering you’ve had two defaults. I suspect P2P (and the defaults which come with it) will only become more popular as bank rates move down and close to zero.

    • Hi MG UK

      Yes, the defaults only had a small effect on my return because I’ve tried to keep my loans really small. I think P2P will become more popular as they become a bit more mainstream but for some, the risks (of default) might be too high.

  5. Hi Weenie,

    I’m going to be going into P2P lending once we’ve moved to our new home in Sept so I’ll be sure to pop over and use your referral link. Thanks for the progress report, it’s really good to see your strategy and results.

    Cora.

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