Short term investments options?

Typo on my part, will adjust :+1:

A single cocktail less per 6 months :wink:

A round of drinks in Wetherspoons if it changes your calculations. :joy:

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I was thinking more like a months bill (mobile phone bill for example, or Netflix), 3-4 days of dinner, a good 6 months of toiletries. £10.50 can go a long way on things you’d otherwise have to pay for from your wage for the sake of (imo) negligible extra convenience.

Yes, that’s true and that’s a risk that would need to be taken. The other main risk is the borrower is late paying back or defaults, in which case you might not get all your money back on time or at all. Diversification (i.e. only a small fraction of your investment in any given loan) and provision funds (available at some platforms) mitigates against this.

Some peer-to-peer lenders provide auto-invest and auto-sale options. The ones I have most experience with fall into this category - Zopa, Ratestter, Funding Circle, and Assetz Capital. So far I’ve not yet had a problem accessing my money within a couple of days. Most of the time I can access within a few hours, but they all warn that under abnormal market conditions, access can’t be guaranteed.

The platforms that require you to pick and sell your loans manually are the ones which take longer to exit from, but also provide higher rates.

EDIT: There are also some platforms which provide access to loans that last 6 months or less. These remove the access risk, although not the repayment/default risk. One example is Growth Street, who provide 30 day invoice financing loans to businesses.

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I personally would see if you could wait even longer than 6 months

If not you could open some of the current accounts with high introductory rates

Yep, if he can wait for 12 months then he can try Dozens as they offer 5% “no risk” over 12 months.

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I think with Dozens it’s a 12 month max term for their bonds - you could (I thought) withdraw at any time.

You would, though, need to wait for the next bond issuance - end of May, I think?

I was considering suggesting Dozens earlier but I don’t think we know for sure when the next bonds will be issued and the way the bonds are issued is a bit of a faff with no certainty as to whether you can actually invest what you hope to invest.

I wouldn’t call their bonds no risk (you have to trust they are safeguarding in the way they claim; there is no FSCS protection). The risk does however seem to be closer to bank accounts than the investing options mentioned earlier.

I think this is correct, unless they change the terms when they start issuing bonds again.

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Dozens FAQ
image

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Atom is 1.6% for six months.
Just saying

Latest on @AskAC suggests the next dozens bond will be towards end of May. Less likely to get 10k in this time too, I think

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I think Atom is a good choice it’s going to get you around £80 in six months with no risk.

With Marcus you would get about a fiver less on 1.5% with the same £10k but more helpful if you really needed it before six months was up.

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I wouldn’t even think about stocks or bonds with that time horizon. Just get any savings account with a decent interest rate. I fully recommend Marcus.

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My advice would be to try extend the 6 months (obviously not sure what the reason for 6 months is)

12 months you can get better interest rates

If you could extend it longer then shares might be a better route

But if you really do only have 6 months just find the highest interest rate you can

That’s why I wrote “no risk” in quotes :slight_smile:

All very useful information, thank you.
Atom seems like the hightest return for the least amount of work, but £80 on a 10K investement just makes me wonder whether it’s worth the effort.
I need to understand the risks of peer-to-peer lending, at it seems to be the next step in risk/returns, if I can expect 3% over 6 months.
I’ll start digging around, and see if it’s viable for 6 or 7 months. (I need the money in Jan 2019).

Zopa looks interesting for being the longest standing P2P operator, and Funding Circle looks interesting too, as it lends only to businesses, and the Government is using it, apperently, to lent to businesses.

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This comparison site may be useful as it comes up with a risk score for different options. Bear in mind its not an exhaustive list of options though.

If you do decide to invest in peer-to-peer lending, of the options I’m familiar with I’d be inclined to suggest RateSetter rolling account (targets 2.8% AER), Landbay Tracker account (targets 3.1% AER), or Growth Street (targets 5.3% AER). I believe Ratesetter and Landbay have provision/reserve funds which buffer investors from borrower defaults and late payments (to a degree) and they don’t charge withdrawal fees on these particular accounts (they do on other accounts on their platform). Growth Street loans are only 30 days long so you are only ever 30 days away from guaranteed access to your funds (minus any borrower defaults/late payments, I assume).

One thing I forgot to mention in earlier posts was some, but not all, platforms/funds charge a fee for selling your loans and exiting early. Zopa is one example of this so don’t go with Zopa for only a 6 month time period, and look out for this when choosing a platform.

Several peer-to-peer platforms have have referral schemes where you can earn decent cashback for signing up an depositing some money. I’m not sure if you would be able to benefit from these as they usually require a 1 year minimum investment period to earn cashback. But if you would like a referral to a platform, feel free to PM me. I have accounts with several of them.

So 3% in six months is getting you roughly £150 quid. It’s whether or not the risk is worth the £70 extra from a 1.6%.

As far as worth the effort I timed setting up Marcus and paying in and it’s under two minutes. It’s very friendly, they don’t have an app but the website and onboarding is modern. Better than doing nothing and having £10k just sitting there losing value.

The next step up would be investing in a REIT. There are some that have yields over 7%. There’s a chance that at the end of 6 months the price has fallen a little, and you’ll need to be lucky with the timing to buy in time to be eligible for dividends and sell after receiving them.

But at least you’ll have complete liquidity and little to no “platform” risk, compared to the pains and possibly negative gains you could get with P2P

I think what I mean by effort/return is I’m not learning anything by putting my money in a 1.5% savings account, not the speed at which I can set this up :slight_smile:

So far, I quite like the idea of Funding Circle, Zopa and IFISAs. If I put 10K into Funding Circle for 6 months chosing the lowest risk lending options (I still need to read up on that), I could then keep the ISA open for further investments, and perhaps open one with Zopa in the next tax year to spread the risk further. Even a 2% return would be worth it effort for me, because I would have learnt something new, which I value as well :slight_smile:

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Can you put some of the money away for longer?

I worry that the thing you’ll have learnt is not P2P lending, or REITs, or stocks and bonds but how to lose money in 6 months :smile:

You’ve mentioned this 6 month time line but not much about why or what purpose its for? This makes a difference on where you might want to set your money and if you really want to put it at great risk of loss over 6 months.

You seem to be comfortable with a potential loss or at least a potential for your money to not be available in 6 months. How much would you be willing to spare? Because you could take this amount and put it into riskier options for a longer period with better returns, and keep the portion you don’t want to risk in a risk free option with access in 6 months.