Zopa Returns
I am trying to be as honest as I can here. I don’t want to be optimistic and I know that with any investment can go up as well as down, but so far the returns are much better than I get with my account at the Nationwide.
One point to note, is that all of the returns shown in the graph, are based on real returns. For instance, if I have any money that is unlent, then it is included in the total and thus it reduces the returns.
Zopa Returns Since January 2007
There are various lines shown on the graph.
- Red shows the A* lending rate
- Blue (Earn1) shows the returns discounting for any bad debt, but including accounts in arrears.
- Orange (Earn2) shows the returns discounting for any bad debt and arrears.
- Dark Blue at the bottom, is the OBR or Official Bank Rate
Notes.
- You will notice that Earn1, shows a large dip around the end of May. This was because I had a large default of £200 on a loan. I have now cut substantially the level I lend out in any individual tranch. It used to £200, but now it is just £30. The whole idea is to push the average level of loan to around £40 to £50, so that each deafult costs less. Admittedly, you will have more loans so it will be a case of swings and roundabouts.
- The dip and recovery in Earn2 was caused by payment difficulties at the start of some loans. So they went quickly from being in arrears to being up to date. You might blame computers and finger trouble, but I couldn’t possibly comment.
I’m happy with the returns and feel that by managing the lending properly, I can keep the Earn1 rate above five percent in these difficult times.
The Anonymous Widower 
[…] I said in an earlier post, I set my limits too high at first and ended up with a bad debt of £200. I now have a maximum […]
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