My Zopa Summary For 2014
I’m publishing these figures, as in my view, they are very indicative of a mature Zopa account.
Remember that I started investing in 2008, so some of the money is possibly on its third loan.
I have added to the pot over the years, when I have spare money left over at the end of the month. I’ve also repatriated money at times, when because of circumstances, I have some large bills to pay.
At the start of the year I had £147,000 invested and at the year end that had risen to £156,000.
Over the year, I’ve actually taken out £16,700 and paid in £18,500, so I haven’t really paid anything into the pot.
Interest and repayments to my holding account in Zopa has been almost £96,000, which conveniently works out at £8,000 a month. So I could bring up to this sum into my bank account for paying bills every month. As these payments usually occur around the beginning of each month, it is very easy to juggle them with my approved overdraft limit to avoid paying the wunch, excess fees I don’t need to.
Over the last year, the amount of money I’ve earned works out as a return of five percent before tax.
Because most of my money has been lent out in the last couple of years or so, I suspect that a high proportion of my Zopa money is covered by their Safeguard scheme.
The downsides are that I could earn more with more risky peer-to-peer lenders and I have to pay tax on my earnings.
I never give financial investment advice, but I have found Zopa to be the ideal mattress to put my spare money in a place, where I can access it reasonably quickly. It certainly pays a better interest rate.
Peer-To-Peer Energy
This report from the UK Solar Power Portal makes some good points.
I can envisage a time, when the solar panels on my roof, feed into a system, that gets me the best price and this is delivered at a best price to those that need it.
As a control engineer, I know it’ll probably be totally automatic and the price will be a balance that is the best for micro-generators and consumers. Just as with peer-to-peer lending, the only losers will be the big companies. Except for banks, you will read energy companies.
An Open Letter To Police Commissioner Adrian Leppard
In the article in Friday’s Standard with the front page headline, Force Banks To Fight Web Fraud, you say that the banks must fight web fraud.
I agree that banks must be forced to report all frauds to the Police.
As someone, who has analysed a lot of databases in his time, I know from experience with some of the best consultants in the City, that properly analysed these reports will uncover valuable patterns that will help police locate the perpetrators. The findings should result in sensible advice that would help both the banks and customers.
My worry is that the banks will introduce levels of security, that mean you have to do things like access your bank account with a dongle or install special protection software on your computer. This approach just means that criminals use the new restrictions as new ways to fool clients.
In my view, banks need to think deeply about adding new features to their banking systems for the benefit and protection of customers.
So what would I do?
1. A friend was robbed at a cashpoint and someone took his card and got him to give up his pin at knife-point. I think we should all have an emergency pin, that if typed into a cashpoint, indicates something is wrong. The machine keeps the card and perhaps gives out a minimum amount of money, saying that the client has no funds available.
2. We should be able to set a limit on payments, above which the bank sends us a text message, to say that we’ve just paid £220 to Marks and Spencer. So if say your card details had been stolen, you would at least get an early warning.
3. We should also be able to lock bank accounts. Say you were going away for a month and during that time, you would not be accessing your bank account. You would enter an extra password, which only you would know, that stopped access to your account until it was re-entered.
If banks were to think what customers actually want and not waste their time selling them junk products, we might get a banking system that was fit for purpose and very secure.
Banks should do other things.
1. Some of the work I know was done with my software, allows banks to profile how customers access their accounts. Are they doing enough in this area to fight crime? I doubt it.
2. Banks should also only use systems and programmers based in the UK, as this would mean that those responsible for any serious breaches or problems can have their collar felt.
Personally, I also always access my banking from the same computer, which stays locked in my house and has never left. Those that use apps on their mobile for banking deserve all the trouble they get!
Peer-to-Peer Lending Losses To Be Eligible For Relief
An obstacle to some, who might want to use peer-to-peer lenders to save money, is that any there was no relief for any bad debts. But George Osborne has changed all that and you can read about it in the Guardian. This is said.
And this week the industry received a major boost when George Osborne unveiled a package of measures designed to help it grow. Crucially, the chancellor announced a new bad debt relief which will allow individual investors to offset any losses.
So it seems that peer-to-peer lending is getting less risky all the time.
Zopa Goes With The Flow
This article on CrowdfundInsider talks of a tie-up between a boiler maker; Flow and a peer-to-peer lender; Zopa. This describes the link.
The Flow boiler will be launching in January 2015 and will be available to customers through a new finance package. This will provide a payback time of five years for the complete cost of the boiler. Customers may purchase the Flow boiler using a separate unsecured personal loan via Zopa, with repayments being off-set by reductions in your home energy bill from the value of the electricity generated.
I think we’ll see a lot of deals like this, where two new companies in different fields link up to make two and two add up to six.
This is disruptive innovation at its best.
Zopa’s Courageous Decision
I have believed for a long time, that certain databases should be made public, so that they can be properly analysed.
Suppose for example that a suitably anonymised database of all road deaths, was to be made available.
I will not speculate as to what it might show.
But you can rest assured, that some parties would not like some of the obvious conclusions that were thrown up.
How about to a detailed database of all those in prison?
Because of the power of data analysis, I was very surprised to read that Zopa has decided to make their loan data available for analysis.
It is a very courageous decision, that I hope gets other companies and organisations to do the same thing.
Payday Loans Get A Cap and a Kicking
This morning the Financial Conduct Authority has imposed a cap on payday lenders. The BBC report starts like this.
Payday loan rates will be capped at 0.8% of the amount borrowed a day,said the Financial Conduct Authority (FCA).
In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.
I do hope that this type of loan quickly becomes a blip on the history of finance.
If you might at some time need to borrow money, make sure that you can get the best credit rating you can, by behaving responsibly. This should help to give you access to finance at a reasonable rate when you need it.
But we can all help to get rid of these high cost loans.
I believe that if we put our savings in a peer-to-peer lender that lends to others, this will put more money in the hands of responsible lenders, who can lend to those that need to borrow, who fit their lending requirements.
So you’ll be helping yourself and also helping others.
But do choose a peer-to-peer lender that is or will be regulated under the FCA.
Zopa, who are regulated, say this about their relationship with the FCA
Peer-To-Peer Lending For The Non-Digital World
I was an early adopter of peer-to-peer lending in 2008 and now have a six figure sum invested, which returns me over five percent before tax.
Reading the letters about poor broad band and mobile phone coverage in today’s Sunday Times, it strikes me that many people are cut off from this sensible investment.
I could if I wanted to, set up my Zopa account, so that I perhaps looked at it once every blue moon.
Would it be an idea if one of the peer-to-peer lenders offered a minimal input product for those disconnected from the digital world?
Money would be paid in by a direct transfer or even a cheque paid in at a bank branch, if you still use one.
If you needed to check your account or perhaps withdraw a small amount of the interest and repayments that you have received as cash, you would just use a debit card in any ATM.
Obviously, you will still have the option to login normally, if you wanted.
Now Barclays Tidy Up Savings Accounts
It’s reported in The Sunday Times, but also here in The Guardian.
In my view it says to me, you don’t trust of the wunch of bankers.
All I use my bank for is to hold my working money and provide debit and credit cards.
What Would I Do With £70,000?
A spam e-mail turned up in my Inbox asking me what I would do with a lump sum of £70,000.
I would have no hesitation and I would stick it into a peer-to-peer lender, that had a mechanism that protected my lump sum and gave me interest. Without doing the research, I think that is either Zopa or Ratesetter, at present. But there may be others with an equally safe risk profile.
Zopa, the one I know best, has given me the following.
1. A safe haven for my money, until I want to do something else.
2. 5.1% interest before tax.
3. The ability to either roll-up or take-out the repayments and interest.
4. You might also get invited to the occasional party to meet the team. You might meet mavericks like me there too!
Dont’t put your lump sum near any wunch of bankers. The Bank of Mattress is probably a safer investment.
The Anonymous Widower 