Closing A Zopa Account
Someone likes the idea of a Zopa account, but is worried about, how he could get access to the money in an emergency. I have been researching this and find that although it may not be the best financially in the long term to close a Zopa account, there are ways that will get most of the money out fairly quickly.
Let’s say you have £10,000 invested in Zopa and it is lent out on a three year basis. If you do nothing then over three years the money will be returned with the appropriate interest, subject to any losses from bad debts. There is only one way to assess these and that is by looking at the past performance of your loans and the proportion of bad debts that Zopa discloses. I have always adjusted the interest rate I charge to be not too greedy on the one hand and not too low on the other to get the money lent out quickly. I also make sure, I don’t lend over large sums to any borrower.
Analysing my borrowers, shows that only a small proportion have missed a payment and only five out of over 2300 loans have gone bad. Ask anybody who has run a finance company about that rate and they will say it is very small.
If we look at our notional £10,000 it will earn about seven percent a year, which is £2,100 over the three years. I’m assuming here that you reinvest the money in Zopa. Looking at Zopa performance it would appear that about two percent of loans fail. So if we look at the our £10,000 then expect to pour something like two hundred pounds down the drain.
It’s not quite as simple as that and I’ll be putting together an Excel spreadsheet that is properly calculated.
But the point is that you will still get 98% of the original money back, plus a bit of interest.
But supposing you want the money quicker. Only a small proportion of my loans are not available for Rapid Return, which is Zopa’s get out quickly method. This will cash out most of the money in a couple of months.
But I wouldn’t do that!
The notional £10,000 will give you a cash flow of about three hundred pounds or so for the three years, but if reinvested in Zopa it could be longer. This may in fact be what you want to do.
The trouble is if you have cash-in-hand you always want to spend it.
Is Fred Goodwin a Coeliac?
The reason I ask this question, is that we have one important thing in common; we both hate pink vanilla wafer biscuits. In my case, I’ve avoided them all my life even before I was diagnosed as a coeliac and of course can’t eat the normal ones now. But I’d never write an e-mail about it, as Fred did and I reported here.
But hope is at hand, as Sainsburys are now selling Pink Panther gluten free vanilla wafers.
Who’s to know, if Fred might have liked them? If he had, the train crash that was RBS might not have happened.
Fred the Shred’s Annoyance Over Pink Biscuits
A new book, Masters of Nothing: The Crash and how it will happen again unless we understand human nature
The former boss of Royal Bank of Scotland (RBS) vented his anger over the pink wafer in an email titled “Rogue Biscuit” in an example of his “overbearing” management style that may help explain the collapse of the bank in 2008, the new book claims.
I find it strange that the biscuit was pink. Is there a psychologist out there, who can offer a better explanation than the obvious one?
I think if anybody had treated me like that, I’d have gone straight to my lawyer and someone like Max Clifford.
The only way you will rid businss of overbearing bullies is to stand up to them using the full force available.
Those accolytes who surrounded Fred the Shred must be partly guilty in many peoples’ eyes for the mess they allowed him to create.
And what were the non-executive directors doing? If the answer was nothing, they were failing all of the bank’s employees, customers and shareholders. And of course ultimately, UK taxpayers. Have any of those non-executive directors been disqualified? The respected newspaper calls them the Silent Nine.
Should My Bank Pay Me Not To Have a Cheque Book?
I’ve written three cheques since I moved to London. Two were for small jobs done on the house and the other was to a friend for some tickets. In all cases I could have used cash, if I’d been forewarned, but I’d have preferred to have used a credit card, a direct transfer or something like PayPal.
Thinking about it, I have a feeling, one of the cheques hasn’t been presented to my bank yet. It’s only for a few pounds, so it shouldn’t cause any trouble.
I would be happy if my bank said that if I gave up cheques, they’d give me a small financial reward. Either as a direct payment, or perhaps a discount on charges.
I wonder how long it will be before banks give up traditional premises in many cases.
Suppose there were free cashpoints in places like Starbucks. This would get round my need to sit down to sort out everything after a withdrawal. One branch of Nationwide I use is actually next to a Starbucks anyway.
I have hardly ever seen a bank manager in recent years, but why shouldn’t they see you at a convenient location or on the phone.
Payment Protection Insurance and Credit Cards
I got a letter yesterday from Aviva saying that the terms of my payment protection insurance were being changed. It indicated that the insurance was with HSBC. Now HSBC may be a reputable bank, but I’ve never dealt with them. It then turned out that the insurance related to a credit card that I have that is managed by the bank.
When C died, I had a problem with household expenses and needed a second card to keep them separate from my business expenses, so I got one quickly. It would appear that in the form, you needed to check the box to say you didn’t want the insurance, rather than say you wanted it. So I was fooled and have been paying for something I didn’t want for three years.
I wonder how many others have unnecessary insurance they don’t want.
I hadn’t spotted it, as every month I just paid off the value at the bottom of the account. Others may even do this by a direct debit to save money.
I wonder if C was paying this form of insurance on any of her cards! I shall be finding out, as her method of paying cards was to write a cheque for the full amount and then put the bill through the shredder.
You may think that I can’t claim as she died three years ago. Oh! Yes I can! Sometimes the bereaved get very angry. You may have a target out there, who will give you enough money for a small celebration.
It’s not difficult to claim. Just go to this page in Money Saving Expert. It might be a profitable way to spend a wet Sunday afternoon, and as Martin Lewis says it’ll only cost you some paper and a couple of stamps.
Banks Cut Services To Pay Bonuses
The Royal Bank of UK Taxpayers has now decided that a good proportion of its customers must use a restricted set of cash points.
Obviously, the savings will be going to pay banker’s bonuses and Fred the Shred’s pension.
Moneywise and Zopa
Just read this page.
So in terms of trust Zopa rank with the very best when it comes to providing personal loans.
Who says so?
A survey of 12,000 Britons by Moneywise. I suppose it all boils down to how much you trust Moneywise and their methods of doing surveys.
The detailed results are here.
Here’s a couple of paragraphs from the page.
Although there’s the risk of borrower default, lenders benefit from rates that are higher than those on savings accounts, while borrowers enjoy low rates and no early repayment fees.
And the model’s proved a hit with its customers. One describes it as “shaking up financial services,” while another said “it just works. No nasty bankers”. There’s also praise for the service Zopa providers: “They are friendly and care about their members. Service is fast, reliable and efficient.”
Incidentally, Santander and Halifax were rated the worst.
It’s All About The Markets
There is a lot of doom and gloom in the markets, as this report says.
To me the markets have become one gigantic fruit machine, run not for the benefit of the companies and investors, but for the middle men. Did you ever see a financial advisor on a bicycle?
Remember the Stock Exchange was setup originally so that businesses who needed to expand could raise money to do so. Those who invested got a return on their money, with the higher returns coming from the more risky investments. It’s about time the Stock Exchange got back to basics.
An old friend, Phil, long since dead, and myself put forward the principle of a company called Very Dodgy Investments, which would only invest in blue chip stocks like GEC. We never had the guts to start it, but GEC went into melt-down soon afterwards, despite having been one of the most cash-rich and solid companies a few years before.
Over the last few years, I’ve come to the conclusion, that a company is only as good as the person who pulls the strings, no matter what the figures look like. Just as with GEC at its pomp, you might not have liked some of Lord Weinstock’s methods, you couldn’t fault the returns you got by investing. The same could be said of other companies and the people who led or now lead them.
But look at some of the banks of recent years. Someone, often with lots of charisma and no sense, have proved that what goes up must come down and have undone many decades of prudent management. Generally by greed. Whoever said Greed is Good was wrong! Wanting to be rich and then working out how you do it, by perhaps inventing something and/or lots of hard work is good. Provided you don’t step over the line of what is morally bad.
But generally the one group of people you can trust is the men and women on the street. Not everyone has of course a good credit rating, but those that have one can generally be someone, who is worth supporting. This principle has been used by reputable banks and building societies to make money for years. It is even being exploited by the government in turning the bad loans of Northern Rock round. People would prefer to pay their loans rather than lose their house, even when the consequences might not be that bad in all cases of default.
Some companies, like those who charge high rates for payday loans also take advantage of the good nature of the person on the Dalston Omnibus. There must be half a dozen of these companies on the Kingsland Road near me.
This principle is one of the reasons I support Zopa. With them, the element of trust also works both ways and to and from the company.
Lenders know that their money will be lent out at the rate they ask for, but they know if they want a too high rate, the money may take some time to be lent.
Borrowers know the consequences of not paying and generally do pay, although there is a proportion of bad debt. They also know that the terms and conditions are as fair as they ever are in the financial services industry.
But I would never recommend Zopa directly to anyone. Look at the company and understand how the system works. Only when you are satisfied with what you see, should you make a judgement.
But I will say one thing. Put a note in your diary for ten years from now to look at what Zopa has become!
I’ll also say one last thing about the markets. Who tell you to invest in the Stock Market? Journalists, who work for so-called reputable newspapers! And possibly others with similar vested interests, but no money of their own.
You might ask why I invested in Zopa. I’m a Control Engineer by University Education, a Computer Programmer by work experience and someone who likes those behind an idea to have a proven record amongst many things. Zopa ticked all of my boxes and felt it was worth investing the money I got from selling my late wife’s Porsche Boxster. It wasn’t even the world’s third best car anyway!
It’s been a case of so far, so good! But Zopa for me has outperformed the Stock Market.
An Odd Problem With Zopa
Because a lot of people repay their Zopa loans on the first of the month, when the first is at a weekend, these payments get delayed by the banking system by a couple days and I worry that something has gone seriously wrong, as money hasn’t arrived. I just checked and tomorrow is a very big payday – We need to have 28-day months to sort this problem out.
Or I could stop being paranoid.
Who’d Be A Banker?
According to the Telegraph, there are going to be a lot more job losses in the banking industry.
My old friend, David, ‘s judgement gets better. If he was still here now, he’d be surprised that it hadn’t happened earlier.
The Anonymous Widower 