Councils Told Not to Bank at Santander
Kent County Council have moved their money away from Santander according to this report. The Times is also reporting that councils should move money away from Spanish banks.
Probably this advice should be heeded by us all.
The Grexit
The Greek Euro crisis now has its own name; the Grexit.
Pioz is the Most Indebted Village in Spain
Pioz in Guadalajara has just 3,000 inhabitants, but the village has run up debts of €16,000,000 and at the current repayment rate will take over 7,000 years to pay the debts back. It all stems from a previous administration that built an elaborate water purification plant.
And then there was the €150,000,000 airport at Castellon near Valencia, which never attracted a single aircraft.
No wonder Spain and Spanish banks are in trouble!
It’s Not Just Customers That Hate Banks
I found this article entitled Why Investors hate banks. It is a fascinating read, with the main point being that if you invest in utility shares over the past year, your return will be six times that of investing in banks.
Rules for Zopa – May 2012
I did write a set of rules for Zopa investors or lenders some time ago, but my thoughts have changed since then.
Joining Up
The first set of rules are concerned with joining up.
1. Don’t join up to Zopa without reading all you can find out about the system and how it works. There is a forum on the site, where you can ask questions to borrowers and lenders. Search the Internet for any references to Zopa. That is easy as the word, Zopa, doesn’t occur much outside of reference to the company.
2. When you are certain you want to join, always get invited by a member. That way, if you invest more than £2,000, they will get a bonus of upwards of £50, which traditionally,they will share with you on say a meal!
Getting Started
The next set of rules are concerned with getting started with lending money.
1. Choose a sum of money that you would like to experiment with. Obviously choose a sum that if you really muck it up, you can afford to lose. I would suggest a sum below £500 initially so you can get a feel for the system. I did make a mistake in that I started too high and got a couple of bad contracts because in my impatience to get the money lent out, I set the parameters wrong.
2. Choose the markets you want to lend into. I started with A* and A, and later I added the B market to them. I ignored the C and Y markets as I thought they were too risky. Do all your lending in one offer, as this will mean, that if say there is a shortage of punters in the A market, but plenty in A*, the money will get lent out.
3. When you have chosen the markets adjust the interest rates you want to charge in these markets. I have found that the best thing to do is to set the rate, one notch( or 0.1%) below the level where you are told it is “Too High”. Note that the lower you set the rate the faster you will lend out the money, but this lower rate also brings in more dodgy borrowers.
4. Set the maximum amount you want to lend to individual borrowers to something like £50. Setting it higher will mean you lend out the money quicker, but it will increase your risk. Looking at it simply, if you lend out £1,000 in 10 lots of £100, if one goes bad, you will lose £100, but if you lend it in 20 lots of £50 and one goes bad, you only lose £50. It’s not quite as simple as that, but it does show you the pitfalls of lending in too big chunks.
As money gets lent out, you will see how changing the rate and maximum amount you lend will change the speed with which money is lent out.
Daily Maintenance
I look at my account and do the following every day.
1. Withdraw any money I need from accumulated interest and early repayments, if required.
2. The balance of this money is then reinvested.
3. The interest rates I charge are set to my desired level of one notch below the “Too High” level.
4. I also put all of my important values in an Excel spreadsheet.
Obviously not everybody has time to look at their accounts every day, but make sure you do it regularly. There is nothing worse to login and find that you have a lot of money sitting there doing nothing. You might as well have it in ten pound notes under the bed!
A Long Term Strategy
Most borrowers set their repayment day to either the first of the month or somewhere close to the end, which probably reflects when people get paid. I have lent out 3130 loans of which 38.4 % were on the first of the month and 8.2 % on the next most numerous day, which is the 28th.
I have now developed a long term strategy, where on or about the first of the month, I withdraw enough to pay my monthly bills to my current account. If say, at the mid-point of the month, I have more in my current account than I need, the excess is returned to Zopa.
Peer-to-Peer Lending; An Assessment of Returns
This article from This Is Money makes an attempt to analyse the returns from peer-to-peer or social lending, as it is increasingly being called.
RBS, Donald Trump and the Dreaded Wind Farms
The more I read about Donald Trump and the wind farms, I just think how funny it would be if either the golf course or the wind farms had been all or part funded by the Royal Bank of UK Taxpayers.
After all something Sir Fred did is going to jump up and bite us, so when it does, it might be something with a good laugh in it.
The Zopa Return Rate Is Up
The Zopa rate so far this year has been 7.4 % before tax, including all costs and bad debts. This time last year the rate was 5.98 %
From my figures, it looks like they are short of borrowers. Have the banks finally got their act together or is it that the economy is turning?
It could also be that the bad publicity of payday loans is rubbing off! Their only connection is that they have a snappy name and they give loans, but they are a peer-to-peer lender, not a payday loan company.
The Bank Holiday is Not Good for Zopa Lenders
I’ve just looked at my Zopa statistics over the Bank Holiday weekend and the amount of money requested by borrowers has dropped by nearly 20% since Thursday. A similar thing happened last year, but in the last part of the Bank Holiday week borrowers returned to finance those cars and other goods they’d seen over the weekend.
Lenders seem to have kept up their funds in Zopa.
So perhaps now might be a good time to borrow from Zopa, as there is plenty of funds available.
The Anonymous Widower 