The Anonymous Widower

Zopa Seems To Have Deconstipated

In early March, I wrote Is The COVID-19 Having An Affect On Lending At Zopa?, where I said this.

I lend money on Zopa and at the moment no-one seems to be borrowing any money.

I put some of my pension in my lending pot into the peer-to-peer lender each month and it’s still there sitting safely in the queue for a borrower.

Perhaps everybody is being cautious because of the COVID-19 alert.

At the time of writing this new post, everything seems to be back to normal. Or at least money, that I put in my lending account yesterday, has now been allocated to borrowers and is awaiting the final checks.

Eight years ago, I wrote Stability in Financial Systems, where I put forward my belief that Zopa is a stable system, that adjusts itself to the conditions it encounters.

Has the peer-to-peer lender just demonstrated, that my thoughts are correct, by sailing untroubled through the COVID-19 crisis, with just a small adjustment on the tiller here and there, just as it survived the Banking Crisis of 2008?

May 29, 2020 Posted by | Finance, Health | , , | Leave a comment

Zopa Resumes Lending To ‘C Risk’ Borrowers

The title of this post, is the same as that of this article on Peer2Peer Finance News.

Zopa, the first peer-to-peer lending site, rates all borrowers as to risk, between A (the best) down to E.

Certainly, since they introduced this policy, my invested money gets lent out more quickly.

Hopefully, the risk won’t have been increased by an amount, that is unacceptable to lenders.

May 19, 2020 Posted by | Finance | , | Leave a comment

What Exactly Is Upside Energy?

On Friday, August 9th, 2019, there was a massive power cut in the South of England, that is described in this article on the BBC, which is entitled Lightning Strike ‘Partly To Blame’ For Power Cut.

This is the introductory paragraph.

A lightning strike and the sudden loss of two large electricity generators caused nearly a million people to lose power in England and Wales earlier this month, an interim report has found.

So what exactly happened?

This article on Wired is entitled How Batteries Stopped The UK’s Power Cut Being A Total Disaster, was written after the report into the cut had been written.

This is the third paragraph of the article.

But it could have been even worse. Within seconds of problems hitting the grid, a fleet of batteries dotted around Great Britain were able to pump power into the system, preventing a rapid drop off in transmission frequency.

Is fleet the right collective noun for storage batteries? But it will do for the time-being.

This is the next two paragraphs.

Upside Energy is one firm that lent a helping hand by supplying six megawatts (MW) from five large lithium-ion batteries located on a solar farm near Luton Airport. “Those batteries responded immediately – actually it was sub-second,” says the firm’s chief executive Devrim Celal.

Six megawatts may not sound like much. It’s about the same capacity as a single medium-sized wind turbine, but in the context of national electricity supply that can make a difference, says Tim Green, co-director at Imperial College London’s Energy Futures Laboratory. “A home on average is consuming about two kilowatts – six megawatts gets you 3,000 homes maybe.”

But every little helps!

So who are Upside Energy?

If you look at their web site, this is the headline on the home page.

Smart Energy Management Systems

There is also this description.

Our award-winning cloud-based platform provides our customers with a way to capitalise on new opportunities, while supporting an acceleration in the use of renewable technologies, and overall helping to create a more sustainable and efficient power network.

From what I can gather with further reading, it almost looks like a peer-to-peer network for energy, akin to how Zopa is one for money.

  • If you or your company, built a battery or a solar farm, then Upside Energy would control it, in the most efficient way.
  • As the Wired article states, they also have a few batteries of their own.

On another page they describe the system as a cloud-based platform can connect with a multitude of devices across commercial, industrial and domestic sites. They give the following examples of devices.

  • Battery storage systems.
  • \electric-vehicle charging points.
  • Uninterruptible power supplies
  • Heating and cooling systems.

They then say a bit about how it works.

It uses advanced algorithms and artificial intelligence to match energy demand with the available supply, helping the electricity grid deal with fluctuations and times of peak usage. Supporting the grid in this way, opens the doors to additional revenue streams for our customers, who also benefit from significant reductions in energy costs and carbon emissions.

The platform can manage demand response for more than 100,000 devices running in parallel.

As a Control Engineer, whose friend went on to manage ICI’s power networks in the North West, I know management of these complex networks was difficult even in the 1970s.

It is interesting to look at their funding page.

Funding would appear to be typical for a company like this.

Conclusion

If I was a farmer, who was investing in a solar farm on a piece of land, I would check out Upside Energy.

But I’m not!

Over eight years ago, I wrote Stability in Financial Systems, where I used my Control Engineering and mathematical experience to postulate that Zopa might have found a way to create a system with an equilibrium between saving and borrowing, that responded to politics, the economy and unforeseen circumstances.

Could Upside Energy have created a system that balances energy production, storage and use, which navigating the perils of the modern world?

 

 

 

 

May 17, 2020 Posted by | Energy, Energy Storage | , , | 1 Comment

Zopa: P2P Investors Outperformed The FTSE 100 In 2018

The title of this post is the same as that of this article on Peer2PeerFinance News.

The title is a good summary of the article, which is a must-read.

January 9, 2019 Posted by | Finance | , , | Leave a comment

The Concept Of Hybrid Banking

I have been writing about hybrid trains and locomotives recently.

In Hybrid Power On The Railways, I summarised the current state of development, with brief descriptions of the current hybrid trains and locomotives.

This was my conclusion.

Just as hybrid cars are becoming more numerous, I suspect we’ll be seeing more hybrid trains in the future.

So can hybrid principles be applied to other industries and processes?

A Standard Hybrid Process

In my opinion, one of the best hybrid systems is the transmission of London’s New Routemaster bus. This description of the drive-train is from Wikipedia.

The bus is a hybrid diesel-electric driven by a battery-powered electric motor, charged by a diesel fuelled generator and recovering energy during braking by regenerative braking.

It is a classic serial hybrid vehicle.

Energy is collected in the battery from the diesel generator and regenerative braking and the battery powers the bus.

Hybrid Banking

Could a bank account be designed on similar principles?

  • Money would be collected and stored in a deposit account, where it would earn interest.
  • There would be a wallet or current account, where sufficient money is available to pay bills expected.

I also believe that just as in the bus, there would be a clever control algorithm, that made sure money was in the right place.

  • To pay bills.
  • Earn maximum interest payments.
  • Avoid charges for going overdrawn.

Many would believe, I’m asking for the impossible.

But!

Zopa Or Another Peer-To-Peer Lender As A High Interest Deposit Account

I use Zopa to store my excess cash.

I just add money, when I have spare.

Zopa’s computer decides, who I lend it to, so it’s effectively deposit-and-forget.

Since, I started investing I have earned returns of around five per cent before tax.

Any irrecoverable debts are now allowed against earnings.

But the unique property of Zopa and probably some other peer-to-peer lenders, is that each month a certain amount of money becomes available for reinvestment or withdrawal.

These figures show the percentage of money, I’ve had available in the last few months.

  • May 2018 – 7.5%
  • April 2019 – 6.0%
  • March 2019 – 5.7%
  • February 2019 – 5.6%
  • January 2019 – 6.1%
  • December 2018 – 4.7%
  • November 2018 – 6.9%
  • October 2018 – 7.1%
  • September 2018 – 6.7%
  • August 2018 – 7.5%
  • July 2018 – 6.8%

So it looks like for a mature Zopa portfolio, around 6-7 percent is available for reinvestment or withdrawal.

If like me, you have tax bills to pay at various times of the year, you might sometimes take the latter option, as I do!

But if you do withdraw money, your ratio will change.

It should also be noted that a high proportion of Zopa contracts make payments on or around the first of the month. So lenders can get a sizeable payment in the first few days of a month. All very handy!

Nationwide Or Any Other Bank Account As A Wallet

I use Nationwide as my bank current account, transferring money between Nationwide and Zopa as required.

I also have a sensible agreed overdraft limit, which gives me an extra amount of flexibility. I think it’s only been used twice in the last couple of years at tax payment time.

As the overdraft limit is lower than the minimum amount of money, I’ll be able to withdraw from Zopa in a month, I know that if I use the overdrsft, I should be able to repay it quickly.

The Control Philosophy

I don’t have a computer to work through the control philosophy, but I can use the brain I was born with.

By about the twentieth of the month, I can see the state of my finances and generally know, whether my pension will cover my expenses for the next month or so, or if I need some help.

So when the Zopa payments kick in around the turn of the month, I withdraw what I think I’ll need.

If I draw out too much, then around the twelfth or so, I put any surplus back into Zopa.

A Hybrid System

I believe that what I have described works in a similar way, as a typical hybrid drive system for a bus, train or car.

  • Zopa backs up the bank account and provides extra finance when needed. This is a similar function to the traction battery in a hybrid vehicle
  • The agreed overdraft facility is there if any extra short term finance is needed. It has a function similar to capacitors in a hybrid vehicle, where they are used to provide a fast smoothing response.

Imagine an on-line banking system, which used artificial intelligence to calculate how much extra money is needed each month and transfer money to and from Zopa accordingly.

 

December 25, 2018 Posted by | Finance | , , , | Leave a comment

Is Peer-To-Peer Lending Having A Spot Of Bother?

There have been one or two news reports questioning asking tis question.

I invest in Zopa and I have made the prudent decision to put my spare money in a Safeguarded product.

I have had a good run and certainly get more on my savings than I would in a bank. Obviously, I am including any bad debts in this statement.

I shall watch the situation, but I still believe what I said in Stability in Financial Systems.

If there are rumours of a spot of bother, then the following will happen.

  • Investors will put their money elsewhere.
  • Rates to lenders will rise.
  • This will tempt nvestors back in.

It’s a merry-go-round for money!

Note that because Zopa matches investors and borrowers by means of a computer, no human bias can drive the system in a wrong direction. Except a bent programmer and hoipefully systems are in place to check the honesty of their employees.

September 2, 2017 Posted by | Finance | , | Leave a comment

Peer-To-Peer Lending Is Different In The US

I like peer-to-peer lending and have quite a large sum invested. But after reading this article in the Financial Times, I’m pretty certain that if I lived in the United States, I wouldn’t touch peer-to-peer lending with a bargepole.

The reason is that in the United States, institutional investors get first pick of the borrowers and are developing software, so that the retail investors gets what’s left.

In the UK, the Peer-To-Peer Finance Association has moved to ban this practice and make all investors equal.

The day they give preference to institutions, my money will be withdrawn gradually as it becomes available.

I think we all have to remember that one of the causes of the Financial Crash of a few years ago was greedy bankers, who felt they were a class above the vast majority of people, who have made their money by sheer dint of hard work.

Whatever you do, read the article in the FT. It’s a cracker!

And also look at the Peer-To-Peer Finance Association web site!

May 23, 2015 Posted by | Finance, World | | Leave a comment

Peer-to-Peer Lending And Retirement

This article in the FT, entitled Zopa To Launch Product For Retirement Savers is a must-read for anybody who is retired or thinking about it. This the first paragraph.

The UK’s largest peer-to-peer lending service, Zopa, is developing a new investment product tailored to people beyond retirement age who will have much more flexible access to their pension savings from April.

It sounds that I’m using my Zopa funds in a similar way. There is one big difference though in that I’m doing it using the standard Zopa system, so I’m not paying anybody in the middle for commission or advice.

My use may have advantages, in that as funds comes available they can be stored away in Zopa.

January 3, 2015 Posted by | Finance | , , | Leave a comment

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.

 

January 2, 2015 Posted by | Finance | , , | Leave a comment

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.

December 18, 2014 Posted by | Finance, World | , | Leave a comment