Zopa - 1 Month Update
Posted: December 22nd, 2008 | Tags: finance, investment, money, zopa |I wrote a while ago about “Zopa - Experimental Investment” and my initial experience and plans to use the service, so just under a month later here is my update of how things are going!
As mentioned in my previous post, my aim was to set an extremely competitive rate of interest in the hope of attracting borrowers as quickly as possible. On the whole this strategy worked, with almost the entire sum being “processed’ within the first week. However one thing to note is that just because a loan is being processed it doesn’t mean you are guaranteed that that money will be lent.
All of the money I put into Zopa has now been lent to borrowers and in my opinion that is extremely efficient. 60% of my money went to A* rated borrowers with the remaining 40% going to A rated borrowers. Looking at the information on demand, these two categories are by far the highest so it makes sense to include these in your offers.
Below is a breakdown of my current loan book with the borrowers blurred out for privacy reasons:
One thing I was pleasantly surprised to find was that magically, 4p appeared in my account. It turns our Zopa will pay you interest on money sitting in the holding account waiting to be distributed which I didn’t expect! It isn’t a high rate of interest but some is better than none.
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paulmbain
@paulbain
[...] also discovered a fellow Zopa user, Paul Bain, who is reporting on his Zopa experiences. Paul’s report reminded me to provide an update here, [...]
Paul, I too am a zopa lender - however the problem with zopa is not apparent in the frst 2 yrs or less. The issue is the cumulative bad debt rate. See P2P lending elsewhere and it indicates that bad debt rates are nearly always underestimated - the issue is further compounded with 5 yr loans.
The site is still reletively new and so I urge caution and the investment angle can only be genuinely commented on after a number of years - a monthly report is vanity or interlectual dirrea. There is already much hype and though I am a lender and support the idea there are few voices of reasoned caution. - Do not treat it as an extra investment market in itself but as a small diversification activity (one of many) as a small part of a portion of investment activity, is my advice.
Just to echo what Jon says, I’m now seeing something similar with my Zopa investment.
I’ve just written about my third bad debt here:
http://monevator.com/2009/08/05/bad-debts-are-rising-at-zopa/
Any chance of an update please Paul? Would be good to get a few more datapoints.