Always keep them in mind
They seem to have noticed the peer-to-peer lending sector and have some new funds based on P2P to recommend to investors.
Now, I am a fan of the concept of P2P and have been experimenting with it in the UK myself, but as I have written before on this site I am very wary of commission-based advisors.
The first question you should always ask is ‘how are you getting paid’? Be very aware that commission-based advisors will only recommend products that pay them, they will not mention possibly superior strategies you could be pursuing.
Specifically in this instance, I would be very careful with the fine print on P2P funds. What guarantees (if any) do you have? How long will your money be tied up? Can you get it back quickly if you need to?
Any kind of economic shock could wreak havoc with P2P lending if people start defaulting on the loans, so tread carefully and do not be greedy (the email was full of exciting numbers “guaranteed 8.5% return”, “annual 14% compounding”.
Have you tried P2P? Are you a Flag customer? Please post comments here or on the forum.
I’ve been investing directly in P2P for about two years now through a US company and like it quite a lot. The returns have been quite good (about 9.5%), but appear to be going down somewhat as it becomes more popular and mainstream. I’m not sure why you would need an advisor or fund to invest in the space, however. That just seems like a needless level of bureaucracy. It seems to be a good piece of an overall investment strategy.
Exactly! It’s an extra level of fees and opacity. I suspect it will also make it harder to access the funds.
This is why I have a (huge) problem with commission-based advisors. By definition they have to sell you products with commissions, which are almost invariably worse than the same products on the open market…
Happy to complete explain both funds and with full disclosure
Hi Trevor
Thanks for commenting. If anyone has questions, feel free to post them here or contact Trevor directly.