It’s a fair question isn’t it? We send you a wide variety of investment and moneymaking opportunities. But when the chips are down, where do I put my money?
Well the truth is that I try to spread it quite widely to minimise risk and also to take timescales into account – some cash I’ll need today, some next month, some next year, and some (God willing!) not for many years to come. And so I have property investments, stocks and shares investments, bonds investments, business investments, speculative investments….and good old-fashioned cash.
I like to have a reasonable amount of relatively liquid funds and for the past few years that’s been a problem. Last week The Bank of England raised interest rates by a quarter of one percent – the first rate rise for a decade. If that rise has filtered through into deposit rates, I’ve yet to see it, but returns from bank and building societies have been pitiful in recent years.
You’re lucky to get 1%.
A couple of years ago, that caused me to start looking at peer-to-peer lending. I opened accounts with a number of companies and started lending money out at anything from 3% to 8.5% per annum – much better than the rates on offer regular institutions. On the whole, the experience has been excellent. My returns from the cash I had sitting earning next to nothing in bank accounts has gone through the roof, and any risks there are have been mitigated by spreading funds.
But it isn’t for everyone (or it wasn’t!) because there can be drawbacks:
1. Entry requirements can be prohibitive
Some peer to peer lenders require that you self-identify as a high net worth individual. That means an income of over £100,000 a year or assets in excess of £250,000, which rules out most of us.
2. Security can be less than perfect
To my mind, the best loans to invest in are those secured by property. Property values are relatively stable, so if the loan is secured against a property at a maximum of 70% LTV, there should always be plenty of security there if the borrower defaults.
However, some companies lend to individuals on an unsecured basis, and others lend to businesses, secured on the assets of the business. Neither offer the same level of security as property and so headline rates can be eaten into by defaults.
3. Company websites can be complicated
Sometimes it’s hard to see exactly what’s going in or what you’re investing in, and the nature of the loans you’re investing in, isn’t really clear.
4. Some loans can be long term
I don’t like to tie my money up for more than a year. Some companies specialise in loans of 3 to 5 years, meaning you can’t get your hands on your money if you need or want it quickly.
Now if you’re a millionaire, happy to tie your money up for several years and can spread your money wide enough to take the rough with the smooth, none of this is a deal-breaker. As I said before, I’ve done very well out of peer-to-peer lending. But what if you just want a reasonably secure home for your nest egg, where you can invest small amounts quickly and simply…and get better returns than most of the other companies out there…and way more than the banks or other regular financial institutions?
Just recently I discovered a company called Kuflink, and have already started moving a lot of my peer to peer lending in their direction. Let me tell you why I like it…
- All loans are secured against property at a very comfortable loan to value, so risks are relatively low, and there is ample coverage should anyone default. No one has yet.
- Loans are typically for 12 months or less, so you have fast access to your funds.
- The website is simple and easy to use. You can be up and running and investing in 15 minutes.
- Investment clarity. You can see exactly which property loan you’re investing in, read the valuation reports and see the actual property. You could even go a stage further and see it if you wanted to!
- The company put their own money on the line by investing 20% in each loan first.
- Returns are between 6.5% and 7.2%.
- Authorised by The Financial Conduct Authority.
And the icing on the cake? You don’t need to be a millionaire (or anything like it) to invest and start benefitting. You can open an account with as little as £100 and start investing with that.
I’ve looked at over a dozen peer to peer lending sites and invested in at least six. In my opinion, Kuflink offers the best combination of returns, security, clarity and simplicity for anyone who has a bit of spare cash languishing in a bank account and wants a better return without undue risk or effort, or tying their money up for several years.
I now have a substantial five figure sum invested through Kuflink and expect that to rise to six figures over the next few weeks.
Here’s a link to some more information. http://join.kuflink.co.uk/refer/
I’m not authorised to give you any kind of financial advice – I’m just giving you my opinion and telling you what I’m doing – but if you have any questions about my personal experience with Kuflink or any of the other peer to peer lenders, just drop me an email.