{"id":2124,"date":"2017-05-20T17:42:55","date_gmt":"2017-05-20T17:42:55","guid":{"rendered":"https:\/\/www.foxymonkey.com\/?p=2124"},"modified":"2017-05-20T17:42:55","modified_gmt":"2017-05-20T17:42:55","slug":"zopa-review-investor","status":"publish","type":"post","link":"https:\/\/www.foxymonkey.com\/zopa-review-investor\/","title":{"rendered":"Zopa Review for Investors (Peer-to-Peer Lending)"},"content":{"rendered":"

It’s been about 4\u00a0months I have been investing with Zopa<\/a>. That’s not a long time, but this Zopa review sums up my first experience with this peer-to-peer lending platform.<\/p>\n

Questions like… How much can I make? Will I lose money? What if I want to take my money out early?<\/strong><\/p>\n

I find the concept of people lending to other people really fascinating. It’s one of the modern ways of skipping the expensive middleman (hello banks!) using technology. Another example is Airbnb, where people “lend” their home and TransferWise<\/a> where people\u00a0exchange foreign currency skipping the expensive bank rates. It just makes our world fairer<\/em>.<\/p>\n

So I had to try Zopa<\/a> as an alternative investment in my portfolio. Especially after it received full FCA authorisation and they will soon be offering the new IF-ISA. This means tax-free profits plus more credibility!<\/p>\n

What is Peer-to-Peer lending?<\/h2>\n

\"Peer-to-peer

Bob wants to borrow<\/em> money for home improvements. Alice wants to invest<\/em>\u00a0her savings and earn some extra money. Peer-to-peer lending brings those two together.<\/p>\n

Alice wants to get her money back plus some extra profit. Therefore, she wants to lend only to credible borrowers who will return the money she lent.<\/p>\n

Bob wants to pay as little as possible for getting a loan from Alice. But Bob’s credit history is not that great since he’s had a few late payments on his credit card history. To compensate for the extra risk, Alice wants to charge 10% interest\u00a0for\u00a0lending to Bob.<\/p>\n

Credible Charlie, on the other hand, has been an excellent payer in his whole life. Alice would love to lend to him. But credible Charlie wants to pay very little for getting a\u00a0loan from Alice\u00a0since it’s very likely she’ll get her money back. Charlie wants a 3% interest loan.<\/p>\n

Alice wants to make sure she lends her money to\u00a0multiple credible people and a few less credible for extra profit. She wants to spread her risk.<\/p>\n

Alice, Bob and Charlie know that if they could handle the payments between them, they could skip going to the bank and avoid\u00a0being charged a service fee.<\/p>\n

The above story dear friends is the problem Zopa is solving. It matches thousands of people with different credit history and makes lending a beautiful hands-off experience.<\/p>\n

Zopa understands the needs of those groups and matches them together without the need to\u00a0even talk to each other. It distributes the payments every month and makes sure everyone gets paid in time. Sounds like a sales pitch, but let’s see what’s that all about.<\/p>\n

How much can I make with Zopa?<\/h2>\n

This is my investment statement of the Zopa Plus product (up to 5-year loans).<\/strong> As you can see, the average return is around 6.7%<\/strong>\u00a0and there are no fees for investing. <\/strong>So you lend \u00a310,000 you get back \u00a3650 in a year. The longer the loan term the higher the interest because your money is lent for longer.<\/p>\n

Knowing myself, I want the highest return and I’m in the for the\u00a0long term, so I wanted to lend to up-to-5 year loans. Here’s a view of my investment summary:<\/p>\n

\"Zopa