DIY Investor Magazine
/
2015 Issue
21
Crowdfunding seems to be a catch-all title
that covers many different things so as a
starting point, allow me to give you a tour
of the current UK landscape, so that you
might better understand where you might
want to put your money to work, to match
your investment and risk objectives.
Right now there are just less than 160
private companies raising capital on equity
crowdfunding sites in the UK
DEBT
Peer to Peer lending, also known as Marketplace
Lending, another invention that Blighty has given the
world is founded on the idea that when people lend
to people and cut out the cost of maintaining a bank
in between, costs go down which means that the rate
that the borrower pays goes down and the rate that the
lender gets paid goes up.
Zopa are the people that kicked it all off back in 2005.
In addition to increased yields and lower costs for
lender and borrower, Zopa are of the opinion that
people that have borrowed from people feel more of a
personal responsibility to their lenders than had they
borrowed from a bank and therefore default rates are
also lower.
Using the P2P concept, it is now possible for you to
lend your money to individuals and businesses, secured
or non-secured, long term and short term.
For example, ArchOver allow companies to borrow
against the credit worthiness of their clients by
facilitating lending of up to 80% against the company’s
Accounts Receivable (AR), backed up by credit
insurance to safeguard the investor.
A quick look around the web finds interest rates of 5%,
6%, 7%+ (July 23, 2015) when Bank of England base
rate is 0.5%.
If you fancy getting exposure to the yields that
marketplace lending offers but would prefer to have
the loan selection taken care of on your behalf, you can
always chose one of the specialist investment trusts,
listed on LSE and therefore available through your usual
broker, these are P2P Global Investments (ticker P2P),
Victory Park Speciality Lending Investments (VPC) and
Ranger Direct Lending Fund (RDL) soon to be joined
by a new Investment Trust from GLI Finance.
The additional benefit of taking this route is that should
you need to, you can get out as easily as you can from
any other share holding.
