Peer-to-peer (P2P) loan-based crowdfunding is slowly but surely being seen as a legitimate alternative to fixed-rate deposit and other notionally capital-secure, yield-based investments.
Low interest rates certainly mean that savers and deposit-account investors have had a particularly tough time of it in recent years – and the necessity for income has prompted searchers to be more and more inventive.
Here’s what the Telegraph has to say on the subject: “Savers have become used to having their hopes of higher interest rates dashed. Economists have consistently got their forecasts wrong, predicting rate rises, then being forced to accept that there will be further delays as new facts emerge.”
A quick trawl of internet comparison sites shows how dismal the situation is. Moneywise highlights what it considers the most attractive longer-term (five year) accounts. Tesco offers the highest rate, with 3.1 per cent for a five-year investment with a minimum £2,000 opening balance and interest paid on the anniversary of the opening of the account.
Instant-access accounts are led by the Newcastle Building Society, which offers 2.57 per cent. The next best offers a mere 1.6 per cent.
Yield, of course, is by far from the only thing to consider when planning a savings strategy. P2P loans are not guaranteed by government under the terms of the Financial Services Compensation Scheme. So it’s important to find crowdfunders with a stringent credit-analysis process.
We plan to be saying a lot more on P2P credit-analysis models at a later date.