Matured Isa - Rates so low what to do? Watch

Kutie Karen
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#1
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My Isa has matured and the rates are so so low. what should I do?
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Quady
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Transfer it to a stocks and shares ISA would yield more if you're after yield?
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Kutie Karen
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(Original post by Quady)
Transfer it to a stocks and shares ISA would yield more if you're after yield?
I have put money in there before but ended up losing some. Not fair.
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Quady
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(Original post by Kutie Karen)
I have put money in there before but ended up losing some. Not fair.
How?
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IWMTom
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(Original post by Kutie Karen)
My Isa has matured and the rates are so so low. what should I do?
RateSetter is a good shout.
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barnetlad
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Look at fixed rate bonds, especially from one or two building societies, assuming you do not need to spend the money for 2 or 3 years.
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ch0c0h01ic
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(Original post by IWMTom)
RateSetter is a good shout.
Peer to peer lending is very risky, I would argue even more so than global equities (ie; no FCA protection, high risk of default in a recession), for relatively poor return (ie; 3-5% annually).

Considering you can get a 2% return with a fixed rate savings account (with no risk to capital) or 10% from global equities in the last year ("high" risk but lower than P2P) I personally don't see the attraction.

Go back a couple of years when you could get 8+% interest, it was maybe worth the risk (for a relatively small proportion of your portfolio), but given that a couple of P2P platforms have gone under relatively recently, and default rates are rising I wouldn't risk it.
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Etomidate
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As above, I would avoid p2p lending. More of the platforms are dropping their rates, charging fees for withdrawal and there are endless horror stories of people waiting months-years trying to sell their loans to withdraw their funds.

Ultimately, it depends what your goal is for the money - emergency savings, saving for a deposit, for retirement etc?
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IWMTom
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(Original post by ch0c0h01ic)
Peer to peer lending is very risky, I would argue even more so than global equities (ie; no FCA protection, high risk of default in a recession), for relatively poor return (ie; 3-5% annually).

Considering you can get a 2% return with a fixed rate savings account (with no risk to capital) or 10% from global equities in the last year ("high" risk but lower than P2P) I personally don't see the attraction.

Go back a couple of years when you could get 8+% interest, it was maybe worth the risk (for a relatively small proportion of your portfolio), but given that a couple of P2P platforms have gone under relatively recently, and default rates are rising I wouldn't risk it.
RateSetter is probably the safest P2P lending provider out there and we all know it. Never had a problem, and there's a provisioned fund for if things do go wrong (which has never happened before!).
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ch0c0h01ic
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(Original post by IWMTom)
RateSetter is probably the safest P2P lending provider out there and we all know it. Never had a problem, and there's a provisioned fund for if things do go wrong (which has never happened before!).
Given the vast amount of unsecured debt they're carrying (like all P2P lenders) that's not saying much.

How big is the provisioned fund compared to overall liabilities? I would hazard a guess that it makes up a tiny percentage (if that), so in the event of higher than average defaults the fund becomes quickly exhausted and you lose all your money.

You need to understand that the "provisioned fund" is a PR mechanism, it was originally implemented to set them affront their competitors and give the illusion that their investments are "safer". They are clear to highlight that it is "not a guarantee" and that in the event of widespread defaults you are likely to lose all of your money, all for a measly 1-3% extra interest!

P2P is relatively new and has never experienced a recession, which feeds the illusion that it is far safer than it actually is.

It wouldn't surprise me if P2P becomes a major mis-selling scandal in the future.
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