Is p2p investing really investing?

[BIRMANBOY]

So where is the "strategy" in P2P "investment"? Most investors have some sort of strategy when they invest...and in fact the thread where this sitting is called "Investment Strategies". How can you align lending money to individuals with a strategy? There is no strategy, no intellectual involvement, no examination of company performance and prospects....just an examination? of likelihood that joe borrower will pay back his loan.

[Bjauck]

So where is the "strategy" in P2P "investment"? Most investors have some sort of strategy when they invest...and in fact the thread where this sitting is called "Investment Strategies". How can you align lending money to individuals with a strategy? There is no strategy, no intellectual involvement, no examination of company performance and prospects....just an examination? of likelihood that joe borrower will pay back his loan.

I think, in a balanced portfolio it fills a risky place. I think there is probably more thought that goes into the decision to invest in a P2P than would go with the decision to invest in a Big Bank term deposit or even perhaps even in a company bond issue. Maybe there is thought that goes into deciding which P2P and from thereon reliance is placed on the P2P company's assesment of grade of loan. (Just as you rely on the Big Bank's assessment on how they deploy the funds provided by your term deposit).

[Bjauck]

So where is the "strategy" in P2P "investment"? ...

With Harmoney the average age of an investor is 41yo (https://www.harmoney.co.nz/assets/Pe...stors-info.png). I think that is quite a low average age for an investor. Part of the reason may be the online platform would be more comfortable for younger investors. However, I remember a Harmoney spokesman said in an interview that many of its investors were people saving for a house deposit. So I think that given the current housing market with prices appreciating more than the rate of inflation, many investors are people seeking returns higher than term deposit rates. So their investment strategy may unfortunately be tinged with desperation, perhaps reflecting the current housing affordability for first time buyers trying to raise a deposit.

[Harvey Specter]

With Harmoney the average age of an investor is 41yo (https://www.harmoney.co.nz/assets/Pe...stors-info.png). I think that is quite a low average age for an investor. Part of the reason may be the online platform would be more comfortable for younger investors.

Thats part of it. The other thing is we have already established above that P2P is higher risk, so naturally as you get older, you reduce your exposure to high risk investments. A 65yo probably shouldn't have any money in Harmoney except maybe the A and B loans.

I cant see how you can save for a house deposit in something with a 3y liquidity timeframe.

[Bjauck]

Thats part of it. The other thing is we have already established above that P2P is higher risk, so naturally as you get older, you reduce your exposure to high risk investments. A 65yo probably shouldn't have any money in Harmoney except maybe the A and B loans.

I cant see how you can save for a house deposit in something with a 3y liquidity timeframe.

As you get older you should reduce the percent of your wealth in riskier assets, however your wealth, in many or most cases, increases as you become older, so the total amount invested in riskier assets may actually increase.


I guess if you have a plan to buy a house in say 5 years time, it would allow you to invest for about a cycle or two in P2P loans and allow access to the funds for when you are in a position to look for a property. I see Harmoney are still pushing the "P2P saving for a first home" line. https://www.harmoney.co.nz/blog/saving-for-first-home " The benefit for investors, and first home buyers trying to grow their deposit faster, is that the return on your investment is considerably better than the return offered by high-interest bank accounts, meaning you can save up for that deposit faster."