Getting a decent return on a small chunk of money. Help needed (p2plending?)

[Millennium]

Hi there

I recently almost got burned by a binary trading probably-scam outfit based in London after replying to a facebook advert. I posted about them on moneysavingexperts forum and was talked out of investing. I still to this day don't know if they were legitimate but I've since read that it's basically a form of gambling, the money is unlikely to be guaranteed and there is an FCA (or similar) warning out about them (binary trading firms generally) as they are unregulated.

Anyone tried one? lol

But that's not the main reason for me posting today. Showing up on my twitter feed are this outfit (UCGTRUST) who offer 'guaranteed' p2p lending at high rates of interest for amounts over £1000. Upto 13% for a 3 year fixed term. Our family has around £20k to invest. So I posted again on moneysavingexpert forums and received quite a negative response. They don't like anything that could possibly be fishy over there.

However I'm still considering them. The main negatives are they are an overseas company (looks like a tax haven) and they are not regulated in the UK. Also I dunno what happens to my money if for some reason they go bust. They are only recently registered but they have like £100 million lent already.

Anyone have any experience or advice, either in this space, for investment generally, maybe crypto, or even with this specific company? I would also consider a low cost way to invest this in the FTSE 100 or similar.

I really wanna make more than 1.5% on this money.

Thanks

[MLyons]

Hi there

I recently almost got burned by a binary trading probably-scam outfit based in London after replying to a facebook advert. I posted about them on moneysavingexperts forum and was talked out of investing. I still to this day don't know if they were legitimate but I've since read that it's basically a form of gambling, the money is unlikely to be guaranteed and there is an FCA (or similar) warning out about them (binary trading firms generally) as they are unregulated.

Anyone tried one? lol

But that's not the main reason for me posting today. Showing up on my twitter feed are this outfit (UCGTRUST) who offer 'guaranteed' p2p lending at high rates of interest for amounts over £1000. Upto 13% for a 3 year fixed term. Our family has around £20k to invest. So I posted again on moneysavingexpert forums and received quite a negative response. They don't like anything that could possibly be fishy over there.

However I'm still considering them. The main negatives are they are an overseas company (looks like a tax haven) and they are not regulated in the UK. Also I dunno what happens to my money if for some reason they go bust. They are only recently registered but they have like £100 million lent already.

Anyone have any experience or advice, either in this space, for investment generally, maybe crypto, or even with this specific company? I would also consider a low cost way to invest this in the FTSE 100 or similar.

I really wanna make more than 1.5% on this money.

Thanks

Personally I would just stick it in an S&P500 index fund and leave it.

[Output]

I have no experience or advice regarding investing, but I'd be extremely suspicious of advertising on social media platforms in general, let alone those claiming big returns. The fact that they are outside UK regulation being an additional red flag against them if that wasn't enough already. The recent registration adds yet another red flag in my eyes and would make me even more sceptical of the £100m claim.

Overall I'd point out that there's not really a legitimate way to get rich quick - if it was that easy to make money, everyone would already be doing it and not risking large sums of money (especially if it can't afford to be lost) on what is basically gambling under another name.

As Malthusian says in that linked thread "If it looks too good to be true, it probably is". If it was me, I wouldn't go anywhere near these things with a bargepole.

[Saracen]

Sadly, for investors, we live in the times we do, and ROI rates reflect that.

If you find an above-standard rste of return, it WILL reflect either a degree of long-term commitment, or increased risk, or both. And again sadly, tying it up for several years doesn't make a huge difference.

So my first question is the degree of risk you'll willingly take, and the type of risk. You could have, for instance, invested in certain Russian oil/energy bonds in recent years, and many of them have paid out well. However, you were at risk of, perhaps, geo-political events, state action by the Russian state, etc,. That type of investment was likely to either pay very well, or you lose the lot .... which is WHY it offered high rates.

On the other hand, if you invested in blue chip companies it's VERY unlikely you'll lose a substantial part of the capital, but you may not make much return and could see capital values drop.

For instance, over a period of few years, I saw my BT shares go from around £4, to north of £15 then back to £10. If you see you capital go from £20k to nearly £80k, and then down to £50k, is a few hundred quid in dividends really the issue?

And are you delighted at turning £20k into £50k, or miffed at not selling at £80K? Are you £30k up, or £30k down? Well, you're BOTH.

If there was an easy, risk-free way of getting above average returns, every would be doing it and it'd be the average return.

Anything much beyond a bank bond or savings account reflects either restrictions or risk, though the profile of the risk varies. The bigger the return, the greater the type of risk and, frankly, if it looks to good to be true, odds are it is.

There are any number of ways you can handle this. A very hands-on approach and daily monitoring can mitigate risk on legit investments by being prepared to cut losses if they don't perform as expected, but if you invest in something truly dodgy it may look great until you try to get capital back, which is when the axe falls.

You could try a salami strategy - put one slice of your money into low risk, another into medium and a third into high risk. And watch the latter like a hawk.

You can pay for a good broker/fund manager or pick your own investments. A good manager generally will do better than you, but the only certainty is that they'll be paid their fees, either way.

As for MSE, are they "negative", or simply risk-averse and experienced?


My advice would be that higb-risk investments are fine provided you take care to ensure you understand the risk, and are willing to (and can afford to) risk losses. Don't gamble with what you can't afford to lose.

[virtuo]

Invest in your family and go on a beast of a holiday. £20k will take you anywhere and buy some priceless memories.

[Peter Parker]

Echoing others - if you invest in 'get rich quick', you quite like get what you deserve. Handing money to someone offshore who claims to have $100mm lent already ... who knows how true that is?

If you just want better than 1.5% then Zopa are a safer bet. Disclosure - I've lent via them for 10+ years, but recently reducing investment by 50% to have cash for other purposes. Their Core product currently claims "3.7% Annualised projected return (capital weighted average loan interest rate minus expected principal loss and our loan servicing fee)" and Plus is 4.5%. Beware if you sell loans off early there's now a 1% fee. Still better than basic savings accounts and most cash ISAs, even after the occasional default loss is factored in.

If you do go Zopa, Funding Circle or similar, people on the forums might have referral code. Not sure if the forum rules allow us to share, but if they do it's a £50 bonus each.

The stock market has done better than savings accounts in recent years too. You could get something like a Vanguard index tracker. I suppose the risk is a stock market crash could wipe out a chunk of the capital. Perhaps ask on reddit /r/ukpersonal finance, and look at their investment flow chart - https://i.imgur.com/BfHzwr9.png

And if your family don't mind the risk of losing the 20k, you can always buy bitcoin! Not my cup of tea though.

[Millennium]

Thanks for the replies so far. I have found the support email of UCGTrust to be very good so far so have emailed them some additional questions.

It's money we could AFFORD to loose, but we're not happy with that outcome lol.

I suppose we could spend some on a holiday, but we're talking my mum and brother here, not like I have a partner or kids, and I would rather get a potential £230 or so extra a month. And reinvest most of it, probably.

I am considering investing in Factom (an altcoin) instead. However it's quite a small outfit and high risk I would say. But it's had some positive news recently and I believe in the project.

I am not really interested in Zopa's rates I would rather take a bit more risk on for higher reward Peter. I may move money around into the stock market after the next cyclic crash and go that way.

I am sure that bitcoin, etherium, litecoin, NEO, and some of the other crypto will go up over time (if they don't just die out). Bitcoin transaction fees are atrocious but steps are being made. I have small amounts of money in some or most of those but it's not where I wanna dump £20k unless you can convince me otherwise

Replies welcome. Our income looks good as a family (or at least enough) so I have this money to play with in a way.

Best wishes

edit: UCGTrust trustpilot. 8.6/10.

[kalniel]

Tax wrap with ISA and invest in a low cost index tracker from Vanguard or other. Also check savings rates - you can get around 5% on regular savers from a few banks - limited to putting only a small amount away each month but still might be worth using as a hedge against an index tracker.

[Output]

To be honest, you're coming across as someone who has already made up their mind about what they are going to do with the money, and are looking to find people who agree with your approach rather than warning against it like most have.

As I said, I wouldn't go near these things with a bargepole and it throws up lots of red flags for me, but in the end only you can decide what to do and see if it brings reward or ruin.

[Millennium]

I'm not specifically looking for people to agree, though if someone with experience of this company does so that would be a big factor, as happened on the MSE forum thread (that reply is since removed).

I have not made up my mind but I'm leaning towards this.

I also have to have a good think about Factom too.

[Zak33]

the 4:40 at Chepstow?

if not then maybe settle for 1.5%.. you'll not pay tax as it's £1000 per year allowance unless you're a 40% tax payer..even then it's a £500 limit

or... do as I do... stick it all in Premium Bonds and ride the wave of lady luck

[Output]

though if someone with experience of this company does so that would be a big factor, as happened on the MSE forum thread (that reply is since removed).

I suspect that the reason for the removal would most likely be if that reply was someone who registered just to reply in support of the company, which would obviously raise another red flag to me as such cases usually mean that it is an owner/employee etc. of a company themselves seeking to falsely enhance their reputation by making themselves look more legitimate, as a real happy customer would be unlikely to be searching for places to register and reply to threads about a company they use.

[peterb]

Generally, if something looks too good to be true, it generally is.

That is a high return, and high returns generally involve high risk. You could be lucky, but I’d be very wary.

[Spud1]

That company looks like any one of a thousand scam companies out there. If you put your cash with them you are unlikely to see any of it ever again..

Remember that its very simple to fake trustpilot (or any other "reputation/review" site out there), its also very simple to start making positive posts all over the internet about a company. Hundreds of millions are lost to these scammers every year - whether it's investing in wine, land with supposed amazing planning permission, Binary Trading, ForEx trading or whatever else...if they are promising returns of over 7% - or even worse promising "guaranteed" returns of more than about 3% you can be 99.9% sure that it's a scam.

There are a tiny minority of these sort of "get rich quick" schemes which can work but they are all essentially high stakes gambling - A lot of the better ones are there are in the cryptocurrency market (e.g. ICOs and the like) but as I say, they are essentially gambling and it's not something I would ever touch with a penny of my own money unless I knew the market and industry inside out. and I don't.

TBH you have a few choices...

1) Do your research personally, and take your time over it. Go and visit their offices, speak to them in person, get their accounts, trading history etc etc. This is expensive, very time consuming but will quickly show them to be the scammers they likely are. The problem is that you need to know the warning signs to do this will or they will just pull the wool over your eyes.
2) Go and see an IFA and pay them for advice. This tbh is the only sensible thing to do - their job is to make money from money and to avoid the scam artists out there
3) as 20k is a very small amount of capital to invest, don't bother at all and put it into an ISA. If you are dead set on taking a risk then take the "Salami Strategy" mentioned by Saracen - thats a very sensible approach. Id suggest something like 50% in an ISA/Bond, 25% in P2P lending (stick to the big names like Funding Circle or Zopa) and maybe 25% for a bit of gambling fun by buying some Ether or BTC/BCC.

BTC was my best investment of my lifetime actually in terms of percentage - I mined a single coin in the early days and then bought a couple when they were trading at $200 a coin in 2013. Given that today they are trading at £3200 a coin, thats a roughly 1500% increase It has taken 5 years mind but still was a good investment!

[The Hand]

If you're looking at investment funds, my Dad swears by Fundsmith for nurturing a nest egg etc. Obviously, it's not a get rich quick scheme though.

Here's a link for them:

https://www.fundsmith.co.uk/