SocietyOne - peer-to-peer lending and investing

[So_Cynical]

SocietyOne is Australia first fully compliant Peer to peer (P2P) Lender, borrowers can get cheapish unsecured personal loans starting from 11.05% and investors can get returns starting at 10% ~ the chasers new show the Checkout had a good story on SocietyOne and other P2P lenders.

With interest rates falling this could be a good alternative for people looking for higher 'safe' returns.

http://www.societyone.com.au/
~

 

[clowboy]

Well I have to say, I was like, you have to be kidding, but it actually looks interesting. Still seems like you are completly at the mercy of the borrower to repay you back though, yea ok the risk is spread over 10's or100's of investors but if they all decide not to repay....

I guess being regulated though it would effect someones credit rating? That alone is a pretty decent incentive to make the repayments

 

[So_Cynical]

Well I have to say, I was like, you have to be kidding, but it actually looks interesting. Still seems like you are completly at the mercy of the borrower to repay you back though, yea ok the risk is spread over 10's or100's of investors but if they all decide not to repay....

I guess being regulated though it would effect someone's credit rating? That alone is a pretty decent incentive to make the repayments

I would imagine that it would be wise to spread your risk the same as you would for any investment, if say an investor wanted to put 5K into SocietyOne loans it would be wise to spread that 5K across say 10 loans, risking 500 per loan.

I can really see something like this taking off...people hate banks and this is a way to put those bank profits in your pocket, there's an honesty about this to, a straight up 1.05% to 1.25% or so spread is the way finance should work.

 

[Tyler Durden]

I just had a quick read of their website - is it the case that they currently only allow for "sophisticated investors"?

 

[So_Cynical]

I just had a quick read of their website - is it the case that they currently only allow for "sophisticated investors"?

Yes that is how i read it, i didn't realise that was the case, thought it worked like the other (foreign) P2P set-ups that i have seen on the net....cut and paste below from their site.

---------

INVESTOR FAQ'S
I'M INTERESTED, HOW DO I BECOME INVOLVED?
SocietyOne will allow three types of investors to invest in its marketplace. These are:
_ Institutions
_ Sophisticated Investors and
_ Retail Investors
To ensure the success of SocietyOne’s offering and managed delivery, a phased approach has been taken to introducing investors to the business. Until further notice the investors on the marketplace are by invite only.

 

[JTLP]

Have just been reading up on these guys as well as US institutions. Interesting that they are still closed to retail investors, AFR article says they are targeting year end to open up to retail investors.

Seems like a decent way to minimize risk (as per US model) but will remain to be seen.

 

[Wysiwyg]

SocietyOne

Just noticed Kerry Stokes and James Packer have invested in this peer to peer loan company.

Source : The Australian.

NEWS Corp has been joined by billionaires James Packer and Kerry Stokes in a powerful consortium that will disrupt the major banks in the unsecured lending market through an initial 25 per cent stake in the peer-to-peer lender SocietyOne.

The consortium, which has been pulled together by former Challenger boss Dominic Stevens, has the potential to increase its holding to 50 per cent, depending on performance.

Mr Packer and Mr Stokes will invest in SocietyOne through their private companies, Consolidated Press Holdings and Australian Capital Equity.

Unfortunately at the present only wholesale clients can invest in the business as per this quote from the SocietyOne website. Very soon for retailers.

Our platform is currently open to Wholesale Clients. We are working to open the platform to all retail investors very soon.

 

[Garpal Gumnut]

I find cash as volatile as shares and now have close to zero cash in my portfolio. ( or very little <10%)

gg

 

[Wysiwyg]

Love to get on the SocietyOne IPO whenever that happens. Lower loan rates plus from the other side the option of investor participation is very appealing.

December 11 2014 11:57 AM

Lending Club Corp. (NYSE:LC) shares skyrocketed more than 60 percent Thursday in their debut on the New York Stock Exchange. The San Francisco startup, an online peer-to-peer lending company connecting borrowers and investors, priced its initial public offering at $15 a share late Wednesday, topping Wall Street expectations for $12 to $14.

But shortly after the opening bell, Lending Club's shares surged to $24.75 and at one point climbed 67 percent to $25.44 -- valuing the company at more than $9 billion -- before easing slightly in early-afternoon trading. The company raised $870 million on 58 million shares sold.

 

[basilio]

It is a very interesting idea. However I just cannot see how Society One will make a dollar out of the deal ?? A spread of 1-2 % seems ridiculously low.

It is also worth remembering that banks actually create money. The deposits are only 10-15% of the amounts they loan out. So a bank might have $15m on deposit paying 3% interest while loaning out $100m at an average of 7% .

How could a peer to peer group make significant returns with such a tiny margin on only the actual monies invested and loaned ?

(It sounds like an excellent idea for the lender and borrower though !)

____________________________________________________________________

OK it is for real. Apparently there are a number of effective and profitable peer to peer companies around. I'm impressed.

 

[basilio]

What you find if you start looking.

This perked up my interest..

United Prosperity presents you the opportunity to directly help poor entrepreneurs and transform the lives of their families and communities by making a loan or a loan guarantee.

Lend: You select the entrepreneur to support and lend any amount you want. United Prosperity would consolidate the loan amounts from all online lenders and through a locally present Microfinance Institution(MFI) ; your loan will directly reach the entrepreneurs.

Guarantee: You select the entrepreneur to support and each $1 you contribute acts as collateral or a loan guarantee to a bank. Based on the guarantee, the bank makes a loan of nearly $2 to the entrepreneur though a partner Microfinance Institution (MFI).

Once a loan or a loan guarantee has been made, the entrepreneur’s progress can be tracked online. On loan repayment, you get your money back, and you can choose to recycle it by lending/ guaranteeing the loan to another entrepreneur.

Since our launch in May 2009 and as of May 2013:

1300 families have received more than $280,000 in loans
Our partner MFIs have built their credit history with the local banking system encouraging more banks to lend to them.


This has impacted an even greater number of entrepreneurs, their families and whole communities. We work in regions with high levels of extreme poverty and ask you to join us in amplifying this positive change and lift many more communities out of poverty.

http://www.unitedprosperity.org/us/about_us

 

[onthesword]

here's one for retail investors
https://www.ratesetter.com.au/

 

[RussianAussie]

I've been investing on international p2p platforms for the last year and have 10%+ returns after all losses.

I think that in zero rate epoch P2P lending idea is brilliant!

It's the only way to get stock-like returns with almost zero volatility!

 

[basilio]

Thought this deserved a reboot.

What have been peoples experiences with investing/borrowing through P2P ? I wondering if it could be reasonably safe way for retirees to get more than 2% return on their term deposits.
I had a look at Rate Setter and was impressed with their provision fund idea.
But there are a number around.

Thoughts ? Experiences ? Other suggestions ?

https://www.ratesetter.com.au/

 

[Zaxon]

I wondering if it could be reasonably safe way for retirees to get more than 2% return on their term deposits.
I had a look at Rate Setter and was impressed with their provision fund idea.
But there are a number around.

Thoughts ? Experiences ? Other suggestions ?

P2P lending had massive scandals in China which has tarnished the industry. There's also been some examples in other countries where some very shady practises have been happening. The industry just isn't regulated, allowing the companies to basically do what they please.

The problem is that the market maker's incentive is to push through as many transactions as possible. They take no risk. You the lender do. They make their transaction fees regardless.

So I would place this in the "speculative" area. If you have some spare cash to play with, fair enough. But I don't consider it suitable for anyone on a limited income.

 

[basilio]

Interesting Zaxon.

P2P lending had massive scandals in China which has tarnished the industry. There's also been some examples in other countries where some very shady practises have been happening. The industry just isn't regulated, allowing the companies to basically do what they please.

The problem is that the market maker's incentive is to push through as many transactions as possible. They take no risk. You the lender do. They make their transaction fees regardless.
.

Thanks Zaxon. Very Interesting. I can hear the concerns of scandals in China. Your observations about the lack of risk the companies has seems pertinent.
Just wondering if there are any other direct experiences of how local companies are working ?
Also thinking that it isn't in the companies interest to have loans fall over. A bad book is bad for all investors ?

 

[SirRumpole]

Just wondering if there are any other direct experiences of how local companies are working ?

I think VC is involved in this area, he may have a few comments.

 

[CBerg]

Thought this deserved a reboot.

What have been peoples experiences with investing/borrowing through P2P ? I wondering if it could be reasonably safe way for retirees to get more than 2% return on their term deposits.
I had a look at Rate Setter and was impressed with their provision fund idea.
But there are a number around.

Thoughts ? Experiences ? Other suggestions ?

https://www.ratesetter.com.au/

I've start using Ratesetter in January last year, I've been very impressed by the results so far. I haven't used any of the others but from appearances it looks like Ratesetter appear to try to be transparent with their loans & how they're performing: every 3 months they give you a data dump of all their loans from the start and whether they're current/arrears/defaulted etc.

I'm also impressed they made a change to let investors "sell" their loans, the fees are a bit iffy but the option is there now if you need the cash or some % of what you have invested.

All of that said I'm slowly drawing the money out now because it was a joint account with my now ex-partner and I'm using the money as part of a deposit for a unit for myself.

See image for actual numbers of my results, I don't have Feb-2019 or Mar-2019 starting figures because I stopped recording that info since I made an offer on the unit.

 

[basilio]

That's excellent CBerg. I take Zaxons comments onboard but it would be useful to get a independent overall picture of how safe the loans made by Rate Setter (and other providers) are. They do have a provisional fund to pay out at least some defaulting loans.

 

[CBerg]

That's excellent CBerg. I take Zaxons comments onboard but it would be useful to get a independent overall picture of how safe the loans made by Rate Setter (and other providers) are. They do have a provisional fund to pay out at least some defaulting loans.

Yeah the provision fund is what sold me. I've attached 2 snapshots of the provision fund info from within the platform. 1st one dated 24/10/2018 & 2nd one dated today(21/03/2019). There's a differences between the 2 in terms of how they're calculating the provision fund balance since the 1st one and the loans current have deteriorated slightly.

I can't say if I've personally had one of my loans default & then be covered by the provision fund, it does happen but haven't received any special email. Plenty of loans paid out early which is fine by me, previously I would've reinvested but now it just makes the withdrawal process quicker.