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Friday, January 4, 2013
While incessant rain washes away all vestiges of the festive season, many of us will reflect upon, and possibly implement, those ideas and resolutions we’ve had and made recently before the dreaded credit card bills begin thudding the doormat with the ferocity of a Mike Tyson punch.
The Christmas break provided me with an opportunity to share a beer with several people, although the thoughts and ideas of two in particular, neither of whom I had seen in a while, justify a wider audience.
The first was with a guy who works in the property industry and is a constant fount of ideas. It doesn’t take him long to start discussing investments.
He revealed that he was no drip-feeding around £500 a month into Zopa.co.uk, the peer-to-peer lending platform which, according to the company’s website, is where “lenders get lovely returns [and] borrowers get low-cost loans.”
My mate is currently receiving “in excess of 6pc net” on the cash he’s lending to others via Zopa.
It’s a startling revelation, guaranteed to make you replace your beer on the bar and say, “How much?”.
Zopa works for lenders, ie individual investors, by first asking them to choose the rate at which they would like to lend and the level of risk with which they’re comfortable. There are three different lending markets: A*, A, and B, levels which effectively describe the borrower’s credit status, with A* deemed least likely to default on a loan. Lending via Zopa is not risk-free, but it is possible to mitigate risk by lending as little as £10.
Lenders have the option of lending for between 2-5 years as Zopa’s role is to match lending offers to loan requests from borrowers. At any point, lenders can see how much they’ve extended, who has borrowed from them and how much is still available to prospective borrowers.
Lenders receive loan repayments and interest each month; at this point, they have the option of either withdrawing their cash or lending it out again to a new borrower. At present, average gross returns for an A* loan are between 6.2-7.5pc, a rate which made me mark this down as a ‘definite possibility’ for 2013.
Last week, I met another pal who moved with his family to Singapore seven months ago.
He is a very senior guy with a well-known company who use Singapore as an Asian base, which means he’s been in Australia, Japan, Indonesia, China, India and Malaysia since moving east last May.
“Attitudes amongst people in the Far East are in complete contrast to those you experience in Europe,” he told me over a “welcome pint of warm ale”.
“Opportunities are all around you,” he said, adding that from an investment perspective, demand emanating from the middle classes of China and India are likely to continue driving their respective economies. “Everyone in India wants a motorbike. In China, it’s a Gucci bag.”
This succinct assessment prompted me to start investigating funds investing in products designed to satisfy either market, an ongoing process best undertaken when the weather is miserable. It means I’ve had plenty of time to do this and will report back with my findings in due course.
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