Peer to Peer Lending – The Beginning

I have wanted to start my foray into Peer to Peer (P2P) Lending for almost a year now, and I have finally had time to get around to it. Just like most people, I am a fan of having a diversified and balanced investment portfolio based on my desired risk vs return objectives… That really sounds like a boring old man’s statement, I didn’t think I was that old yet.

Given the current RBA cash rate is only 1.5% I have been looking to other investment options to increase returns. I already have quite a bit invested in a few different types of “high” interest accounts and bonds, but want something that can both give me a higher return for part of my money, and also give me more flexibility in choosing how much risk vs reward I am willing to take. At the moment, I still place P2P lending in my X-Factor investment category, however as the space matures over the years to come that may change.

I am sure there are many people talking about P2P lending already, but thought an Australian audience would enjoy seeing how I go about choosing and investing on/in one (or more) platforms. Not to mention how things go over time. This will be broken down into a few different posts, and the first one starts now.

Peer to Peer Lending Companies

To begin, I need a list of companies to choose from. I can then use various criteria and requirements to reduce that list down to a manageable bunch. As I live in Australia, and am not after the added complexities of anything international, so I will be sticking to Australian for everything.

A quick bit of Googling later and I can up with the list below. Any company that doesn’t come up in either Google or other people lists of P2P lenders by now is probably either not large enough or too new of a company for me. However, if I have missed one please do let me know in the comments below!

Peer To Peer List

1. Wisr (previously DirectMoney)
2. RateSetter
3. OurMoneyMarket
4. SocietyOne
5. Bigstone
6. ThinCats
7. MoneyPlace
8. Marketlend
9. Harmoney

The next step was to check on the investment eligibility and requirements for each of these companies. One key requirement for me is that they allow retail investments. There are three main reasons for this:

• I don’t have net assets of $2.5m,
• my SMSF doesn’t have over $10m,
• and I don’t earn over $250k per year.

This proved to be a good way to cull most of the entrants and left me with three:

1. Wisr (previously DirectMoney) – Retail accepted!
2. RateSetter – Retail accepted!
3. OurMoneyMarket – Retail accepted!
4. SocietyOne – Wholesale only
5. Bigstone – Wholesale only
6. ThinCats – Wholesale only
7. MoneyPlace – doesn’t seem to take investors
8. Marketlend – Wholesale only
9. Harmoney – Wholesale only

Now begins my review of those 3 companies, there take on P2P lending, and the risk vs reward prospects they provide.

As I mentioned, please do let me know if I have missed anyone, or if you have recommendations or experience with any of the three companies that want my business.

… find part 2 over here.