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Savings Vs Peer-to-Peer Lending Vs Shares in 2014

I want to show you how different savings and investments did in the year just gone by.

I've not cherry-picked this information to make peer-to-peer lending look good. I’ve looked for precisely the information that I want to know when doing a serious comparison of savings accounts vs peer-to-peer lending vs shares.

All three are very useful ways to save and invest, as you see in 4thWay's guide Peer-to-Peer Lending Vs Other Investments.

Peer-to-peer lending in 2014…

  • All 73,000+ investors lending through five of the safest P2P lending companies1 made money.
  • There were zero losses at those five P2P lending companies (and at several other lower-risk lending options).1
  • With few exceptions, those who chose to P2P lend their money for five years (with an early access option) will have made at least 4% with those shopping around getting more like 5.5% after fees and bad debts2 in 2014.3
  • For easy access or one-month notice lending options, the best you could have expected was 2.5%.4

…versus shares in 2014…

  • In contrast, the majority of people investing in shares or share funds, share ISAs or pensions, lost money in 2014.5
  • Those investing in UK shares lost over 2% on average, more after investing costs.5

…versus savings accounts in 2014

  • The best five-year savings account was a cash ISA paying 3.05% (with no early access option).6
  • The best shorter-term savings account was a cash ISA paying 1.8%6, although half that rate was a fixed bonus that ended after nine months.

My view

Although savings accounts are very useful for the right reasons, banks always struggle to pay savers a good return after they lend our savings and keep most of the interest for themselves.

Unlike in 2014, share investors can usually expect to make real money – on average. Returns are very varied. For example, on average share investors probably lost around 4% in 2014 after deducting costs. But many people will have done worse than average.

And the stock market can have long losing streaks in general. So share investing is only suitable and reliable enough for long-term investing.

I think that cautious savers and investors have been getting better rates than they deserve for taking part in P2P. The safest peer-to-peer lending websites are continuing to offer over the odds for the modest risks involved.7

Peer-to-peer lending will have bad years when some people lose money by taking too many chances on higher-risk loans and higher-risk P2P lending companies. But at least a third of the 30-odd P2P lending companies allow you to lend at very low risk and we can expect that there will always be low-risk options.


I'd love to hear your own views on these figures and any others about savings accounts, P2P lending and shares. And I'm sure our other readers will find it useful! So please comment below if you have anything to add.


1. The five P2P lending companies are: Landbay, Lending Works, RateSetter, Wellesley & Co. and Zopa.

Each of these five have the best 4thWay® Risk Ratings, and are easy to use and to spread out risks by lending to many borrowers. All of them lend to quality borrowers or against property valued far higher than the loans are worth. They all also have a provision fund set aside to pay expected bad debts as well as other, additional protections.

2. This figure is after fees and bad debts, but actually none of the 73,000 lenders suffered any bad-debt losses.

3. 4thWay data and data from the five peer-to-peer lending companies observed.

4. Based on data from the P2P lending companies.

5. Most people in the UK, whether they invest in pensions, share ISAs or directly buying shares, tend to be largely overweight UK shares. The FTSE 100 index finished down 2.45% and the FTSE All Share down 2%. After costs, most investors will have made losses exceeding this.
(The FTSE World Index finished up 3.21%. After costs, investors will have typically made closer to 1%.)

6. Yahoo Finance

7. 4thWay P2P Forecast Returns Index is currently at 4.72% as at Tuesday 13 January 2014.

Commission: we receive commission from the P2P lending companies mentioned here for publishing their calculated 4thWay® Risk Ratings and our editorially independent 4thWay® Insight Report, which are our own proprietary research products to help individual lenders like you make good investment decisions. We do not take commission for including P2P lending companies in our free comparison tables. All P2P lending companies will be included over the next few weeks. Learn How we earn money fairly with your help.

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