About 18 months ago, I started to siphon some of my savings into Zopa in an attempt to get a slightly better return on my money. So I thought now would be a good time to look back on how well it has gone. First up, it certainly provides better returns than having your money in a bank account, with interest rates as low as they are. On the downside, this increased return does mean increased risk, the old risk premium again. Those loans can sometimes turn bad and when they do, all the outstanding debt is written off. Well I guess some of it may be returned, but I’ve not had any bad debt returned yet.
But the main downside is that the money is tied up for a long time, and by my calculations the return from part paying off my mortgage is still better than the returns on Zopa. And although doing that means that the money is gone forever, in the future I’ll probably be more likely to do that than put more money into Zopa.