Is this investment too good to be true?
Do our returns seem too good to be true? Then you have reached the right page…
One of the first things we hear from people looking at the Basset & Gold Fixed Monthly Income Bonds is that our returns are “too good to be true”. Investor suspicion is a welcome trait when investing, and staying sharp and alert is always advisable, so we decided to provide some more insight into the market we operate in.
Marketplace lending, otherwise known as online lending and peer-to-peer lending, is a new but growing industry that has grown exponentially over the past 10 years with accelerated growth in the past 3 years. The below graph shows the lending volume growth from members of the Peer 2 Peer Finance Association:
As with many growing markets, this allows for various market participants to appear to provide a gap in the market, which is exactly what Basset & Gold has done by establishing Basset & Gold Plc.
Win-win is not just a marketing slogan for us, it is our way of life. We make sure that our services benefit both sides as platforms get access to bigger pools of capital and investors get higher returns, relying on our excellent investment analysts who pick and choose between available investment opportunities.
So how do we achieve these results?
Going back to marketplace lending, one needs to understand the opportunity that is available and to identify the low-hanging fruit.
Let’s take invoice financing as an example. In its most basic structure, it’s a platform that provides financing for businesses against unpaid invoices. This could be, for example, a pharmacy that gets paid by the NHS 90 days after the invoice date, or a supplier who supplies Coca Cola with glass bottles and only gets paid later. These businesses require capital urgently and do not mind paying high returns as they see it as part of their business costs. The interest is paid for the invoice amount and not on the entire business’ revenue, so it seems like a small price to pay.
However, this creates an amazing opportunity for investors as returns range between 1% and 3% per invoice, with many invoice financing opportunities lasting around one month. This translates to high double-digit returns for the platform - some reaching 30% p.a. - and is how they can afford to pay us and how we, in turn, pay our investors.
Looking at some live examples so we can get a better feel for the market, the leading UK invoice financing firm in terms of volume is marketinvoice.com, which has lent £148,400,000 since the beginning of 2018 and a total of £1,516,600,000 since they started lending according to AltFi data on 27th February 2018 (source: http://www.altfidata.com/marketdata/).
If you examine the statistics on their website, you can see that their average return is above 10% net on an extremely short-term product, although one must consider the fact that capital isn’t always deployed, yet this provides investors with a great understanding of how we are able to provide them with such attractive returns.
Now, you could always go ahead and invest in a couple of platforms (depending on how much capital you have available) without buying the Basset & Gold bonds; however, you will quickly discover that picking and choosing between loans is a full-time job, and much like picking stocks, it requires a significant amount of research and a deep understanding of the market.
Another good example is Relendex, one of the players in the property lending market that has issued loans of £1,900,000 since the beginning of 2018 and a total of £17,200,000 since inception according to AltFi Data (source: https://www.altfidata.com/marketdata/). When going through their loan requests as seen in the screen shot below which was taken on 27th February 2018, as loans on offer constantly change, all loans seem to offer security that look sufficient:
According to Relendex, all the “Coming Soon” loans are “A Risk” investments; it does not provide any differentiation among these loans which could make us difficult to choose if we rely on platform’s internal rating system. In addition, we would like to diversify as much as possible, and that means platform diversification as well as borrower diversification. Therefore, we have to invest in not just one but several of these loans. Another point to notice is that there is no live auction loans on their website available, meaning investors have to follow the site regularly in order not to miss these opportunities.
Basset & Gold provides you with easy-to-understand products that give you the benefits of marketplace lending without the hassle of managing it yourself. With Basset & Gold, you can rest assured that extremely high-level investment specialists are handling your investments for you while you reap the rewards.