How investing in P2P helped this teacher prepare for retirement
Elaine O’Shannessy, a retired primary school and TAFE teacher, now lives in northeastern Victoria, where she runs a bed and breakfast with her husband and enjoys tending to her extensive garden. We spoke to Elaine about how using RateSetter helped her prepare for a relaxing retirement.
Why did you choose peer-to-peer lending?
I went to a financial adviser some years ago because I wanted to get out of any investments that had to do with coal, oil, slave labour, child exploitation, palm oil … all of that kind of stuff. I wanted to make ethical investments.
A lot of people were saying, “For goodness sake, ethical investments don’t make you any money”, but that’s not true.
I ended up going with a fund, which has done quite nicely for me. In 2017, I came into a bit of extra money and my financial adviser urged me to consider peer-to-peer lending.
He mentioned a few names, and I went home and did a little research and discovered RateSetter. It seemed easy to use and I liked the idea that making loans to people would be helpful to them, while providing me with a bit of a return.
How did you get started with RateSetter?
I started with a small investment over a few months. I was only using the 1 Month Rolling market, with an automatic rollover. I checked its performance quite regularly and was satisfied with the results, so, earlier this year, I moved some money into the 3 and 5 Year Income lending markets for a higher interest rate.
I now draw on some of the interest from my funds on a monthly basis, which provides me with a convenient supplementary income. I have about $200,000 invested.
Do you have a self-managed super fund?
No, I’ve got a certain amount of money in one ethical super fund, a certain amount in a different fund, and some extra money, which I’ve invested in RateSetter.
What’s your main objective when making an investment?
I’m generally an environmentally conscious person and I wouldn’t invest in things that might do harm to the planet or other people. Ethical investment is a high priority for me and I wish it were a high priority for other people too.
Of course, any investment has to give me a return. That’s the main thing. Stability and security are also important to me.
What motivated you to invest with a non-traditional lender?
I left the big four banks many years ago because they weren’t very helpful to me, and they’ve become less helpful as the years have gone by. They keep closing branches, especially in rural areas. Also, as we’ve seen with the banking royal commission, I think much of their behaviour is really terrible.
So, when the time came to start making investments, I like that you can easily see all aspects of your investment, such as the interest rate, the repayment date, and everything else. It’s really straightforward, which is a big plus. I also like that RateSetter sends me monthly statements and reminders if I have idle funds.
How do you monitor your RateSetter investments?
I rely heavily on the website, which I use to check how much interest I’ve earned, check how much is rolling over, and consider what to do next. I know there’s an automatic reinvestment option, but I prefer to be involved in managing the investment. I probably check about five times a week!
Do you have any thoughts for other investors who might be interested in P2P lending?
You can invest as much as you want, as often as you want, and for as long as you want. So, you can just do the monthly thing, and in my experience there has been very little risk attached to that. When you feel more confident, you can shift to the 3 or 5 Year Income lending markets, or invest into the renewable lending markets.
That’s what I did: start small and feel your way forward. If you’re a working person and you invest a little with every paycheck, your investment will grow quickly. In my view, RateSetter is low-risk, because your investment is spread across multiple loans, and there’s also the Provision Fund.
What has your retirement strategy allowed you to do, now that you’ve officially retired?
I spend every day in the garden, of course. That is, unless it’s raining. We have a vegetable garden with half a dozen beds and we eat what I grow. My husband and I also run a small B&B. It’s lovely living in the country, really lovely.