Plenti of Questions - Why Would Anyone Lend out on Plenti Right Now?

team teri on 06/08/2022 - 16:01
Last edited 06/08/2022 - 21:59 by 1 other user

Ok, I admit it: the title is my attempt at a word play, the actual topic is: why would anyone lend out on Plenti right now?

I have an account with Plenti and I fared quite well with it in the past. In fact, my current average interest rate received there stands at 8.1%. All from 5-year investments made several years ago. Ever since rates sharply fell on Plenti I decided it is no longer worth it for me.

Now I notice the curious situation that plenty of people still lend out on Plenti, with significant amounts made available to them for between 4 and 4.3% for 5 years. When at the same time a 5 year AMP term deposit yields more, 4.35 to 4.4%.

Even more stunning: $180k in the queue for 3 year investments, at between 2.4% and 2.7%, when at the same time a 3 year AMP term deposits yields 4.1 to 4.15%.

At the same time the AMP TDs are superior in a number of ways: the term is actually fixed, not subject to early repayments (which are a major nuisance with Plenti). Early access for customers, if needed, is available at a fixed fee, independent of market fluctuations. And most of all, AMP TDs are covered by the $250k government guarantee on deposits, unlike Plenti where the provision fund is the only thing standing between investors and potential losses.

Other than people being oblivious or too lazy to move money around, why would anyone invest with Plenti under current circumstances?

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Plenti (Previously RateSetter)

• 

  Nugs on 06/08/2022 - 16:06

  -2

  AMP advert?
  .

  • 

    team teri on 06/08/2022 - 16:18

    +1

    Why would it be? If you're in the market for a safe fixed term investment, I haven't found anything better, that's why I chose to compare against them, but everyone has different needs. You can't objectively compare term deposits with shares or real estate. Comparing with savings accounts like ING or Ubank is hard too, because you'd need a good understanding of how the RBA will adjust rates over coming years.

    This is different. Both products have the same term on paper, but vastly different risks. Usually the more risky investment yields more. When I invested with Plenti that was true, no bank offered 8%+ 2 or 3 years ago, they still don't.

    Now the opposite is true. I really don't get why investors pour hundreds of thousands of dollars into an inferior product. Or do you see any way that Plenti would be superior right now? That is the question, nothing else.

• 

  Mr Krinkle on 06/08/2022 - 17:50

  Out of interest, do you get to choose where your investment goes with Plenti? First time I've heard of them and having a quick look at the website it looks interesting.

  Regarding the different interest rates, could it be matter of supply and demand?

  • 

    team teri on 06/08/2022 - 18:17

    No choice who gets your money, only choices are the indicative term and the rate you want.

    After that, whether you get the rate you want, depends on supply and demand. I'm surprised there is supply at those minuscule rates.

    • 

      holdenmg on 06/08/2022 - 18:37

      I invested in National Clean Energy via Plenti @ 5.7%pa (now dropped to 1.1% for new Investments).

• 

  avoidfullprice on 06/08/2022 - 18:54

  +1

  Apart from AMP requires min 5k deposit to get that rate and plenti doesn’t, I don't see the benefits as well.

  • 

    holdenmg on 06/08/2022 - 19:10

    +1

    Plenti is not AMP. Reason enough?
    There you go.

    • 

      Daabido on 06/08/2022 - 20:06

      I'm surprised AMP survived all its corporate malfeasance.

    • 

      team teri on 06/08/2022 - 21:54

      For people who hate AMP JudoBank would still be a better option than Plenti, at least for 3 year terms where they pay 3.95%.

    • 

      avoidfullprice on 06/08/2022 - 22:08

      Wut? Weird but k

• 

  StuBalls on 13/10/2022 - 18:39

  I just checked on Plenti and their rates are decent again…
  3 year - 4.0%
  5 year - 5.4%

  • 

    team teri on 13/10/2022 - 20:20

    For 3 years you're better off at Judo Bank with 4.55% p.a.
    For 5 years the difference is small enough that I'd still prefer Judo with 4.8% p.a. Reasons: no risk (covered by government guarantee), and no risk of early repayment by the other party.

    That said: I've seen over 6% at Plenti for 5 years recently. For some that may be enough extra to compensate for the downsides.