P2P Lending – How To Get A 14% Return

p2p lending

Regular readers will know I’m a fan of Peer-to-Peer (P2P) Lending.

For those unaware of how P2P Lending works, or for a refresher, check out my article called “Become A Bank With Peer-to-Peer Lending.”

The article gives a good overview of the ins and outs of this relatively new technology, and I share my experience so far.

Basically, with P2P Lending you agree to lend your money out to others, using an online platform.  The credit checks and paperwork are dealt with by the online platform provider – in this case RateSetter.

My experience has been positive.  And the returns are attractive, the platform easy to use (even fun), and RateSetter’s customer service is excellent.


Returns With P2P Lending

Effectively, the longer you lend out your money, the higher the returns you’ll achieve.

Current interest rates for lenders are as follows:

1 Month – 4.1% p.a.
1 Year – 4.9% p.a.
3 Year – 7.7% p.a.
5 Year – 8.9% p.a.

For 1 month and 1 year, you are paid interest monthly.  Your principal will be returned to you at the end of the loan term – 1 month or 1 year.

For 3 or 5 year lending, you are paid interest monthly, and also some principal.  So the loan will be paid back to you a bit each month, along with the interest. Think of it like a mini home-loan in reverse (where you’re the bank).  You can then choose to re-invest your money into a new loan, or withdraw the money to your bank account.

We have a fairly large sum invested on the platform, as a result of investing proceeds from a property sale last year.  Our funds are spread across many different loans, and we receive payments all throughout the month.

Currently, we have it set up to ‘auto-withdraw’ on Monday each week.  So basically, as loans are partly repaid to us throughout the month, the funds sit in the ‘Holding Account’ – the home of funds that have been paid back to you, or just sitting there, waiting for you to invest or withdraw.


So here’s what I did…

Since I’m a famous blogger now (ha!), I decided to call RateSetter.

First of all, I told them about my experience with them, and then about my blog.  Because I was going to be recommending that folks consider trying out RateSetter for a portion of their investments anyway, because of my happy experience, I thought we could make a deal.  And we did.

RateSetter has decided to offer my readers a $100 bonus, when they signup and invest on their P2P Lending platform.  They even said I would receive the same bonus too, which is nice.

Here is the special link for Strong Money Australia readers – RateSetter signup.


What’s the catch?

To get the bonus, you need to invest a minimum of $1000 on the platform, for 1 year or longer.  That’s it!

Not long after investing, you’ll receive the $100 cash bonus into your RateSetter account.  Usually RateSetter makes the bonus payments at the end of each month.  You can then withdraw this bonus cash, or invest it, it’s up to you.


Dude where’s my 14% return

If you lend $1000 in the 1 year market, satisfying the criteria for the cash bonus, here is your return.

$1000 invested.
$100 bonus.
$49 interest received.  (1 year interest rates are currently 4.9%)
Total Return = $149.
That’s a 14.9% return on investment

Not too shabby at all!


Here’s my logic

If you are interested in P2P Lending maybe being a part of your portfolio, it’s a great way to test the waters.

Trying it out with $1000 for 1 year, will let you enjoy much higher than average returns, while you’re experimenting with it.  After the year is up, you’ll have a feel for the platform, and know whether you like P2P Lending as an investment.  Afterwards, you can then decide if you want to make it part of your investment portfolio for the longer term.

Again, for the nuts and bolts of how P2P Lending works, see my article here – Become A Bank With Peer-to-Peer Lending.


Some things to remember with P2P lending

Investing for income should ideally be done in the lowest tax bracket possible.  Since retiring earlier this year, we are now in very low/no tax environment, so this is not an issue for us.

Earning interest via P2P Lending, is essentially the same as interest from a bank – it’s taxable income.  So while you may earn a high rate of return in the 5 year market (8.9%), if you’re in a high tax bracket, it’s likely to end up only around a 5% return or so after-tax.

Something to think about before diving in.  If you have a spouse on a low to moderate income, it’s likely to be well suited to that situation.  Whatever the investment, we should make sure we aren’t losing too much of our return to tax.

If you’ve read about P2P Lending and it sounds interesting, then you can signup using the special link RateSetter have provided, to make sure you get your $100 bonus.

Signup here for your $100 bonus.

Remember, to get the bonus just invest $1000 or more, in the 1 Year Market or longer on the platform.

Happy experimenting, happy learning and happy lending  🙂



Note – If you have any questions or issues with the link, or the platform, just let me know.  I’ll try to help as best I can.  And if you do decide to take up the offer, this blog will receive a bonus too – so thanks for your support!


  1. Great deal! I’ve been using Ratesetter since April this year, and I’ve found it to be easy, once you get your head around how it works. After an initial play, I’m only investing in the 5 year market now, although it’s about time I put some into the Green market as well. I have noticed the rates come down a little in just the time I’ve been investing, but it’s still so much higher than I can get elsewhere with such a minimal amount of work!

    1. Nice work Mrs ETT. The 5 year market returns are quite juicy, and no fuss involved at all. We lent our lump sum in the 3 year market as that worked out best for our situation. Not without risk though, but sure as hell beats a term deposit at 2%!

  2. Excellent read as always. Conidering the $100 off deal, now i will definitely join RateSetter and start investing. Also good tip with the spouse. Keep them coming

  3. I’m already investing with Ratesetter but this deal you have going on is too good! I think I will get my husband to sign up too. 😀

  4. Helpful review! Another good tool for a FIRE-chaser’s portfolio, especially for shorter-term savings goals. I signed up to the platform via your link in early November, making my $1000 loan for 1 year. Do you know how long it takes for the sign up bonus to come through? Keep up the great work.

    1. Gday HerdingDollars, and thanks!

      Not sure if you saw my much more detailed RateSetter review – here

      I’ve had a great experience with RateSetter so far and the rates are solid. I like the provision fund in place, since it works (so far) to smooth out the defaults and lenders receive the regular income stream.

      Thanks for letting me know – it usually takes only a week or so. I’ll chase them up about this today!
      I’ll let you know their response. Should I email to your herdingdollars address?

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