I thought I would share this experience as an example of how investment expectations can differ drastically from reality. Luckily the amounts involved here were relatively small, and it was more of an annoyance than anything else, but the lesson learned was incredibly important.

Several years ago I was living in London, and put some extra cash in a P2P account with Zopa (the UK equivalent of Lending Club). I had no investment plans for those funds, and was attracted by the promised 6 percent (and up) return. I also liked that Zopa emphasized if I ever needed that money, the platform would take care of selling the loans to a new buyer, and wire me a lump sum. Plus, I figured, finding a buyer would be a speedy process since the website’s user base was growing every day, and rates weren’t going up anytime soon – how hard could it be to sell a 6 percent loan?

You can probably guess where I’m headed with this…

Fast forward to March 2017. In preparation for my move to Dallas, I decided to sell all my P2P loans and transfer the lump sum to my checking account. Being incredibly tech savvy, I successfully logged into my account and clicked “Sell”. After agreeing to the relevant fees, and already making plans for what to do next with the money, a window popped up with my payout – for significantly less than my principal! Apparently a combination of technical issues, less than expected buyer appetite, and delinquent borrower payments meant I would not be able to sell the entire portfolio at this time, and I should try again after several weeks.

Well - 7 months have gone by now, and I’m still slowly unwinding that portfolio. While most of it has now been sold, this was definitely a wake-up call on how easy it is to take things for granted. Of course I read the disclaimer saying significant delays are potential issues, and of course I knew that private loans are typically more difficult to sell than public stocks. But like many people, I brushed off these risks, seduced by the attractive rate of return, and the assumption that if needed, it would be easy to sell and walk away within a reasonable time period. Clearly that logic was silly, and if I pride myself on being conservative with real estate, why wouldn’t I take that same approach with my other investments?

So whether you have your money in real estate, P2P, notes, ETFs, bitcoin or stocks, I just want to emphasize the obvious lesson to readers - always ask yourself what happens if your expectation on timelines are wrong, and what will you do if your main exit strategy is no longer possible. Sometimes the unexpected happens, and that flip you expected to sell in 2 months could easily turn into a 5 month holding period. Or that crowdfunded loan you expected to be able to sell quickly if needed – guess what, no one wants it anymore! I have about $100 in loans left to sell, and that Zopa account is my smallest holding – but man of all my monthly statements, that’s the one I always pause and think about the most, if only because it’s a fantastic reminder that I should always stay vigilant and prepare for the unexpected. Hopefully you will too BP.

Good luck!