Everything you wanted to know about: the dozens 5% bonds


#1

The post many of you were waiting for is now up :partying_face:

We’ve written about our upcoming 5% bonds and tried to answer as many questions as possible in this post:

Our 5% bonds – Everything you want to know.

Thank you all for your insightful questions and your patience. If you have further questions, leave your comments here and we’ll either reply here or even update the post.


#2

That’s really interesting and answered a lot of my questions. Can’t wait to see the full app! Will that ISA have a fee attached when compared with the GIA? And have you considered a SIPP wrapper as well as an ISA one?


#3

@robert thanks for posting. I know you stated the bond will be open for current tax year investments. Will the window be open to buy in the next tax year too as I’ve money I’d like to invest in April. Thanks.


#5

In the article you say:

For our first issuance we will have £100,000 available, so we cannot sell more than we have left.

Which I inferred meant that you are only issuing £100,000 worth of bonds in total across all customers - which felt on the low side.

Then you go on to say

If you require more than £100,000 worth of bonds please email us

Which kinda implies that it’s a per person limit.

Could you help my muddled Tuesday morning brain, please?


#6

My understanding (all be it limited :joy:) is that if 1 person came along as soon as it opened and invested £100,000 - The offering would be taken off the table for everyone else.

That is, until Dozens issue more bonds, which, from previous conversations, sounds like they’ll try and do asap (with the idea being that there is always something you can invest in - Even if it’s not as much as you’d like).

£100,000 definitely feels on the low side, but I guess it depends how quickly they can get another £100,000 round out… (I can see a handful of people fulfilling that £100,000 in the first few minutes).


#7

Excellent! Let’s get stuck in

No, there is no additional fee for the ISA

Early days! Let’s get this bond out there with the ISA and there will be many new things for the financial year 2019-2020 and beyond

Of course! Minds are focused on the end of this year in the first instance, but the bonds will be available on a regular basis so there will be other savings and investment opportunities available for you to choose over time.


#8

Let me share a metaphor which will hopefully explain this better. Let me know what you think

The dozens bonds are a bit like trains (its not perfect, but it helps)

We have a full schedule of trains that you can buy a ticket for. The ticket, or bond, entitles you to a spot on that particular train which will run for a defined period and have a known destination.

If you miss one particular train, another one will be along behind it at a known time and follow the same path and schedule.

At this point the first train has £100,000 worth of tickets for sale at £100 each. The idea is to fill the train before it leaves, so we need to decide how many carriages to make available. If we add too many, it leaves half-empty. If we add too few, there will be passengers left on the platform.

As we are still gauging demand, we think this is a sensible place to start.

Now, if (as we want) dozens savers buy a few £100 tickets each at a time, this particular train can cater for up to 1000 customers. This is the model we are building for. Lots of people cooperating to make the journey possible and affordable for everyone.

As you point out, someone with a lot of cash could come along and buy up a large chunk of the train in one go - even the whole thing. We don’t CURRENTLY have a maximum someone could buy because we don’t yet know the demand. This is what we mean by “there is a practical limit” - this train only has so many tickets even if we can put on more trains.

However, a person with £100,000 could just as easily hire a car and a chauffeur to get them to the destination instead of sitting on an empty train. They already have other alternatives open to them. They have choices that regular savers do not have. We therefore don’t necessarily expect these bigger investors to come and exclude the smaller savers.

However, time will tell.

If there are a lot of passengers filling the platforms, we will lay on more trains, and instead of selling all the tickets to one individual, we can take them aside and help them find more bespoke travel options instead.

Is that too many trains? :slight_smile: :bullettrain_front:


#9

It’s a lot of trains :joy: But I think I follow.

Perhaps I haven’t looked hard enough, or I just don’t know where to look - But I didn’t think there were loads of options for people with savings in the region of say, £10,000 (to make the numbers easy).

I can see less than 10 people taking that first £100,000 - But perhaps I’m well off (time will tell!)

How are you going to advertise the first issuance?


#10

Thanks for the insight, @robert!


#11

Great analogy and explanation as how the dozens 5% bonds will be issued.


#12

Could there be more than one train in the first month?

Will the ISA be a flexible ISA?


#13

Excellent breakdown of the bonds and good analogy Rob :wink:

Agreed on the statement above above higher level savers. They will have access to similar if not larger returns through products which require a high buy in. What you may see though is a number of mid level savers who simply fall between the brackets and take up the majority.

As you say, time will tell, but this is an interesting journey, one which I will definitely be buying a ticket for. Next station, saving parity :bullettrain_side: :joy:


#14

Out of interest, what do you and @robert see as “higher savers”?

Are we talking about people who have 100’s of thousands of pounds - Or more than X amount?


#15

It is quite hard to put a figure on, but I know people with :100: thousands who benefit from these high interest products. Harder to find if you are in 10s of thousands.

This is just my experience though. Not my personal experience…it is difficult to save that much in my line of work :joy:


#16

I kinda assumed that people with over 100K would likely know where to store their money (again, not from experience I may add :joy:)

But I haven’t seen anything concrete that matches what Dozens are offering (for the first year at least).

So I do think that initial 100K will disappear in a flash (my gut tells me it’ll be taken by less than 20 people!)


#17

I think that it will go quickly, but to more than 20 people…surely! It will be interesting to see if dozens has capacity to offer more and indeed how much based on demand.

It will also be interesting to see how many stick around after the guarantee period is up!


#18

Loving this :bullettrain_front: analogy, this puts the whole thing in terms I can explain to friends, family and other would-be fintech-ers. As for those who are worried about 10-20 big fish buying up all the seats on the train and having a private party :dancer::man_dancing: how many are likely to deposit £10k-£100k off the bat into a relative unknown?

I really like what I’m hearing here about the offerings, but I would hazard a guess that when the first train departs, it will be full of curious travellers putting up £100-£1k just to ‘give it a try’, maybe a few bigger fish willing to take the same chance for £1k-£5k.

If I was a gambling man (based on no tangible fact or evidence I would hasten to add :joy:) I would envisage around 150-200 passengers on board.

Of course, the security on the first round of bonds may skew that, along with the fact that most in the first round will be early adopters and therefore relatively savvy.

Theoretically, due to the fact that the full issuance of bonds must be released (per train I am understanding this as?), then if I had £50k to invest with Dozens (I don’t), then I would be more likely to deposit £5k per :bullettrain_front: over the next 10 scheduled departures, to elicit the 5% yield, but still have better liquidity, thus still leaving room for other travellers…


#19

So many :bullettrain_side::bullettrain_front::monorail:


#20

I’m this close to renaming the Dozens app on my phone as trainline.com :joy:


#21

Hey @robert, sorry for spamming you across multiple forums, but I thought it was best to post here as well, as it’s likely something that someone will ask (I did search, but couldn’t find the answer).

The “5% guaranteed for the first year”, does that apply to each bond, or is it per account?

If I buy £5,000 on March 1st, and then another £5,000 on September 1st, when March 1st 2020 comes around, do I still have a guaranteed 5% return on the bonds bought in September 2019?

Edit - Also, when it comes to selling them on March 1st 2020, can I sell the initial £5,000 (which would have made me £250) and keep the other £5,000 until September 2020?