Update on Dozens' fixed-interest bonds and protection

Depends what your mean by reliable but there is no guarantee your bid will be successful. All that can be said is chances of success increase if you bid a smaller amount.

After two rounds of bonds my initial thought is the bidding system brings with it too much faff. You have to think about what to bid each month, commit funds for a few days before the bonds can even be issued (with no interest earned in that period), and there is no guarantee of success. If not successful you then have to spend time finding somewhere else for that money. I don’t think this faffiness is conducive to good saving/investing habits.

I’d prefer if Dozen’s met their goal of helping smaller savers/investors by capping the bid amount to a level that is likely to be successful. Or perhaps offer some predictions on likelehood of success of different bid amounts. This won’t guarantee success but Dozens should have a lot more data to base effective caps or likelehood scores on than individual savers.

If they capped maximum bid amount I think a better tie breaker (in the event of running out of bonds in any given month) would be to give preference to to those who use Dozens’ others features. E.g. those who regularly do their spending through Dozens. This wouldn’t help me as I don’t yet use other aspects of Dozens but it would feel to me to be more reasonable to give preference to Dozens primary users.

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The plan is to have an issuance available each month. This will depend on availability and demand, but that is happening at the moment. We just closed the first issuance of £100,000 worth of bonds, and there were almost £1m worth of bids placed for them.

Our next issuance is scheduled for 1st October and will be £1m, with a portion reserved for our Seedrs investors.

In terms of ‘accessibility’ it is easy to bid, but the success of those bids each month will depend on the demand for whatever is available.

These will be available to read in the app as soon as the bonds are available for bidding, but you can also read the terms on our site: www.dozens.com/nex

Yes. Note, any bid must be made from your cash savings account. This is your ‘Grow’ tab in the app. The way to put funds in there for investments is to move money into your current account via bank transfer, then ‘boost’ your cash savings.

You cannot move money directly into that cash savings account.

See above for information on the bidding process with reference to larger bids especially.

Interesting idea about the link to spending.

Although convoluted, you could say that for every £100 spent on the dozens card, you get a £100 allocation for the bond, should you wish to accept.
(Or some similar calculation)

You could argue, this encourages spending, against the dozens ethos, as it is essentially rewards spending. But if you have half as much as you spend you’re not doing too badly. It just means you must use dozens as your main card.

This would probably smash the finances of dozens, paying £50 loss of each £1000 spent on the card. But, with the magic banking maths, we can assume that half of people may not choose to take the bond, so you then have £25 loss. Somewhat more ingestable.

As otherwise, you’re tempted to use dozens just for the 5% bonds and not a lot more. This spend to save model would encourage use of the app and spending. Returning revenue and increasing use of the app.

Can I ask how bids are allocated? I recall 13k not being utilized but 3k bids being rejected

All the details are here

https://www.dozens.com/our-5-bonds-everything-you-want-to-know/

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Yeah, that doesn’t help.

The 100k issuance wasn’t met yet bonds of 2k were rejected - when there was enough room left.

I thought they had 980k in first few hours

Where did they report the 100k wasn’t met?

The latest info I’ve seen was in the investor’s email.

No mention that they didn’t get to the 100k limit.

For our latest issuance of listed bonds, we received £100,000 worth of bids within 26 minutes of going live, and at closing had a total of bids from 613 customers, with a total value of £987,600.

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Yep that’s the one

If they had 12.4k left why didn’t it get allocated?

Just saying, but 987.6k is 887.6k more than 100k, not 12.4k less :eyes:

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My brain didn’t do math correctly, it had 1m in its working calculations

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I agree, it’s way too much pfaffing around for such tiny returns - or zero returns. In the last round the median successful bid was £200. So the pre-tax return on that at 5% would be £10 after a year. Half of that is eaten up by inflation. So genuine return is £5 after a year.

I’m not sure how other people calculate the worth of their time, but mine is worth far more than making £10 (/£5) after a year.

Instead if this nonsensical bias in favour of tiny investments, dozens should show respect to all their customers.

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Good morning! Always nice to hear from a Dozens Fan

So, your maths is correct, but rather misses the bigger picture.

You are drawing your conclusion from a single issuance in a single month. Firstly, this was the first, small and very highly oversubscribed, issuance. The £200 figure may turn out to be true across future issuances, we will see, but since there are currently £1m of bonds available, the median in October may well be higher.

Secondly, this is the first of a series of issuances. It is not about a one-off investment of £200. If you take part each month, even assuming the number stays consistent, that’s £2,400 earning 5% - i.e. £120.

The reality is that a very substantial number of UK consumers, particularly younger ones, have NO SAVINGS AT ALL (in 2018 50%+ of all 20-25yo have £0-£2000 total savings).

Even if individuals manage to scrape together anything at all, they are not rewarded for saving it instead of spending it. Yes, inflation will eat into the 5%, but that is also true in any other circumstances. If you keep it as cash, in a current account or even most Cash ISAs, you will end up with less than you started with. It is this crazy scenario that encourages more and more spending today, and reduces your ability to cope in future.

If you were able to put away just £200 a month (which is quite a lot for most of us), and were sure it was going to be worth more than it is now in 12 months, AND you could be sure to get access to it at any time, is that not a good thing?

Now, if you already have a lump sum, you have other options available to you in the market. Dozens is also working on providing you with other options for helping you to invest this for your future, so you can then choose the most appropriate option for you and your risk levels.

I wonder what alternatives you might suggest that would “show respect to all their customers”? For the avoidance of any doubt, we are not a bank and we cannot pay interest on deposits. If you have any other ideas, we would definitely be happy to hear them.

Finally, there’s no need to get involved with the Dozens Fixed-Interest Bonds if you consider this to be not worth your time, of course. You can still enjoy the features such as the built-in budgeting tool and the fee-free travel transactions, and we will be announcing more details of the Invest tool that is currently open for browsing only.

Thanks for raising these interesting issues.

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I actually like the idea of bonds for encouraging saving, I actually think the minimum should be bought down to £50 though. £50 a month is easier to obtain than £100 for a lot of people. I put money in my ISA, my Stocks ISA and so on each month, it might be £50 in one, £50 in another, £50 in savings etc, its soon ads up. The fact with the Dozens bonds you are getting interest, will encourage people to save while earning a bit of month.

If I was investing a lump sum, there are many options, but I wouldn’t see Dozens as a big lump sum scheme, more as a regular savings scheme with a decent rate of interest.

People always want different, but those that can afford more, need to remember Dozens isn’t about just helping the rich, its about encouraging savings, and using money wisely. And the bonds with 5% interest a £100 minimum can help those that previously don’t save, consider a decent option, for a few button clicks.

I also think, as well as reducing the minimum to £50, there should be an auto bid option each month, so you set how much you wanna bid each month.

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@daedal, what an amazing thought:slight_smile: I really enjoyed reading it.
100% agreed with all the points you mentioned here .
@robert, it would be a good idea to include these points like reducing bid amount to £50 and auto bid to Dozens roadmap.

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Thanks @daedal - thoughtful and insightful as usual!

I do appreciate your point about £50 being more achievable, but there is a balance to be struck between accessibility and the practical considerations for bond listings and costs.

Yes, £50 would be easier, but then so would £20, or £10. We must remember that this is not a deposit product, it is a bond. There does need to be a value, and when we create the listing, we establish the value of the individual ‘bond’ that is sold. It is currently set at £100 and can’t be changed for the current series*.

Edit: … or at all in fact. I believe that all bonds are sold with a ‘par’ value of £100

This is already a very low price hurdle for the kind of product that is being sold (with the protections we’ve put in place, the interest rate, and the ability to withdraw at any time), so we feel it is already a good offer.

As for the auto-bidding, I will raise that and get back to you but it is already a very low-effort investment process (a matter of a few clicks, as you say) and there are some other products coming to this section which might change the choices people make, so we should get feedback on those first.

Love this, and do agree. The good news is that if you do have more of a lump sum to invest, and are looking at the longer term, then we will shortly have some very exciting news.

Invest seems to have gone live!

Nothing at the low risk end though :pensive:

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Not yet! We have the current Fixed Interest bonds, and there will be some other options in Grow for cash savings, and we will be adding to the list of investments at all levels from now on :slight_smile:

Just waiting for iOS to update their app store before we say too much more … but watching with interest