Update on Dozens' fixed-interest bonds and protection

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