#4 RateSetter as my Rainy Day Fund

All of the books I’ve read on the subject matter of FIRE have mentioned the importance of having a Rainy Day Fund to cover life’s ups and downs, and to be honest, that completely depleted to zero with the purchase of our new house as we put pretty much everything we had in to reduce the mortgage repayments. I’m regretting this now for many reasons but it was a decision I made before being financially aware! In fact, it makes me feel worse now that I am. (nb. i’ll be covering the mental impact of being financially aware in a future post – FYI). We’re already running into some issues on our house that are requiring unexpected expenditure and of course my wife and I both work in sales which is perhaps always a little risky in terms of job security.

Therefore, over the past few months, whilst having to split additional earnings into a house improvement savings fund (high priority as we need to sort out bedroom 3 by August (ie. nursery before bubba #2) and investments (as I’m desperate to continue this as much as possible of course), I have also been putting a little bit away each month into a Savings account called the Rainy Day fund. This is sitting in a classic Savings account with Natwest with 1.5% interest as long as I add 50 quid or more each month. My target is 3 months living costs to start with, so lets say 15,000 GBP for arguments sake.

Now… I am wise enough to know that this, over time, is devaluing with inflation being 2.5-3% year on year, and so it pains me to “lose” money in this way, but the options for Easy Access withdrawals are limited at much higher than 1.5% since to get a good interest rate you need to lock it up for a period of time which sort of makes the fund meaningless. With Ratesetter, whilst not immediate, the funds can be made available and withdrawn, typically in 24 hours which seems a pretty good deal when you’re looking at ~3% on the Rolling rate (with no withdrawal penalty) option. If you want to invest for longer, then 1 year is ~4% and 5 year at ~5% at the time of writing. Great if you want to save for something short/medium term in my eyes, and/or diversifying your investment portfolio beyond property, stocks and shares, etc without the volatility of the market. OK, so this is not risk-free – please read around for some honest assessments on the risk!

I’ve been wanting to dabble with the Ratesetter product for some time now as it seems to be the choice of many a FIRE blogger and the rates, whilst not the biggest amongst this sort of Alternative P2P lenders, seems to have a solid base with which to feel more confident about longevity and risk. I’m not here to bore you with the details of how it works – I’ll let you do your own due diligence, but I like the cut of its jib.

If you are interested in investing in this, please follow this link. For transparency, its a referral link and so we both set to gain as a result…


This is the offer on the table if you invest 1000 GBP. 10% guaranteed interest on that after 1 year seems like a pretty good deal to me, right!?

I’ve invested 1500 GBP so far (10% of the way to my first goal) and I’ll be reviewing this in more detail over time and showing you the results on a monthly basis if you want to see it in action before investing.

Would love to hear your thoughts on this as a plan for Rainy Day funds as I’ve not seen this talked about on other forums, although, to be fair, I’ve not looked in great detail :). If you think its clever, yay for me, if you think its dumb, I would love to hear why, not because I want an argument, but I genuinely might need your help! 🙂