stokeloans
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Post by stokeloans on Nov 9, 2014 11:36:59 GMT
Is it better to add funds in small amounts and wait til each has been lent before adding more funds or to add all in 1 go ?
As an example,lets say you have £10,000.Should you add £1,000 in 10 installments ?
Or does it not make a lot of difference ?
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Post by goldservice on Nov 9, 2014 14:20:59 GMT
It does make a difference. If you wait for one tranche to be lent, then the next will join the queue further back than if you had put both tranches in the queue at the same time. You might as well just put one large tranche in. Doing that does not seem to lead to it being lent to fewer borrowers. Fewer borrowers doesn't matter from the diversification point of view as there is a provision fund. But I guess that having fewer borrowers is an issue if there is an early repayment as that would be a larger sum that would not be earning interest for a short period. Not much in it. Having said that, I put large amounts in as a group of slices of £1000 max - then there is the flexibility to change some of the slices to different rates if the market moves a lot.
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Post by jackpease on Nov 9, 2014 17:32:16 GMT
Yeh, i've had a few early repayments having taking advantage of a rate spike, having ten grand returned a few days after you lend it could make your eyes water!
JP
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oldgrumpy
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Post by oldgrumpy on Nov 10, 2014 10:14:13 GMT
Well someone whacked in £10K at 5.7% this morning when he could have chosen 5.8% and still been front of the queue. I see today's MR is 5.9% which is the same as "my rate" and that nearly 850 orders are stranded on 6% (£566K) which shows that many people are setting their own rate rather than using market rate. Almost 1750 orders are stranded between 6.1% and 6.4% (£600K+). It shows that a lot of people set a rate then leave it even when the trend is downwards. I suppose they are the people Kev "doesn't understand" and neither do I.
"Your rate" is certainly not "Set'n'forget". (Market Rate is). You have to scroll down and read the details in order to realise this. Many don't, I think.
As I am online contributing to another more active site often in the day, it suits me to have a tab open for this forum, several for the other site (no, not FC!), and one for AC (which they persist in logging me out of far too quickly), and to check up on RS every few hours to see if I need to change my rate, or slam in a few hundred thousand .... (all right, I'm lying).
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Post by jackpease on Nov 10, 2014 10:27:51 GMT
Almost 1750 orders are stranded between 6.1% and 6.4% (£600K+). It shows that a lot of people set a rate then leave it even when the trend is downwards. I suppose they are the people Kev "doesn't understand" and neither do I. I have a company account where there is effectively no alternative to P2P for handling large accountant-required long term company accrued income - is it not entirely rational to plonk a load of money in at 6.4% (say) as one's own judgment as to what it is worth to tie money up long term as opposed to having it in one's company account at 0% instant access? JP
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oldgrumpy
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Post by oldgrumpy on Nov 10, 2014 10:33:56 GMT
Almost 1750 orders are stranded between 6.1% and 6.4% (£600K+). It shows that a lot of people set a rate then leave it even when the trend is downwards. I suppose they are the people Kev "doesn't understand" and neither do I. I have a company account where there is effectively no alternative to P2P for handling large accountant-required long term company accrued income - is it not entirely rational to plonk a load of money in at 6.4% (say) as one's own judgment as to what it is worth to tie money up long term as opposed to having it in one's company account at 0% instant access? JP Not quite understanding you, Jack. Fine if you lend it out at 6.4%, but stranding means 0%, and those have been stranded for a couple of weeks now, and it looks like (with RS's advertising), will stay that way for a good while longer. I (we) are thinking about people forgetting they are stranded at 0% or who have decided how long to stay there waiting for 6.4% (in your example).
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Post by geoffrey on Nov 10, 2014 11:25:00 GMT
Is it better to add funds in small amounts and wait til each has been lent before adding more funds or to add all in 1 go ? As an example,lets say you have £10,000.Should you add £1,000 in 10 installments ? Or does it not make a lot of difference ? It depends how much you trust the Provision Fund and how much diversification you want. Undoubtedly, you will lend to fewer borrowers if you put your £10K in at a single rate. You could quite easily end up lending only to one. Traditional P2P advice has been to diversify, as added protection. In the case of RS, the protection would be against some kind of platform failure, since RS is almost defined by its provision fund. Personally (but I'm a fairly small RS lender) I lend in chunks of £200 at a time, which I drip-feed into the system. I spread my money over a range of rates, since there are movements of greater than 0.2% often within a single day. The drip-feeding strategy for investing is one that is recommended for share purchases, because you then benefit from what is known as "pound cost averaging", and you don't have to bother too much about "timing the market". But arguably, with rates only shifting within a 0.5% band over several months, there is little advantage compared to lending all your money now at a rate you are happy with. In my case, as I am invested in shares and in various P2P, including all the major ones, drip-feeding means that I am thus positioned to take advantage of best offers, or sudden market movements, elsewhere (and on RS) fairly quickly.
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Post by jackpease on Nov 10, 2014 14:36:46 GMT
I have a company account where there is effectively no alternative to P2P for handling large accountant-required long term company accrued income - is it not entirely rational to plonk a load of money in at 6.4% (say) as one's own judgment as to what it is worth to tie money up long term as opposed to having it in one's company account at 0% instant access? JP Not quite understanding you, Jack. Fine if you lend it out at 6.4%, but stranding means 0%, and those have been stranded for a couple of weeks now, and it looks like (with RS's advertising), will stay that way for a good while longer. I (we) are thinking about people forgetting they are stranded at 0% or who have decided how long to stay there waiting for 6.4% (in your example). Well bear in mind i get confused about my rate/your rate/manual rate. My accountant requires me to keep money slopping around that shows as cash because the business takes money up front - much of it slops around in zero interest current account - so i idly plonk dollops of cash in Ratesetter manual investment at say 6.4% not caring if it doesn't get lent for months but if it does get lent, hey ho i will just have to live with it being slightly less liquid than my accountant prefers. Having it sit there to cope with unexpected spikes is surely entirely logical? For money i know i don't need for long periods, yeh it'd be mad to have it sitting there. JP
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Post by geoffrey on Nov 11, 2014 8:48:51 GMT
You're talking about "opportunity cost", i.e. the lost opportunities you might have if you were to tie up your money for 5 years at less than 6.4% per year. If your money can be put to work, or is otherwise needed, in a way that makes anything less than 6.4% effectively a "loss" to you, but if the compensation of 6.4% or above is enough to overcome any lost opportunities, then it is entirely rational to place the money at that rate. However, you need to think carefully about whether you would retain enough liquidity in the (at the moment unlikely) event that the money is lent at that rate. Your accountant must have good reasons for wanting you to maintain liquidity, but from the way you write about it, you seem to see it as an unnecessary or bureaucratic requirement. It sounds like you need to clarify those reasons.
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warn
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Curmudgeon
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Post by warn on Nov 12, 2014 10:27:54 GMT
jackpease - you could stick your money in Monthly Access at 2% - guaranteed return > 0%, and much more liquid...
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Post by jackpease on Nov 13, 2014 12:23:17 GMT
jackpease - you could stick your money in Monthly Access at 2% - guaranteed return > 0%, and much more liquid... Good plan! But i know that the day i do that i'll miss the next rate spike! also Geoffrey >>>However, you need to think carefully about whether you would retain enough liquidity in the (at the moment unlikely) event that the money is lent at that rate. Your accountant must have good reasons for wanting you to maintain liquidity, but from the way you write about it, you seem to see it as an unnecessary or bureaucratic requirement. It sounds like you need to clarify those reasons.I've had a number of accountants all of whom take a very different view about whether or not its 'legal' to bank or spend accrued income. If there's professional argument about that, then i am certain there'll be even more professional argument on whether P2P money is liquid - those of us on this forum know that some is very liquid (all of SS, some of FC, Assetz) and some is very liquid at a premium (RS) etc etc. This is not something that has a single correct answer, leaving me inhabiting a grey area and comfortable to slap thousands in the very liquid holding account of Ratesetter and let any potential spikes make my mind up for me! J
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