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Post by valueinvestor123 on Jan 19, 2015 10:36:51 GMT
I wanted to ask some experienced users for advice. Say you have about a 100k allocated for p2p. How would you distribute it among the various platforms and how much would you allocate per loan?
I noticed that some are incredibly slow to get invested (auctions are very long or I keep getting outbid, like with RebuidingS) and some are very time consuming to get a sensible risk/return balance right (FC).
I am currently using thincats, funding secure, assetz capital rebuilding society, ratesetter and bondora (for savings that I have in Euro). Also using Funding circle but winding it down as I can't be bothered and it does the same as RebSoc but with lower rates.
The problem of allocation: there comes a point at which having too much invested with one platform becomes uneconomical. If for example there is more coming back in repayments and interest, than there are new loans available. I haven't yet worked out the sweet spot as it depends on distribution of amounts per loan.
I want to limit loan amounts to:
thincats: max 1k per loan
assetz: max 1k per loan
rebuilding: max £400 per loan
funding secure: 10k per loan (because of occasional bonus)
bondora: around E20 per loan (immaterial how much)
I suppose one way to find out is to slowly transfer money over and see how much supply of loans there is over time. But since it might vary over time significantly, it might just be inefficient to have 10k coming back in interest+capital when there is only 2k available to invest in new loans.
My favourite is actually funding secure: it's very clear what the terms/LTVs are (hence security of investment) and rates are competitive. I am surprised they are still so small.
Thincats is a bit of a riddle and I don't have the patience to read all the loan details; too much unnecessary information (whether Roger gets along with Kevin etc; why do I need to know that. On quick glance, some of the loans seem more risky than funding secure's and with lower rates). Rebuilding is ok but probably only good for small change. Assetz seems very liquid/convenient and together with funding secure, very viable platforms. Bondora..no comment.
Saving stream puts me off due to current set up. Ratesetter: is a good back up platform if I am running out of ideas although getting locked in for 5 years may not be ideal if interest environment changes quickly. Any other suggestions ideas/welcome. vi123
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debeast
(o)(o)
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Post by debeast on Jan 19, 2015 21:13:19 GMT
Personally i like asset backed security so i always allocate much more to that be it planes, boats or buildings , watches etc.. Once i've run out of options there i go for the other less secure loans. After a lot of DD . Funding knight, rebuilding society etc. I also like the wild cards of bondora and some seedrs. Seedrs i don't expect to ever see my money again but if it does ever come in it will come in big  It'll take a while to get 100k invested though . Probably 6-9 months . At least that how long it'd take me :-P Helps ? /beastie |
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Post by Deleted on Jan 20, 2015 10:11:22 GMT
Really great question and one that I'm beginning to ponder. I set off with three portals about 4 months ago and set an arbitary target of £400 per bet (sorry investment) and an overall target of >9.5% from the group. After reading this site I opted for
AC, RSetter, and FC. The speed of investment, the cash tied up and the amount of time required became a major element (as did some of the aspects of gamification though let's leave that to one side for this discussion), once I took the amount of money tied up into account I came up with the following figures
AC (net 9.8%) actually 7.2%, very little work, but very little to bet on
FC (net 9.5%) actually 6.8%, almost addictive when the balls are falling my way, using up at least an hour a day spread from 8:30am to 6:30pm.
RS (net 5.5%) actually 5.5%, virtually no work required
In an attempt to keep on with another arbitary target of investing £2.5k a week I had to add another portal in January which is FS and this I find about as sleepy as AC
so far the figures are
FS (net 13%) actually 2.6% though probably too early to tell
So my conclusions so far is
1) FC has the best software model, especially written to be attractive to the Y generation. However it is underperforming in terms of rate/risk and will need to sharpen up
2) AC and FS are doing a great job on the rate/risk but need to start driving the business harder before FC get too far ahead.
Now proportions
I think you want
40% asset backed
20% smaller borrowers
40% risk taken on the nose
Why, well I think you need the small borrowers to give you a base load which should not fluctuate much during the economic cycle, I think asset backed is good but remember the value of the asset may go up or down and finally taking it on the nose is part of earning the rate. Hence my arguement that FC is missing the correct rate for the risk associated.
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surby
Minor shareholder in Assetz Capital
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Post by surby on Jan 20, 2015 10:17:53 GMT
I suspect there are as many views on this question on here as there are investors. FWIW my own strategy (as a long term income investor) is to limit my exposure to a maximum of 2% of my investment total per loan, and a maximum of 30% per platform, so putting 10% of the total into a single FS loan would be a bit too racy for me. Like debeast I prefer loans with asset backing and would suggest you consider including Ablrate and Saving Stream in your list of candidate platforms. Hope that helps.
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shimself
Member of DD Central
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Post by shimself on Jan 20, 2015 10:33:08 GMT
Using the aftermarket can get you fully invested inside a month or so. You'll pay a premium on some of these investments, not all, 2% ish would amount to 2-3months interest from FC or TC, so in effect it might cost you nothing compared to letting the pot rust in the bank for that time. I find TC is well worth the effort, the "crowd due diligence" is top notch. The aftermarket gets lively around the 16th of the month just after repayments time. Today there's 25K on offer. There's a daily analysis on the "other forum" www.forum.thincats.net/forums/topic/january-sm/ (you need to be a member and to have put at least £1000 into the holding account before you can get onto this forum) REBS always has lots on the aftermarket. I also like TheHousecrowd THC (buy to let in £1000 lumps) |
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bigfoot12
Member of DD Central
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Post by bigfoot12 on Jan 20, 2015 11:19:21 GMT
Why, well I think you need the small borrowers to give you a base load which should not fluctuate much during the economic cycle, I think asset backed is good but remember the value of the asset may go up or down and finally taking it on the nose is part of earning the rate. Hence my arguement that FC is missing the correct rate for the risk associated. My performance on Zopa was very poor in 2008. I think that they had a poor year, but I might have been unlucky. I think that you can see their data (you may have to join). I would rather have asset security in a downturn, even if the asset price drops. Of course Zopa now has Safeguard so this doesn't apply to it to the same degree as it once did.
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pikestaff
Member of DD Central
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Post by pikestaff on Jan 20, 2015 11:49:01 GMT
...I find TC is well worth the effort, the "crowd due diligence" is top notch. The aftermarket gets lively around the 16th of the month just after repayments time. Today there's 25K on offer. There's a daily analysis on the "other forum" www.forum.thincats.net/forums/topic/january-sm/ (you need to be a member and to have put at least £1000 into the holding account before you can get onto this forum)... Trident's secondary market analysis is actually posted on both forums but all the discussion takes on the one that you've linked to. There would be even more on the secondary market if they processed my listing requests  .
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adrianc
Member of DD Central
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Post by adrianc on Jan 20, 2015 12:09:45 GMT
I wanted to ask some experienced users for advice. Say you have about a 100k allocated for p2p. How would you distribute it among the various platforms and how much would you allocate per loan? I'd be dipping my toe into the platforms that look interesting on paper - initially £500-1k - and seeing if I liked the way it seemed to work for me in practice. Then, once I was happy that I understood what the hell I was doing, and could answer the questions you're asking for myself (since I know my preferences and goals better than anybody), then and only then is when I'd start to put more serious amounts in. Which is exactly what I'm doing.
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webwiz
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Post by webwiz on Jan 20, 2015 12:17:20 GMT
It depends on several factors which will be different for everyone, including:
Your appetite for risk. Asset backed double digit returns are available on some platforms, but common sense suggests that there must be extra risk.
How much you want to be involved. Platforms range from practically none to a significant amount of time daily. The latter type are only suitable for someone who treats p2p as a hobby as well as an investment. Note that users of this forum will not be representative of the majority in this respect.
Whether you have any non-financial motivation. Several platforms are included in the p2p category are not really p2p in the social sense.
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pikestaff
Member of DD Central
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Post by pikestaff on Jan 20, 2015 12:37:02 GMT
A few points in response to the OP.
On finding the "sweet spot":
On TC you have to invest in £1,000 bites (unless you pick up bits of amortised loans on the SM). With, say, £40k on the platform you would get perhaps £700 coming back each month (depending on the composition of your portfolio) which you could top up to £1,000 in order to invest. The deal flow is good and you should have several loans to choose from each month or you could dip into the SM.
On AC you can invest as much or as little as you like, but the problem is deal flow. If you are already at your limit on the loans that you like, you may struggle to add.
On diversification:
P2P is currently about 20% of my portfolio and I am using three platforms (TC, AC and RS) having given up on FC for similar reasons to you and my current split is TC 60% / AC 17% / RS 23%. I'd like to have more on AC but lack of deal flow has held me back. I may add a fourth platform at some point but I feel no compelling need to do so. I'm a property bear so I've resisted the rush into property and the wilder shores of Bondora etc do not appeal.
I normally limit individual loan exposures to 1% of my p2p portfolio, which is 0.2% of my total portfolio, but will lend up to 3-4x this limit for a short period if it gets me cashback.
On reading the information:
I read (or at least skim through) ALL the infomation for those loans I am interested in (including the Q&A and forum comments). "Whether Roger gets along with Kevin" can be very relevant indeed. There's just been a default on TC where one of the reasons is the sales director leaving because he and other management did not get on. This is particularly important on TC because there is more variety (which I like) but the quality does vary.
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