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Post by easteregg on Mar 9, 2015 12:46:05 GMT
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Post by Warren Lee on Mar 9, 2015 13:01:40 GMT
Great idea Ian!
I'm very interested in seeing the "Other" answers as well.
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chrisf
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Post by chrisf on Mar 9, 2015 13:36:45 GMT
My 'Other' was drip-feed rather than bung a load of money in at once.
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Post by batchoy on Mar 9, 2015 13:37:30 GMT
I would really like to vote on 4 not just 3. so in my personal order of importance:
1. Do your homework/research (Platforms as well as Loans)
2.= Make loans on various platforms
2.= Diversify your loans/Spread your money over many loans
4. Reinvest your returns, don't let returns sit idle
Under Other I would also add price for risk and stick to it i.e. don't keep bidding lower in Dutch auctions just to secure a piece of a loan, if the rate others are offering is going lower that you would expect from that particular loan then walk away from the auction
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sand2880
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Post by sand2880 on Mar 9, 2015 16:49:16 GMT
Other: Start slowly with small amounts until you get a feel for the platform and how it truly works against how you think it should work.
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Post by wiseclerk on Mar 9, 2015 21:06:13 GMT
As like the critics in the other thread have mentioned too, one could say here too, that the choices are too broad, as one could easily vote "all of the above" given these choices.
Just for the record, I selected 'do your research' (which incorporates start slow in my opinion), diversify (which in my view goes for loans AND platforms) and be prepared for limited liquidy as a matter of prioritising tips.
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Post by Warren Lee on Mar 10, 2015 12:05:35 GMT
1. It's not about picking the winners; it's about avoiding the losers P2B lending is a form of fixed-income investment. In the absence of flipping loans for capital gains, your upside it limited to the coupon, your downside is possibly par. So don’t get carried away by the extra 2% cashback or 1% on the yield since this isn’t going to pay for a significant loss on default. 2. Don’t over-diversify and don’t obsess over quick reinvestment Diversification applied over multiple parameters (platform, sector, single name credit, maturity) is generally to be recommended. However, be careful not to diversify passively (diversifying without thought or for the sake of it). This can actually increase the risk of the portfolio (for example by exposing your capital to lower credit quality loans or increased operational risk via weak platforms). Better to own a concentrated portfolio of well-research loans than a diversified portfolio of random toxic waste. Similarly, a few days, a week or a even month of dead-time is far better than parking your capital in a poorly researched loan that then defaults. 3. Think in terms of probability weighted return per unit risk, not yield. Focus on the risk-adjusted return by thinking in terms of probabilities rather than modal outcomes. In addition to the non-default scenario, consider a range of possible downside scenarios for the loan (default probability x recovery rate), assign probabilities to each scenario and then calculate the pay-out ratios. Overweight those loans with transparent and attractive payout ratios and drop those with opaque or poor ratios. I like the mindset of avoiding the losers instead of trying to pick the winners, good explanation too. I'm still in the learning stages myself, I like to read the advice of more tenured investors, in which it sounds like you are.
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webwiz
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Post by webwiz on Mar 10, 2015 13:50:53 GMT
Several people favour "Do your research". Can they explain how to go about this?
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bugs4me
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Post by bugs4me on Mar 10, 2015 14:46:10 GMT
Several people favour "Do your research". Can they explain how to go about this? It can be time consuming but far easier than loosing hard earned cash in an investment. Firstly, I do my research on the platform itself. This is fairly easy as the FCA Register is part of the public domain - the platform will be listed along with the individual(s) who are authorised. Simply double clicking on an individual will reveal any other FCA/FSA regulated services they are or were involved in. You can also feed their names into one of the company checking websites which will supply you with a company history background check. If an individual has a habit of starting and closing companies then I tend to look upon this as a negative. There is a platform on the forum which I wouldn't touch under any circumstances. Now maybe all will be okay but as I'm not comfortable with it, FCA or not, I'm not going to invest in it especially as our illustrious regulators always seem to be behind the curve and rarely intervene before the event. Secondly, the loan offer itself. Apart from the odd jewellery floating around here and there, I look at the security being offered then the track record of the borrower(s) again using one of the company checking websites. The company checking websites do offer a reasonable degree of information without the need to take out a monthly subscription. I do in fact subscribe to one as I feel £20 a month is little compared to what is potentially at risk. Security being offered is a funny old thing. Certainly tangible assets especially property are easy to place a value on although I always go over valuation reports with a fine brush. There can be an enormous difference between valuations especially occupied commercial property and unoccupied. For example, pub valuations are often valued as a going concern. But how much is a closed pub worth - not much in my part of the world where I'm surrounded with them. Another mystery is the valuations placed on plant and machinery. My experience is they are often auctioned off at scrap value. PG's I value as zero. There is a loan being offered where 'goodwill' is being counted towards assets. Just how much is goodwill worth if the business fails. If I'm comfortable with the loan then I will invest. If I'm not then I walk away. Personally I would prefer to have loans in fewer businesses rather than spread just for the sake of it albeit I agree with diversification. I'm sure you're going to get plenty of responses but in my book, homework is vital before committing.
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Post by GSV3MIaC on Mar 15, 2015 13:47:40 GMT
My comment would be to reinforce the ones already made here and elsewhere about 'don't rush' .. attempting to put in a lot of money too quickly will probably lead to all sorts of problems, and generally it's much harder to get it out than to put it in.
Leave it where it is .. leave it un-invested on your platform of choice .. park it somewhere [really] safe .. whatever .. but 'put it into something for the sake of being fully invested' is pretty stupid (mind you, so it waiting for a 'perfect' opportunity to come along .. 'good enough' is good enough!).
And like stocks and shares .. P2P investment should only be for money you could afford to lose, or at least 'live without for 5 years or so'.
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Post by ratrace on Mar 15, 2015 16:32:18 GMT
lf you are lending in one of the more active P2P platforms (eg FC ) then you will have to be willing to put in the extra effort and do something different from the crowd, if you want to get the best returns.
P2P platforms like FC rewards those who make the effort in finding themselves a overlooked niche in the market.
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