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Post by caveman38 on Nov 6, 2015 17:15:14 GMT
If there a newbie question thread - moderator please transfer. Hi to all on the forum. Set up my account this afternoon and familiarising myself with the platform. Most things seem straightforward, but. Although early days for repayment, I may as well ask. On the reinvestment page it appears to default at MR at the duration it was originally lent for all monies paid back. Does that mean if I leave it at it's default setting my money could be lent back say for 3 more years before I have a chance of withdrawing it. If that is so, then is it best to change all to Holding Account till I make the decision on the way forward. What do most of you guys do. Thanks. If all these questions have been asked and answered before can someone point me in the right direction. Cheers.
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Post by brokenbiscuits on Nov 6, 2015 17:55:28 GMT
Welcome.
Yes, you are right.So if you only want your money invested for 3 years from today but think ratesetter is the place you want your money then you could...
Reinvest your 3 year capital and interest returns in the 1 year markets for then 2 years and then...
For the final 11 months invest your 1 and 3 year returns in the monthly markets... After 3 years collect your winnings.
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Post by westonkevRS on Nov 6, 2015 18:41:59 GMT
Welcome to the forum caveman38 , your understanding is correct and brokenbiscuits provides a workaround solution employed by a lot of lenders. Kevin.
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Post by caveman38 on Nov 6, 2015 18:52:19 GMT
Welcome. Yes, you are right.So if you only want your money invested for 3 years from today but think ratesetter is the place you want your money then you could... Reinvest your 3 year capital and interest returns in the 1 year markets for then 2 years and then... For the final 11 months invest your 1 and 3 year returns in the monthly markets... After 3 years collect your winnings. Excuse my naivety. Are you saying that I receive both capital and interest during the term of the loan. And yes you agree to change the settings to pay to the Holding Account and then manually lend for 1 year each time till the final year. If I'm on the wrong track what do you mean "reinvest your 3 year capital"
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Post by brokenbiscuits on Nov 6, 2015 19:23:03 GMT
Ah, sorry, didn't realise you didn't know the basic principals.
You won't receive a lump sum back at 3 years. Google Amortising loans.
Read the t+cs.
Each month you will get a little bit of your capital and the equivalent interest owed back.
If you have more than a tenner in your account then you can lend that chunk of money back out for either a month, 1 year, 3 years or 5 years.
Maybe instead of a 3 year loan, think of it as a 36 month loan where each month you get a little back early.
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Post by caveman38 on Nov 6, 2015 19:36:54 GMT
No I must confess, I wasn't aware of the repayment of capital too. So in conclusion, you are unlikely to obtain your initial 3 Yr. lending rate as you re-invest it at a yearly rate as the money dribbles in. Thanks for your patience.
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Post by brokenbiscuits on Nov 6, 2015 19:56:20 GMT
You will get the rate but if you are getting capital returns and putting them else where then only the 36th repayment will have been invested for the full 3 years at the rate you have.
There is a chance of early repayment too! Then you will have to make a decision where that money is going.
Don't want to state the obvious but these are probably questions you should have found out the answers to before you tied some of your cash up for 3 years.
Hopefully now you know how it works you are still happy with the decision to invest.
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Post by caveman38 on Nov 6, 2015 20:13:24 GMT
You will get the rate but if you are getting capital returns and putting them else where then only the 36th repayment will have been invested for the full 3 years at the rate you have. There is a chance of early repayment too! Then you will have to make a decision where that money is going. Don't want to state the obvious but these are probably questions you should have found out the answers to before you tied some of your cash up for 3 years. Hopefully now you know how it works you are still happy with the decision to invest. Spot on. This is the problem with low BS rates, large pension pots and looming retirements. Unless your committed to Funds, S&S etc. You lend up with wads of ISA's, SIPP's, 25 Current a/c deposits and the kitchen sink. Yes, P2P seemed like a good idea and maybe it still is for perhaps 10% of the pot but it is a bit more work than I anticipated - I'm supposed to be retiring. I'd imagine I will look at the best times of the month to lend and try and stick with those dates and then only need to monitor the I/C and O/G's then. It'll be no good earning a good percentage if my handicap goes up.
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spiral
Member of DD Central
Posts: 909
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Post by spiral on Nov 7, 2015 9:39:03 GMT
it is a bit more work than I anticipated You might be better off looking at Wellesley if you want an invest and forget product. They do a 3yr bond at 5.1% repaying interest and capital on maturity. A bit less than RS but you'll not need to look at it again.
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Post by mill750 on Nov 7, 2015 9:57:24 GMT
I was going to mention Wellesley , just had three 18 month investments returned with no problems .
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Post by caveman38 on Nov 7, 2015 10:05:56 GMT
Welcome. Yes, you are right.So if you only want your money invested for 3 years from today but think ratesetter is the place you want your money then you could... Reinvest your 3 year capital and interest returns in the 1 year markets for then 2 years and then... For the final 11 months invest your 1 and 3 year returns in the monthly markets... After 3 years collect your winnings. Has anyone worked out what the final interest rate earned on a lend if was all taken out on completion of 3 years using BB's example above. Assuming initially lent 3 yr. at 5.5% and as each monthly payment was made, re-invested at 4% and in the final year reinvested monthly at 3.5%. What is the true return.
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Post by settersam on Nov 8, 2015 17:50:19 GMT
Have a look at this calculator. It lets you see the total interest & instalments for an amortised loan (it's in $ but that's irrelevant): www.amortization-calc.com/E.g. £1000 loan over 3 years @5.5% monthly repayment = £30 total interest = £87 you really need to ensure that the repayments are reinvested to get a decent overall rate!
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Post by brokenbiscuits on Nov 8, 2015 21:03:56 GMT
You will get the rate but if you are getting capital returns and putting them else where then only the 36th repayment will have been invested for the full 3 years at the rate you have. There is a chance of early repayment too! Then you will have to make a decision where that money is going. Don't want to state the obvious but these are probably questions you should have found out the answers to before you tied some of your cash up for 3 years. Hopefully now you know how it works you are still happy with the decision to invest. P2P seemed like a good idea and maybe it still is for perhaps 10% of the pot but it is a bit more work than I anticipated - I'm supposed to be retiring..
Is there any particular reason you need the money in 3 years? An option may be to put it into the 5 year for the best rate and then when you retire just draw down the interest. If ratesetter still exists and functions in a way I still respect, that's what I would do with a chunk of my cash. Hard to say, for my retirement window, in 20 to 30 years time whether ratesetter will still be around or if the robot overlords will allow us to have possessions and things like money...
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