Monetus
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Post by Monetus on Dec 2, 2015 14:49:59 GMT
Now that the secondary market is live and many of us have purchased various a loan parts at sometimes lower % than the usual 12-13%, I am finding it much more complex to calculate my actual REAL return from Funding Secure based on my total investment level.
I was wondering if it was possible for Funding Secure to add a weighted total % return on the "My Investments" section? This would allow us to easily see what our current overall return is site-wide based on our total investment and it would make life much easier when trying to calculate what our actual return % is across all loan parts instead of having to perform manual calculations in Excel etc for many constantly changing loan parts.
Is there any possibility that this could be added to the website at all?
Thanks a lot!
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Monetus
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Post by Monetus on Jan 29, 2016 16:24:36 GMT
Any chance of this fundingsecure ? Adding up all individual loan parts in Excel to come up with an overall % return figure is becoming a bit tricky to manage!  Quite a few other platforms have this feature... could you possibly consider it? |
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mikes1531
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Post by mikes1531 on Jan 30, 2016 21:29:35 GMT
This would provide a useful bit of info, but it's really only a starting point. An investor's actual return will be lower than that number because... - Most of the time we have some money in our accounts waiting for an investment/reinvestment opportunity, and that is earning nothing
- Many loans don't start paying interest the same day as we invest because there are activation delays. Sometimes those are small and have little impact, but sometimes the period of earning nothing on the funds we have pledged to a loan can be significant.
- Occasionally, a funded loan will not be activated, resulting in a period of nil earnings.
- Occasionally a loan will default and the recovery won't be enough to cover all capital and accrued interest. This might just mean reduced interest earned on the loan, but there have been defaults where the proceeds weren't even enough to repay investors' capital, so some principal was lost.
I use a spreadsheet to keep track of my deposits and withdrawals, and the total value of my account. I then can use the spreadsheet's return calculation function (I use Excel's XIRR) to work out what my actual return has been. It is noticeably lower than the average interest rate on my loans, principally because FS don't pay interest until a loan is repaid, so that at any particular point in time there's a significant amount of interest accrued but not paid and that reduces the actual return achieved. That effect will disappear only after an investor stops investing and all of their loans have been closed out.
In my case, a year after my first FS investment, XIRR calculated my actual return to be about 7%. I then increased my investment significantly, and six months later my return had dropped to about 3%, because none of my additional investment had earned any returns by that point in time. Once those loans started being repaid, my return improved noticeably. By the end of my second year, my return was up to about 8%. |
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duck
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Post by duck on Jan 31, 2016 6:46:54 GMT
I use a spreadsheet to keep track of my deposits and withdrawals, and the total value of my account. I then can use the spreadsheet's return calculation function (I use Excel's XIRR) to work out what my actual return has been. It is noticeably lower than the average interest rate on my loans, principally because FS don't pay interest until a loan is repaid, so that at any particular point in time there's a significant amount of interest accrued but not paid and that reduces the actual return achieved. That effect will disappear only after an investor stops investing and all of their loans have been closed out.
In my case, a year after my first FS investment, XIRR calculated my actual return to be about 7%. I then increased my investment significantly, and six months later my return had dropped to about 3%, because none of my additional investment had earned any returns by that point in time. Once those loans started being repaid, my return improved noticeably. By the end of my second year, my return was up to about 8%. Agree with everything you wrote mikes1531. IMHO a headline figure could tend to be very misleading (unless all the relevant factors were taken into account) especially in the first year of investing in FS. Taking all the factors into account and assuming that I did not live in 'spreadsheet heaven' (and inhabit this forum) would I be impressed to see a % return of say 3% or less on my 'dashboard'? Personally I would head for the exit unless I understood the full picture. I have found the biggest depressor of return to be the long time it takes for some of the property loans to draw down and factor this into bids. I use my spreadsheet in a slightly different way, I work on projected interest (and % return) with a notional % deducted for losses. This works on a month to month basis - not 27 decimal places accurate at any time (  ) but it gives a far more smoothed picture . The fact that interest is not paid until term end is again IMHO very useful for tax planning purposes and if you couple this with the aftermarket ......
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) but it gives a far more smoothed picture .