e7
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Post by e7 on Sept 19, 2016 18:15:21 GMT
Hi all, can someone please tell how often your capital and interest are reinvested
thanks in advance
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adrianc
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Post by adrianc on Sept 19, 2016 18:29:37 GMT
Hi all, can someone please tell how often your capital and interest are reinvested It varies, but - roughly speaking - monthly. If it's in the rolling market, you'll get the principal and the interest back at the end of the month, but it will almost certainly be about a month, rather than precisely a month. If it's in the three- or five-year markets, you'll get a month's interest plus a proportion of the principal. The one exception is the one year market, where you don't get anything at all back until the end of the contract. Expand the "On Loan" section for each product, and then click "Your money on loan" to see exactly what's going to be repaid when. Assuming it isn't repaid early.
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Post by GSV3MIaC on Sept 19, 2016 18:55:39 GMT
If you have a re-invesment option set, then it's reinvested every time you have £10 or more to invest, iirc. As stated, for 1 year you get nothing back until the end (which may turn out to be sooner) but other markets pay out monthly sums.
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e7
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Post by e7 on Sept 19, 2016 19:18:54 GMT
Ok thanks for the replies
let's say I £1000 in the rolling market at 2.8% ang I have it set to reinvest all after a year I would have earned £28 interest plus interest on the interest that is reinvested, is this right ?
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adrianc
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Post by adrianc on Sept 19, 2016 20:04:58 GMT
Ok thanks for the replies let's say I £1000 in the rolling market at 2.8% ang I have it set to reinvest all after a year I would have earned £28 interest plus interest on the interest that is reinvested, is this right ? Yep. But the reinvestment won't necessarily be at the same rate. (BTW, 3.2% is going pretty much same-day in the rolling atm.)
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Post by westonkevRS on Sept 19, 2016 20:06:08 GMT
Ok thanks for the replies let's say I £1000 in the rolling market at 2.8% ang I have it set to reinvest all after a year I would have earned £28 interest plus interest on the interest that is reinvested, is this right ? Not quite, that would be only true if the Market Rate set daily for the rolling market was always 2.8%. In reality the Market Rate fluctuates, and your return would depend on the Market Rate available each day that your repayments were £10 and got reinvested. A Market Rate is set daily for each market term - rolling (used to be called monthly, as this is typically the length of each contract), 1-yr bond, 3 and 5 year markets. The statistics on the Market Rates for each day historically alcan be found here: www.ratesetter.com/aboutus/statisticsKevin.
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e7
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Post by e7 on Sept 19, 2016 20:16:56 GMT
Ok thanks
can you help me understand why it looks like my initial investment has only been loaned to two people ( I can only see 2 loan contracts as I understood it my money would have been spread out in smaller chunks) that are due to be paid back in 1 months time ( I've probably interpreted it wrong but that's how it looks to me )
Also so if I reinvest from the rolling account to the 1 year account is it the case that the last £10 of the rolling to change over will be tied in to the 1 year account for another full year from the 1st payment
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jonah
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Post by jonah on Sept 19, 2016 20:35:35 GMT
Due to the PF and the ratesetter approach, the number of borrowers for each lender isn't really that material.
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Post by westonkevRS on Sept 20, 2016 9:05:59 GMT
Ok thanks can you help me understand why it looks like my initial investment has only been loaned to two people ( I can only see 2 loan contracts as I understood it my money would have been spread out in smaller chunks) that are due to be paid back in 1 months time ( I've probably interpreted it wrong but that's how it looks to me ) Also so if I reinvest from the rolling account to the 1 year account is it the case that the last £10 of the rolling to change over will be tied in to the 1 year account for another full year from the 1st payment Quite often your money will only be lent to one or just a few borrowers. It isn't diversified into multiple small chunks as this diversification happens by proxy through the Provision Fund. Over time as you lend more and re-investments are made and re-lent, you will naturally broaden to more borrowers, but this isn't important. The contract will usually be for around one month; but this is almost irrelevant because we have no sell-out fees in the rolling market. The contract length is more technical and indicates the AER you will earn for that period. Depending on your reinvestment settings, this will the be renewed for another (approx.) month at a new lender AER If money is lent into the one-year, then your money is tied unless there is an early redemption (default or customer early payment) for the AER obtained at start (i.e. it doesn't change). It's one year from date money matched, not the borrower payment. Kevin.
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sl75
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Post by sl75 on Sept 23, 2016 9:45:03 GMT
Quite often your money will only be lent to one or just a few borrowers. It isn't diversified into multiple small chunks as this diversification happens by proxy through the Provision Fund. Over time as you lend more and re-investments are made and re-lent, you will naturally broaden to more borrowers, but this isn't important. The provision fund doesn't provide diversification to secure an income for several months or years in advance. If the single borrower you're lending to defaults or repays early, you receive a large chunk of money all at once, which may not be able to be re-invested at anything close to the original rate. Lending in multiple smaller chunks protects against this, so is probably preferred for the 1 year and longer markets. With a sufficiently large number, it is also possible to start considering the anticipated number of early repayments per month, and maybe even budget for this!
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Post by newlender on Sept 25, 2016 5:23:20 GMT
The microloan versus large chunk investment is the biggest difference between the two big players (Zopa and RS). I have had a number of defaults on Z+ (expected) but lost just £20 each time. Same with total loan repayments - I think £80 has been my biggest so far in Zopa. This is all fine except that I have some older loans with RS of £1000 plus at very good rates - I'm dreading the day that one of these decides to repay early. But my £1000 loans are protected and that's the advantage of RS. Z+ aren't but that's really just a punt to try to get higher rates. I agree about not chasing waterfalls (I thought it was rainbows!) except as a bit of fun with a few £k on the off chance that you manage to keep defaults low. I do see early repayments of large RS loans as a threat to my portfolio over the coming months as borrowers look at rates elsewhere. (I got one for £500 repaid just last week) and that's made quite a dent.
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Post by howaboutthat on Sept 26, 2016 21:14:27 GMT
I recently had £10k worth of loans on the 1 year market repay early after roughly two months. The current rates available now are much worse, and I'm not really interested in tying up my money for another twelve months now. I feel a bit hard done by the situation, as I was always under the impression that I was entering into a 1 year contract of sorts. I'm sure it says otherwise somewhere, but I didn't notice at the time of investment.
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Post by GSV3MIaC on Sept 27, 2016 7:57:08 GMT
/mod hat off
ALL P2P loans (at least all the ones I have looked at) can be repaid early with little or no penalty .. plan for it! If you enter into a bunch a 5 year loans, after year 1 you'll be left with all the ones who could not refinance at a better rate ... guess which end of the risk curve that'll be.
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Post by westonkevRS on Sept 27, 2016 12:30:16 GMT
I recently had £10k worth of loans on the 1 year market repay early after roughly two months. The current rates available now are much worse, and I'm not really interested in tying up my money for another twelve months now. I feel a bit hard done by the situation, as I was always under the impression that I was entering into a 1 year contract of sorts. I'm sure it says otherwise somewhere, but I didn't notice at the time of investment. Alas this is a risk of peer to peer lending when your money is matched directly. Competitive forces and regulatory pressure has combined to give the borrower excellent loan flexibility, including cooling off periods and no fee early repayment. The only answer is more diversification. Admittedly the risk is higher with RateSetter as we don't split your money into small parcels, so the only answer with us is frequent lending and reinvestment. Ideally in the monthly or 5-year market... Kevin.
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Post by westonkevRS on Sept 27, 2016 12:34:31 GMT
The other, lessor known fact, is that much of the 1-year bond money is used for property development loans. The bond nature lends itself to non-amortising loans preferred within property.
As these loans rarely run to term, i.e. payment is made on "exit" strategy, then early repayment is more likely in the one year bond market with RateSetter.
Kevin.
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