bob76
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Post by bob76 on Dec 30, 2016 6:59:06 GMT
Hi,
Since the new FS site has been released, in the Account section, there is an indication of gain or loss made on the SM.
I have apparently made a £400 loss on the SM, which I was surely not aware about.
I have never sold anything on SM, and have only bought loan parts at a positive interest...
I am not clear on how I could make a large loss??
B.
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archie
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Post by archie on Dec 30, 2016 7:31:45 GMT
Hi, Since the new FS site has been released, in the Account section, there is an indication of gain or loss made on the SM. I have apparently made a £400 loss on the SM, which I was surely not aware about. I have never sold anything on SM, and have only bought loan parts at a positive interest... I am not clear on how I could make a large loss?? B. Have you checked the 'Secondary market - history' section, it shows you all your transactions. Your loss is probably the total of the rolled up interest on all the purchases.
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bob76
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Post by bob76 on Dec 30, 2016 7:34:27 GMT
Have you checked the 'Secondary market - history' section, it shows you all your transactions. Your loss is probably the total of the rolled up interest on all the purchases. Do you mean the loss would be the total interest paid in advance when purchasing loan parts on the SM? If so, I am not sure they should have used the wording "gain/loss". I will check the report... Thanks, B.
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archie
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Post by archie on Dec 30, 2016 7:57:57 GMT
Have you checked the 'Secondary market - history' section, it shows you all your transactions. Your loss is probably the total of the rolled up interest on all the purchases. Do you mean the loss would be the total interest paid in advance when purchasing loan parts on the SM? If so, I am not sure they should have used the wording "gain/loss". I will check the report... Thanks, B. It's the differences between the 'Amount' and 'Price' columns on the 'Secondary market - history' report. You gain on a sale but lose on a purchase.
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bob76
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Post by bob76 on Dec 30, 2016 9:28:21 GMT
but if you pay interest accrued to date, upfront to the seller, when purchasing a loan part, I guess you will always make a loss, even when just buying on SM.
It would be good for FS to indicate if an actual loss or gain has indeed been made on the SM.
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archie
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Post by archie on Dec 30, 2016 9:34:01 GMT
but if you pay interest accrued to date, upfront to the seller, when purchasing a loan part, I guess you will always make a loss, even when just buying on SM. Yes, that's why I don't purchase anything on the sm. 
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Post by fundingsecure on Dec 30, 2016 12:14:05 GMT
Hopefully I can try and make this clearer.
When you purchase (or sell) a loan part on the secondary market you are purchasing (or selling) the original loan. Any additional amount (whether notional accrued interest, premium or discount) is effectively separate.
These additional amounts count as immediate losses or gains - hence they are shown in your "earnings to date"
Once the loan part completes (paid back, renewed, defaulted) any interest paid will then be shown on the "earnings to date"
Example:
"A" buys £100 loan part from "B" at a price of £102.
"A" shows a "loss" of £2 in "earnings to date"
"B" shows a "gain" of £2 in "earnings to date" (And has no further interest in the loan part) [pun intended]
4 months later the loan completes - paying £106 to "A"
"A" now shows additional interest of £6 in "earnings to date" - so a net gain of £4
I have deliberately not shown any calculation / comments on taxation - as this will depend upon the status of both "A" and "B" and has already been covered in separate threads.
Naturally any interest earned is dependent upon the rate being paid on the loan, the completion date and (In the event of a default) any recovery. This is the same whether the loan is purchased on the primary or secondary market.
At the request of many investors the "earnings to date" section was added to give a snapshot of actual earnings - separate from potential (accrued) earnings.
FundingSecure
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SteveT
Member of DD Central
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Post by SteveT on Dec 30, 2016 12:24:28 GMT
I suspect it's the use of "gain" and "loss" (especially just below the "Capital loss" line) that's causing some confusion. Most lenders wouldn't regard the purchase of rights to accrued interest as a "loss" (until / unless an actual loss crystallises at completion).
How about changing the description to "Secondary Market trading (net)" or similar?
ps. I think the addition of the "Earnings to date" summary is excellent.
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Post by fundingsecure on Dec 30, 2016 12:46:13 GMT
SteveT
Thanks - will pass on the suggestion, hopefully clearer.
FS
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Post by solicitorious on Dec 30, 2016 13:18:12 GMT
I suspect it's the use of "gain" and "loss" (especially just below the "Capital loss" line) that's causing some confusion. Most lenders wouldn't regard the purchase of rights to accrued interest as a "loss" (until / unless an actual loss crystallises at completion). How about changing the description to " Secondary Market trading (net)" or similar? ps. I think the addition of the "Earnings to date" summary is excellent. I would eschew the word "trading", lest Hector thinks we are actually trading, which (we are led to believe) we are not !  Maybe "SM net transactions"...
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SteveT
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Post by SteveT on Dec 30, 2016 13:27:19 GMT
I would eschew the word "trading", lest Hector thinks we are actually trading, which (we are led to believe) we are not ! Perhaps "SM Transactions (net)" then.
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Post by solicitorious on Dec 30, 2016 13:29:00 GMT
great minds, etc (see my edit, which crossed with your post!)  |
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elliotn
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Post by elliotn on Dec 30, 2016 15:17:26 GMT
Net SM Transactions.
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Post by martin44 on Dec 30, 2016 15:22:27 GMT
Or an SM like SS's.  |
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stevio
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Post by stevio on Dec 30, 2016 18:35:02 GMT
ps. I think the addition of the "Earnings to date" summary is excellent. How can this be used though? It still doesn't differentiate accrued interest paid and discount/premium paid and also doesn't cover a specific period, only to date - it would be better if the secondary market history had these separated out from price paid, then a specific period could be looked at Can I also ask, my Tax Statement is only showing 1/40th of the interest that is showing in the Investment History page?  Is anyone else's working this way? Why such a discrepancy?
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