littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jun 16, 2017 10:09:10 GMT
Everyone has their own appetite for risk, but does this really make any difference to the average net return after defaults? Which nominal rate do you prefer to invest at on the assumption that you will get the average level of losses from defaults for loans at that rate?
Edit for clarification: Which nominal rate do you think would give the highest return net of losses to the average investor on the assumption that there was the average level of losses from defaults for loans at that rate?
Note that I am assuming that the higher the nominal rate the higher the level of losses on average. If you don't agree with this assumption please do not vote as you would obviously vote for 12%.
|
|
|
|
Post by akihisafumihiro on Jun 16, 2017 11:33:58 GMT
No options for more than 12%
|
|
|
|
Post by Butch Cassidy on Jun 16, 2017 11:59:59 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jun 16, 2017 16:44:57 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me. Quite. Everyone thinks they are smarter than average (although logic suggests that is impossible) which is why I specifically said "on the assumption that you will get the average level of losses" and on that basis you are incorrect and it does not depend on your strategy.
|
|
|
|
Post by elephantrosie on Jun 16, 2017 17:35:07 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me. what is Rebs
|
|
|
|
Post by dan1 on Jun 16, 2017 19:56:22 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me. what is Rebs Rebuilding Society
|
|
david42
Member of DD Central
Posts: 419 
Likes: 346
|
Post by david42 on Jun 17, 2017 1:41:16 GMT
See Glossary for the list of platform abbreviations
|
|
|
|
Post by Butch Cassidy on Jun 17, 2017 1:46:07 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me. Quite. Everyone thinks they are smarter than average (although logic suggests that is impossible) which is why I specifically said "on the assumption that you will get the average level of losses" and on that basis you are incorrect and it does not depend on your strategy. Logic suggests nothing of the sort, demonstrable results are much more relevant, my Rebs investment pays 20 % pa & I am happy to accept that, albeit on a decreasing balance.
|
|
jonno
Member of DD Central
nil satis nisi optimum
Posts: 2,742
Likes: 3,137
|
Post by jonno on Jun 17, 2017 7:31:34 GMT
It will entirely depend on your investment strategy, for example buying equal parts of every loan will likely mean an average return but cherry picking & variable levels of investment can result in vastly different outcomes. For example; I have a large investment in a single firm on Rebs @ 20% which if it went wrong would create a huge loss but I am confident in that particular choice, on FC I have several large investments along with many small investments & take a few smaller defaults but the larger ones drag me well above average returns, currently 11% after fees & defaults. I don't invest with Zopa, ratesetter, BM et al as I don't believe the return justifies the risk & believe I can do better with active manual management on the higher risk/return platforms. My approach would clearly not suit everyone but is currently successful for me. what is Rebs Never has the saying "ignorance is bliss" been more apt 
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jun 17, 2017 10:14:10 GMT
Quite. Everyone thinks they are smarter than average (although logic suggests that is impossible) Logic suggests nothing of the sort, . So you think it is possible for everyone to be smarter (or anything else) than the average?
|
|
Mike
Member of DD Central
Posts: 647
Likes: 443
|
Post by Mike on Jun 17, 2017 10:42:41 GMT
Logic suggests nothing of the sort, . So you think it is possible for everyone to be smarter (or anything else) than the average? In fact this is not quite but very nearly the case. If everyone in the population has intelligence rating of 7 (whatever that means) but there is a single person with intelligence 6 (being worse than 7) then the average will be below 7 and thus all-but-one are above-average (at least, above the mean). As the population grows it becomes more and more accurate to say everyone is above the mean.
|
|
|
|
Post by Butch Cassidy on Jun 17, 2017 12:09:48 GMT
Logic suggests nothing of the sort, . So you think it is possible for everyone to be smarter (or anything else) than the average? As long as I am, what everyone else achieves is irrelevant, other than as a gauge to measure my own returns against. Your argument appears to be that every strategy will tend towards the average which , sorry to be blunt, is complete bunkum.
A simple example would be that a platform issued 2 loans equally split between it's investors & exactly half the investors lost 100% & the other half gained 100% which group would you prefer to be in? How would an average be relevant when no one achieved anywhere near it?
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jun 17, 2017 12:33:03 GMT
So you think it is possible for everyone to be smarter (or anything else) than the average? As long as I am, what everyone else achieves is irrelevant, other than as a gauge to measure my own returns against. Your argument appears to be that every strategy will tend towards the average which , sorry to be blunt, is complete bunkum.
A simple example would be that a platform issued 2 loans equally split between it's investors & exactly half the investors lost 100% & the other half gained 100% which group would you prefer to be in? How would an average be relevant when no one achieved anywhere near it?
OK but if you don't assume the average defaults then the poll is pointless as the highest nominal rate will always give the best return if you can eliminate or sufficiently reduce defaults. Indeed, judging by the results so far it does seem that most responders think they can beat the average. Maybe they can, but it will mathematically not be possible for everyone to do so. My 9 year old grandson knows that. I have edited the OP.
|
|
JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,317
Likes: 893
|
Post by JamesFrance on Jun 18, 2017 7:41:49 GMT
I would love to hear why someone would consider lending at 3% could give the best overall return. Have these voters had disastrous personal experiences with P2P loans at higher rates?
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
|
Post by littleoldlady on Jun 18, 2017 10:24:37 GMT
I would love to hear why someone would consider lending at 3% could give the best overall return. Have these voters had disastrous personal experiences with P2P loans at higher rates? Remember that p2p can easily return negative rates. I myself have had a negative return of over 5.5% (capital losses* exceed interest earned) over 42 loans over 18 months on Funding Secure. * As reported by FS for the tax return. Some recovery may be possible on some defaulted loans.
|
|
