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Post by Berkeley on Jul 6, 2017 15:22:04 GMT
I find this thread slightly odd!
Under Funds|Statement: 1) the sum invested it shown 2) The available funds are shown I cannot see why anybody would want to display this as a combined figure. 1) is earning interest for you 2) is losing money, currently at about 2.5% (inflation)
What would be a more interesting figure to display is what the mean interest (or interest rate) is on the total sum invested.
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Post by elephantrosie on Jul 6, 2017 15:36:57 GMT
... or less than £1 (by re-investing all the whole pounds on the SM). (while we can) i do this. plus, i add in money as i get my work salary every month.
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GeorgeT
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Post by GeorgeT on Jul 6, 2017 15:49:30 GMT
What would be a more interesting figure to display is what the mean interest (or interest rate) is on the total sum invested. Seconded. I worked this out manually a few months ago and found my overall average return on MT was 11.70%. Since then we have had a new 13%er which I dived into with some gusto, so I guess my average MT return is slightly above 12% now but I haven't yet worked it all out. It would be very nice to see, at a glance, the mean interest rate across your whole MT portfolio.
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Post by dan1 on Jul 6, 2017 15:56:40 GMT
The weighted mean can be calculated quite easily in excel with the formula: =SUMPRODUCT(<invested sum array>,<interest rate array>)/SUM(<invested sum array>)
e.g. your investments are listed one per row with the invested amount in column A and annual rate in column B: =SUMPRODUCT(A:A,B:B)/SUM(A:A)
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GeorgeT
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Post by GeorgeT on Jul 6, 2017 20:21:54 GMT
Thank you. I will give that a go tomorrow. My P2P job of the day.
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Post by spareapennyor2 on Jul 6, 2017 20:36:50 GMT
just tried it on my loans 12.09% mean
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robski
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Post by robski on Jul 7, 2017 10:12:09 GMT
This is interesting. As we know MT apply simple interest when paying, not APR as many do and quote, eg ratesetter. (IE they assume reinvestment of interest to quote an APR) So MT you could lend £1000 at 12% for one year and would receive £120 in 12 roughly equal installments. If you reinvest the interest the actual return is higher, I assume most people would do this on the platform? I quickly calculated the return profile and monthly payments on £1000 invested on Jan1, and held for 1 year (would be minor rounding diff on exact date lent due to MT daily interest calc) The actual return is obviously higher this way So with the simple model, I calculate the returns as follows, assuming full reinvestment of whole £1 as soon as paid. Pence roll over to the following month, but with multiple loans would in fact be earlier to be able to be reinvested. Anyway waffling My calculated rates for 1 year on £1000 and reinvested at same rate as original loan are as follows : Headline Rate Actual with reinvestment 10% 10.46% 10.5% 11.01% 11% 11.56% 12% 12.67% 13% 13.79%
At 14.5% the return is 15.49%, almost 1% over headline rate
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Post by dan1 on Jul 7, 2017 10:26:05 GMT
This is interesting. As we know MT apply simple interest when paying, not APR as many do and quote, eg ratesetter. (IE they assume reinvestment of interest to quote an APR) So MT you could lend £1000 at 12% for one year and would receive £120 in 12 roughly equal installments. If you reinvest the interest the actual return is higher, I assume most people would do this on the platform? I quickly calculated the return profile and monthly payments on £1000 invested on Jan1, and held for 1 year (would be minor rounding diff on exact date lent due to MT daily interest calc) The actual return is obviously higher this way So with the simple model, I calculate the returns as follows, assuming full reinvestment of whole £1 as soon as paid. Pence roll over to the following month, but with multiple loans would in fact be earlier to be able to be reinvested. Anyway waffling My calculated rates for 1 year on £1000 and reinvested at same rate as original loan are as follows : Headline Rate Actual with reinvestment 10% 10.46% 10.5% 11.01% 11% 11.56% 12% 12.67% 13% 13.79%
At 14.5% the return is 15.49%, almost 1% over headline rateTo calculate the compound return from a simple interest rate you can use the following formula in excel: =(1+rate/12)^12-1 where, rate is the annual simple rate (e.g. 14.5%) This assumes that all interest (not just whole pounds) are reinvested at the same rate and that there are 12 monthly interest payments. e.g. 14.5% simple rate gives 15.5% compound rate.
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robski
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Post by robski on Jul 7, 2017 10:32:30 GMT
This is interesting. As we know MT apply simple interest when paying, not APR as many do and quote, eg ratesetter. (IE they assume reinvestment of interest to quote an APR) So MT you could lend £1000 at 12% for one year and would receive £120 in 12 roughly equal installments. If you reinvest the interest the actual return is higher, I assume most people would do this on the platform? I quickly calculated the return profile and monthly payments on £1000 invested on Jan1, and held for 1 year (would be minor rounding diff on exact date lent due to MT daily interest calc) The actual return is obviously higher this way So with the simple model, I calculate the returns as follows, assuming full reinvestment of whole £1 as soon as paid. Pence roll over to the following month, but with multiple loans would in fact be earlier to be able to be reinvested. Anyway waffling My calculated rates for 1 year on £1000 and reinvested at same rate as original loan are as follows : Headline Rate Actual with reinvestment 10% 10.46% 10.5% 11.01% 11% 11.56% 12% 12.67% 13% 13.79%
At 14.5% the return is 15.49%, almost 1% over headline rateTo calculate the compound return from a simple interest rate you can use the following formula in excel: =(1+rate/12)^12-1 where, rate is the annual simple rate (e.g. 14.5%) This assumes that all interest (not just whole pounds) are reinvested at the same rate and that there are 12 monthly interest payments. e.g. 14.5% simple rate gives 15.5% compound rate. Yes and for a really big hitter where they have so much invested interest will never generate pence then its correct, but lower down where you can often end up with pence uninvested it lowers the rate a little, because the simple straight calc you listed assumes you can reinvest the full amount, which we can't in reality. But my point was really that due to the simple interest calcs returns are higher than the headline figs on MT, and why i posted the table that has a better rate for small/mid investments. As you say the 14.5% returns 15.5% which it cant in the real world unless you can reinvest the pence as well immediately (would be close for higher amounts though I agree)
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robski
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Post by robski on Jul 7, 2017 10:34:46 GMT
Oh sorry and missed to also point out that interest is close to being 12ths but not in fact Eg first "half" of the year is only 181 days vs 184 in second "half"
/pedant mode
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n
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Post by n on Jul 7, 2017 10:43:13 GMT
Will be difficult to acheive when/if the SM dries up again.
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Post by argh on Jul 7, 2017 10:46:24 GMT
This is interesting. As we know MT apply simple interest when paying, not APR as many do and quote, eg ratesetter. (IE they assume reinvestment of interest to quote an APR) So MT you could lend £1000 at 12% for one year and would receive £120 in 12 roughly equal installments. If you reinvest the interest the actual return is higher, I assume most people would do this on the platform? I quickly calculated the return profile and monthly payments on £1000 invested on Jan1, and held for 1 year (would be minor rounding diff on exact date lent due to MT daily interest calc) The actual return is obviously higher this way So with the simple model, I calculate the returns as follows, assuming full reinvestment of whole £1 as soon as paid. Pence roll over to the following month, but with multiple loans would in fact be earlier to be able to be reinvested. Anyway waffling My calculated rates for 1 year on £1000 and reinvested at same rate as original loan are as follows : Headline Rate Actual with reinvestment 10% 10.46% 10.5% 11.01% 11% 11.56% 12% 12.67% 13% 13.79%
At 14.5% the return is 15.49%, almost 1% over headline rateVery interesting, although for me more the other way around. While I like to reinvest interest, whether the APR is an appropriate measure depends on there being suitable loans available to reinvest interest at the same rate and at par. (Suitable = ones I am willing to invest in and not yet maxed out on). As none of that can be taken for granted, I prefer to compare simple rates and then compounding, if reinvestment turns out to be possible, is a bonus.
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moogman
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Post by moogman on Jul 7, 2017 12:53:36 GMT
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