Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 24, 2016 10:00:57 GMT
1380 x £60 = £82,800 Loan value = £94,550 Out of interest, what happens to the other £12K? Do SS only allocate in multiples of £10? It usually get's dumped on the SM soon after the loan goes live. I must have missed it, but it looks like that has happened; there has been some recent investor activity on this loan with transactions up to £1,000.00 taking place. The SM is unbelievably fast... I listed a little of one of my loans today and it was gone before I could click 'cancel sale' straight after the page reloaded.
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Neil_P2PBlog
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Posts: 355
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Post by Neil_P2PBlog on Aug 23, 2016 19:18:50 GMT
Sorry to drag up an old topic, but i'm currently looking down the route of a stocks/shares ISA. Initially I am looking at stocks, but as my knowledge increases it is likely I may look at other products also if I feel the risk/return balance is in line with my expectations. If you were starting fresh, who would you use? I've been with TD Direct Investing for a stocks and shares ISA for more than 5 years. They have a regular investment option that lets you buy shares for I think £2.50 rather than £12.50 or so as usual. When you have to sell shares it is still £12.50. Over time and some big individual losses I've moved just to invest just in funds with low charges. For this TD investing have a flat fee of 0.3% pa but often no buying/selling charges. In my initial dealings 5 years ago with TD they had seemed to be quite helpful and knowledgeable. However recently I've been in touch with them to try to understand some things within their fund information system (morningstar) and they were hopeless. Individual people told me contradictory things on the phones/emails and it took a long time to get a simple answer (what is the actual total management fee for each of my funds). Looking for an alternative I've found Cavendish, who have lower charges (0.25% pa for funds) and were able to quickly respond to my same questions via email. I didn't move over yet as I am hoping to use this year's ISA for the IF ISA. I recommend you to look at the best buys here for an idea of charges depending on what you plan to do. I notice AXA have no fees for the first year so perhaps you could start with them and then swap provider after a year.
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Neil_P2PBlog
P2P Blogger
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Posts: 355
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Lendy (L) in Administration
New to P2P
Aug 23, 2016 16:35:55 GMT
Post by Neil_P2PBlog on Aug 23, 2016 16:35:55 GMT
maybe not the best way to gain the confidence of new members. bit sad really isn't it and more than a bit embarrassing if true.
on the other hand, I did take them up on their offer of £20 to loan out for free. thanks!
signed up, got an email confirming account open in about 2 hours, £20 in the account and lent out. 4.5% over 3 yrs doesn't excite me but i'll take it on £20 that wasn't mine in the first place..
I did the same on the free £20 but with the 1 year. Lets hope there's not some retrospective minimum additional investment when we come to withdraw in 1 or 3 years!
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Neil_P2PBlog
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Posts: 355
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Post by Neil_P2PBlog on Aug 23, 2016 13:49:10 GMT
The email today looked like you could get an opportunity to prefund the loan.. but the email was at the same time as the actual loan release? Is this a work in progress? Would be a really nice enhancement.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 23, 2016 13:39:40 GMT
Hi ribs I do indeed keep an eye on the forum - I'm not particularly active simply because of time constraints! I contribute here mainly because I enjoy speaking with lenders and because I love P2P lending rather than as a representative of LW (although noting I can't avoid being that). Regarding recent matching times increasing - for sure this is very, very important for us and is one of our highest priorities currently as a business. Rates generally across the sector have dropped recently - you will probably be aware of this already. If you assume 30 days waiting to match equates to roughly 0.1% lost interest over 5 year loans, you can compare like for like against our peers and choose where to invest your free cash. Our rates, even accounting for a 0.1% haircut, are still competitive across the prime unsecured consumer space, so should be considered with that in mind. Savers and investors across multiple asset classes have been hit recently, and P2P generally has held up pretty well. That said, we're not happy with current matching times, more from a user journey than anything else. Our reinvestment matching times are still very good (typically one business day). We are working on ways to ensure lenders are matched way more quickly, however right now we're seeing the impact of a large number of investors looking for a decent yield due to recent macro events. It is not even 'just' 30 days waiting time. I started this post in frustration of waiting times on 6th August with '8 days to match' left. I just checked again now and that same money is back up to '8 days to match'!
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 22, 2016 19:28:29 GMT
I leverage my P2P investments along the lines dinisrr suggested. This doubles the risk and doubles the return. It is complicated and needs a lot of monitoring and maintenance. I have been doing it for nearly a year. I release cash by selling my FTSE 100 tracker funds, and replacing them with FTSE 100 futures bets purchased through IG.com. I invest most of the cash released in Peer to Peer. Costs Futures are cheap at the moment, because the future financing cost is linked to interest rates. I don’t have enough information to back calculate the inbuilt future financing cost but it seems to be less than 1% pa. I use the same approach for the S&P 500. But other futures I have looked at, like the FTSE 250, have prohibitively high bid-offer spreads. Risks and Mitigation Margin calls: when the index falls, I need to repay the cash that I released. I protect against crashes by buying put options at around 20% below the current index (cost around 1% pa). And I keep enough idle cash to cover market falls of up to 20%. Benefits As well as releasing extra cash for P2P investing, this approach has tax benefits compared to direct stock market investment because share index gains accumulate tax free and the dividends are built into the futures price so they accumulate tax free. Was it difficult to get started in this - I've signed up for demo accounts in the past but wasn't sure where to begin. Do you have any recommendations for websites/forums?
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 22:52:43 GMT
Why is it a mistake? It would be impossible for them to make a living out of 1% of 8%.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 22:49:17 GMT
I was thinking over the idea of building a cloud based P2P investment dashboard, but the obvious stumbling block is pulling data from each of the different platforms. Something where people manually uploaded exports of their investments would not be too hard, but would defeat much of the purpose.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 17:58:59 GMT
... Strategy 3: Buy discounted loans with 1/4 of term to go. You now hold 400 different loans during the same year and are likely to experience 4x the number of defaults in 1, so 6%. Whilst this approach appears logical take it a few more iterations down the line and at 1/64th of term (OK you can't buy / sell at that stage but bear with me!) you are up to 96% default rate so take it one step further and you are well over 100% which is mathematically 'strange'. With suitable diversification I have always worked on a pessimistic 1.5% of cash loss against cash invested I apply this to all platforms that I invest in not just FS. So far I am yet to even vaguely approach that level on any platform in any year. Yes there have been some sweaty palm moments and some lucky escapes but that is all part of the process. I note Neil_P2PBlog that you haven't mentioned 'recoveries' (I've had several with FS recently) these skew overall returns as well ....... I just call it 'bad debt', but ideally I'm looking for a % that includes recoveries. The cash loss becomes confusing with later term loans, as the accrued interest becomes your cash loss, so is not included in the .07% historic capital loss FS quote. Great observation on taking it a few more iterations, I need to do more thinking on that one!
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 15:18:23 GMT
The % bad debt loss and interest %'s are all annualised numbers, so you need to recycle your investment income on new loans to maintain your £invested. As in strategy 2, if you are buying 6 month loans after 3 months, you'll have to buy twice as many loans over the year to maintain your investment and gross % return.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 15:11:28 GMT
The website appears to struggling at the moment. It's the first time I've seen it this bad for quite a while now. With about £5k of £25 limit loans going in a few minutes probably 200 or so people were refreshing and then opening 10 tabs at the same time.
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 19, 2016 14:50:04 GMT
Not sure that your logic makes sense. A loan on FS is only likely to reveal repayment problems at / near the end of the 6 months term. If you intend to hold a loan to term then there's little difference in default risk between buying it with 183 days to run or 31 days. However, a loan you hold to term has an infinitely higher risk of giving you default issues than one you sell sometime before term. I agree that a loan is likely to default only at the end/near end, and that there is no risk of default if you manage to sell early. Let's just say a figure of 1.5% for losses due to bad debt overall on FS. Strategy 1: Maintain an investment of 50x £100 loans. You buy all loans new and hold to term. During a year you have 100 different loans and would expect that 1.5% of losses we assumed above. Strategy 2: Buy discounted loans on the secondary market half way through their term, with the same total investment as strategy 1. Now you have 200 different loans during the year with the same chances of bad debt over the entire loan term. My logic is that holding twice as many loans through the risky period your expectation of bad debt is now 3% in relation to your original investment. Strategy 3: Buy discounted loans with 1/4 of term to go. You now hold 400 different loans during the same year and are likely to experience 4x the number of defaults in 1, so 6%.
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Neil_P2PBlog
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Posts: 355
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Post by Neil_P2PBlog on Aug 19, 2016 13:56:34 GMT
I'm trying to build a tax calculator for buying late loans on the secondary market. Its straight forward to put together the factors for: - Accrued tax liability at e.g. 20% tax band based on days active/left
- Capital gain from buying at discount
- Annualised % from discount%/ (days remaining / 365)
What I am struggling with is accounting for the increased risk of default/ bad debt. From the statistics page I can come up with 2 different ideas of what bad debt % might be: - Looking at last 3 months, subtract around 12.48% expected return from around 12.26% actual return to give bad debt of around 0.22%
- Looking at their predicted rates, subtract 12.7% gross interest payable from 11.2% estimated net return to give bad debt of around 1.5%
Once I have a number for this, I'll multiply it by (length of loan term/ length remaining). My thinking for this is if you are buying 180day loans with 90days remaining you would have twice the bad debt risk, and 180day loans with 45 days left you'd have four times the bad debt risk. Obviously loans with higher interest rates have higher default risks but I can't find numbers to build that in. Once I have the numbers above I can just sum: A) £x gain from buying at discount B) £x loss from taking on tax liability C) £x loss from expected increased risk
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Neil_P2PBlog
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Posts: 355
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Post by Neil_P2PBlog on Aug 18, 2016 22:22:30 GMT
Looking back at the original open house data for April 21st it was a handful of large trades at very high prices that skews the data (between transaction 10786 and 10792)
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 18, 2016 22:05:16 GMT
This property you link to has data back to July 2015, but when PP plot it in their chart they just take the last 100 trades. Ah, that might explain. Would be better if they allowed it to be filtered by date. I think it's an odd situation that they've taken so long to create some relatively mediocre charts given the ambition of the platform. Just looking at the blip, 4 trades at ~100% premium. Very odd as only £3k in total which would seem unlikely to hit that sort of premium on the SM. Can you go into a bit more detail as to how you're using the open house data to create those graphs. Is it relatively straight forward stuff beyond sticking it into a DB? In the end the main reason for the DB was to calculate the daily weighted average price more easily. I had also intended to use the DB to generate a list of all possible days that each property was on the market, for cases when there were no transactions on a particular day. I scrapped that though as it made more questions than it answered ie. what value to put in its place. Also I did basic calculations for £volume rather than just the count of shares traded as in the open house, and the max and min share price each day. Everything else is just straight from PP (the main property page propertypartner.co/s/uk and the July open house) with a join in Tableau (the software used to make the report).
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