number5
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Post by number5 on Oct 2, 2017 8:41:42 GMT
Hey guys
I was wondering if there was a general rule of thumb I can follow when setting premiums and discounts during the life cycle of a 6 month loan.
Eventually to make a sale within the first 5 months.
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badersleg
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Post by badersleg on Oct 2, 2017 9:08:45 GMT
Hi
There are only 2 rules I can think of- somebody has to want to buy it, and you will have to be the cheapest. Even then it may still not sell.
Sometimes loans can sell for a 1% premium on the first day, and sometimes nobody wants them at all. If it's ISA time and there's not much on the primary market then your loans may be more likely to sell.
There's a daily interest calculator somewhere on this forum that will help you set a price. Remember to take the tax advantage of selling on the SM into account.
Regards,
Tim
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mullet
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Post by mullet on Oct 2, 2017 9:11:02 GMT
Have a look at what is currently on the secondary market. You've got enough info out there regarding discounts being offered, days remaining etc to spot the pattern.
Please be aware that if you are planning to dump all your investments 5 months into a 6 month term (even at max discount) you could well end up being disappointed. If you are so risk adverse that you don't want to hold anything until term either sell after a month or 2 at a competitive price or this form of investing probably isn't for you.
Start small and get a feel for it.
Good luck
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number5
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Post by number5 on Oct 2, 2017 11:20:15 GMT
Hi Mullet...thank you for that information, that is exactly what guidance I was looking for.
I am risk averse and ideally would not like to keep loans to term
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nick
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Post by nick on Oct 2, 2017 14:29:42 GMT
Hi Mullet...thank you for that information, that is exactly what guidance I was looking for. I am risk averse and ideally would not like to keep loans to term Whilst I generally try to sell down my loans near maturity, my base assumption is that I will need to hold loans to term. I think it is a dangerous to assume that there will always be able to sell in the SM before maturity as SM liquidity can change quickly and it only takes a few BH selling down to swamp the SM and/or a loss in investor interest/confidence.
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mikes1531
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Post by mikes1531 on Oct 2, 2017 14:52:03 GMT
Whilst I generally try to sell down my loans near maturity, my base assumption is that I will need to hold loans to term. I think it is a dangerous to assume that there will always be able to sell in the SM before maturity as SM liquidity can change quickly and it only takes a few BH selling down to swamp the SM and/or a loss in investor interest/confidence. I aim to do similarly, but I can confirm that there have been times when, for no obvious reason, I've been unable to sell parts. It falls in the category of "You can bring a horse to water...". You can offer the maximum discount, but if nobody wants to buy you'll have to hold the loan to maturity -- and possibly well beyond.
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number5
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Post by number5 on Oct 2, 2017 16:27:35 GMT
What is BH?
I guess there is always that risk of not being able to sell.
But with the restrictions in place, it limits my investment in one loan so that works in my favour in one way
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rogerthat
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Post by rogerthat on Oct 2, 2017 16:29:51 GMT
Benson & Hedges ?  |
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Post by diamon89 on Oct 2, 2017 16:31:42 GMT
BH = "Big Hitter", someone putting in tens of thousands of pounds into each loan. There are even a few users on FS who put in north of £100k into a single loan.
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number5
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Post by number5 on Oct 2, 2017 16:42:25 GMT
Well I hope I manage to get in there before they do! :s
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