Post by angrysaveruk on Apr 6, 2018 11:39:00 GMT
Personally I have a preference for the smaller loans on AC (in terms of total loan size). The advantages in my opinion are:
1) Greater liquidity - I seem to be able to sell my holdings in smaller loans a lot quicker (normally 1 to 2 days). I assume this is because the amounts available are less and other manual investors/auto investment accounts scoop them up for diversification
2) Lower Risk - this might be a bit controversial but I believe the smaller loans taken out by individuals/family businesses are lower risk. They have more to lose if a default occurs and are in a position to pay the interest with their own income/personal wealth
3) Platform risk - the default of larger loans is correlated with platform failure. So the chances of having a defaulted loan coinciding with platform failure (making recovery more difficult) is less likely to occur. This is considerably less important than the other two factors in my opinion.
Would be interested to hear other peoples opinions.
1) Greater liquidity - I seem to be able to sell my holdings in smaller loans a lot quicker (normally 1 to 2 days). I assume this is because the amounts available are less and other manual investors/auto investment accounts scoop them up for diversification
2) Lower Risk - this might be a bit controversial but I believe the smaller loans taken out by individuals/family businesses are lower risk. They have more to lose if a default occurs and are in a position to pay the interest with their own income/personal wealth
3) Platform risk - the default of larger loans is correlated with platform failure. So the chances of having a defaulted loan coinciding with platform failure (making recovery more difficult) is less likely to occur. This is considerably less important than the other two factors in my opinion.
Would be interested to hear other peoples opinions.
