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Post by jonathan on Aug 9, 2018 12:26:13 GMT
Any benefits in trying to maximise diversification beyond 0.5%?
for instant running 2 accounts e.g classic & ISA, but alternating lending between the two as not to lend to same company twice?
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p2pete
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Post by p2pete on Aug 9, 2018 13:38:09 GMT
The wife and I each opened a classic account with £20K in (at different times to avoid the same loans). One has returns of 6% and one has 7.7%.
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benaj
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Post by benaj on Aug 9, 2018 14:29:41 GMT
Any benefits in trying to maximise diversification beyond 0.5%?
for instant running 2 accounts e.g classic & ISA, but alternating lending between the two as not to lend to same company twice?
Once you have accumulated first 200 loan parts, then your older loan parts will become smaller than 0.5% when you reinvest / top up. Having 2 accounts means more account management, the chance of 2 accounts having the same loan is always there, but there are 75,000 investors on FC and at least 50 new loans formed daily, it is rare to share the same loan part. Other benefit: the performance of each individual account varies, the FC algorithm matches loan to optimise performance in the long term, hence you might have a higher return or even lower return in the short term by having more accounts, but long term performance ( 20 years or more in IFISA) of the combined accounts will be similar to a single account
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Post by buggeddylan on Aug 10, 2018 12:03:17 GMT
So is .5% per borrower the magic number? I am at .7% but don't mind making an additional transfer to minimise risk.
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benaj
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Post by benaj on Aug 10, 2018 12:44:31 GMT
So is .5% per borrower the magic number? I am at .7% but don't mind making an additional transfer to minimise risk. Yes, once you top up your accounts for more loan parts, older ones will be less than 0.7%. Regarding the risk, you can easily choose conservative instead of balanced to reduce exposure to risky loans. Options could be:- - selling your all current portfolio and switched to conservative, - set lending option to conservative for reinvestment - or just top up more money to reduce maximum exposure to one business
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Post by buggeddylan on Aug 10, 2018 13:16:55 GMT
That's helpful, thanks. Although that headline 7% figure is what keeps me on this platform so I think I will stick with balanced risk for now and see how things look in a few months.
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