arby
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Post by arby on Aug 31, 2018 22:12:12 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even:
90% recovery on all loans that are 30 days overdue, or
80% recovery at 60 days overdue, or
75% at 90 days, or
65% at 180 days, or
50% at 365 days,
If you think those recovery rates look feasible then on average you should make money!
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Godanubis
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Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
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Post by Godanubis on Sept 1, 2018 2:41:52 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! Something I’ve always said. Diversify No more than 1% of portfolio in any loan ideally 0.25% Wlll beat most banks
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arby
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Post by arby on Sept 1, 2018 5:36:55 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! Something I’ve always said. Diversify No more than 1% of portfolio in any loan ideally 0.25% Wlll beat most banks The figures I gave are for complete diversification. i.e. if you'd invested £100 in every loan FS has issued. It shows that a year after the investment, on average you'd be out of pocket and are still reliant on these late loans being recovered in order to breakeven and then make a profit. While diversification is important, I'd say it's just as important to try and identify the more risky loans and avoid them, although that is a much harder thing to track retrospectively.
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james21
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Post by james21 on Sept 1, 2018 6:46:38 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! Good work; can the analysis give indicative rates of return %?
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technik
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Post by technik on Sept 1, 2018 9:09:10 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! By stating or each time, it implies that those cases can be taken independently for a given loan you are assessing i.e. if I want to assume a given loan will go 60 days overdue, you need 80% recovery to break even. Is that recovery based on the amount owed including interest? And hence why the required recovery % is seemingly dropping the longer they are overdue?
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arby
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Post by arby on Sept 1, 2018 9:15:16 GMT
Good work; can the analysis give indicative rates of return %? It can, the issue is it entirely depends on our assumption about the amount recoverable from overdue loans; that totally swamps any other consideration. Even loans from 2016 are currently unprofitable, but there are enough unrecovered loans from that time period that could easily swing it back to profit, but that's where the assumption comes from that I posted above, i.e. that we'd need recoveries of 50% to breakeven on loans that are a year overdue.
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james21
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Post by james21 on Sept 1, 2018 9:54:38 GMT
I base my own estimate of a 50% recovery on defaulted loans based on nothing scientific just common sense and a diversified portfolio over a couple of years, it indicates about 7% net; would be interested in what yours says at 50% recovery (or any other %) thanks
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Sept 1, 2018 9:57:05 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! This seems to be a very pessimistic view of recovery rates. I was in loan 2157766811 that was over 365 days overdue and it repaid in full with interest after 662 days. I make that a recovery rate of over 123%
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arby
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Post by arby on Sept 1, 2018 10:29:58 GMT
Been doing some sums from the loan book: if an equal amount was invested in each loan on the site (say £100), the following default recovery would be required to break even: 90% recovery on all loans that are 30 days overdue, or 80% recovery at 60 days overdue, or 75% at 90 days, or 65% at 180 days, or 50% at 365 days, If you think those recovery rates look feasible then on average you should make money! This seems to be a very pessimistic view of recovery rates. I was in loan 2157766811 that was over 365 days overdue and it repaid in full with interest after 662 days. I make that a recovery rate of over 123% That's great. I wasn't trying to imply optimism or pessimism, just indicating the breakeven point for recovery 
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