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Post by goldservice on Sept 20, 2014 14:00:47 GMT
One reason for splitting loans into smaller, more numerous amounts preferably to different borrowers is to avoid what can happen when a borrower repays early. if it's a large loan, and if you are not checking your RS account daily (it's easy not to check daily 'cos, as kev? said, RS is boring in a good way), then you can suddenly have a large sum earning no interest.
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mikeb
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Post by mikeb on Sept 20, 2014 18:59:51 GMT
... missed payments or defaults (the vast minority of early lender return of cash). I know some lenders might find this differentiation interesting ... I find the concept of a "vast minority" more interesting
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Post by GSV3MIaC on Sept 20, 2014 19:42:04 GMT
... missed payments or defaults (the vast minority of early lender return of cash). I know some lenders might find this differentiation interesting ... I find the concept of a "vast minority" more interesting See the 'Scottish Independence' vote thread. 8>.
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c88dnf
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Post by c88dnf on Sept 21, 2014 0:08:06 GMT
One reason for splitting loans into smaller, more numerous amounts preferably to different borrowers is to avoid what can happen when a borrower repays early. if it's a large loan, and if you are not checking your RS account daily (it's easy not to check daily 'cos, as kev? said, RS is boring in a good way), then you can suddenly have a large sum earning no interest. Not so if you have your default reinvestment settings set correctly. Last week while away in Glasgow (yes, for that reason...) I had an £11k paying 5.7% paid back early. By the time I'd caught up with the fact, it had gone out again at 6.2%. No hassle!
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Post by goldservice on Sept 21, 2014 11:30:42 GMT
You are right that you have to have the right reinvestment settings. But to achieve this you have to check them every day - rates can change quickly enough (eg to 6.1%) to leave your repayment stranded looking for 6.2%.
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Post by geoffrey on Sept 21, 2014 13:49:39 GMT
As someone who came from ZP to RS (when RS started up), I was *trained* with the idea that above all I had to diversify my loans to mitigate risk. RS was new and the provision fund untested. So I lent in ZP-style £10 lumps at first. As time went by, and RS gained a reputation for safety and efficiency, I upped it, first to £20, then £50, then £100, and now £200 lumps.
What I do now when I have a capital sum to invest, is spread the £200 offers across different rates, starting at the current market rate and going up in 0.1% increments. I don't go much more than 0.3% above the market rate (unless the market rate is atypically low that day). When I get a notification that an offer has matched, I log in to RS and make another offer at the rate that matched, or just above it if the rates are moving up, until the capital is all in offers and/or matched. Then, if the rate moves lower, leaving any remaining higher offers stranded, and if it seems they won't match for a long time, I change the highest offer back down to the market rate offer. That way my "spread" tracks the rate, and I have a chance to match a little higher on spikes.
This may seem like harder work, but it allows me to track the market, achieve diversification, and is really not much different to the much lauded "drip-feed" approach to investing in stocks and shares, which helps avoid the problem of market timing.
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c88dnf
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Post by c88dnf on Sept 21, 2014 16:07:46 GMT
You are right that you have to have the right reinvestment settings. But to achieve this you have to check them every day - rates can change quickly enough (eg to 6.1%) to leave your repayment stranded looking for 6.2%. Again, not so. My reinvestment for 5 year has been at the same setting for over 5 weeks now. Throughput on RS is so high that a premium of 0.1% is a matter of 48 hours' delay at most for reinvestment in my experience, usually rather less. Today I had another repayment and it was re-issued within 2 hours at 6.3%, again before I was even aware of the repayment occurring.
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Post by westonkevRS on Sept 21, 2014 19:02:37 GMT
The easiest option is the Market Rate, which will give the best rate unless you think the rate will go up in the day and you want to squueze an extra 0.1%. This is the most preferred option and money cannot be "stranded".
I don't like the Your Rate function. I know it allows you to set a floor, but unfortunately money can be "stranded" if your money isn't lent in 24hours and then the market rate drops. Not ideal, not a regular occurance but it can happen. This has been discussed, but a decision hasn't been reached to change.
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spiral
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Post by spiral on Sept 22, 2014 16:44:52 GMT
The easiest option is the Market Rate, which will give the best rate unless you think the rate will go up in the day and you want to squueze an extra 0.1%. This is the most preferred option and money cannot be "stranded". I don't like the Your Rate function. I know it allows you to set a floor, but unfortunately money can be "stranded" if your money isn't lent in 24hours and then the market rate drops. Not ideal, not a regular occurance but it can happen. This has been discussed, but a decision hasn't been reached to change. I thought the discussion concluded that MR can leave you stranded because it was a one off applied rate and as such, if the market moved back lower, there was no automated setting to the new MR, or has something changed recently?
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Post by westonkevRS on Sept 22, 2014 18:04:08 GMT
Market Rate works perfectly, however if used with Your Rate (i.e. a floor) then money can get "stranded" if the market drops and your cash isn't lent within the day. My advice, just use Market Rate. If you want to use the floor, you do need to take a look every few days.
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Post by p2plender on Sept 22, 2014 21:09:10 GMT
You can of course stick your money in a building society if you don't want to monitor it. Why anyone would shove money into p2p lending with the intention of no or little monitoring is beyond me.
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spiral
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Post by spiral on Sept 23, 2014 9:51:47 GMT
Market Rate works perfectly, however if used with Your Rate (i.e. a floor) then money can get "stranded" if the market drops and your cash isn't lent within the day. My advice, just use Market Rate. If you want to use the floor, you do need to take a look every few days. So as you haven't agreed with my statement nor back tracked on yours, do I take it then that if you just set investment options as MR and today for example that is 6.3%, money joins the queue at 6.3% but if tomorrow the MR is 6.2% and yesterday's offer hasn't gone out the door, it gets reset to 6.2%? If not i.e. the money remains at 6.3% (which is how I understanded it to work) , the money is stranded.
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oldgrumpy
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Post by oldgrumpy on Sept 23, 2014 10:24:26 GMT
Market Rate works perfectly, however if used with Your Rate (i.e. a floor) then money can get "stranded" if the market drops and your cash isn't lent within the day. My advice, just use Market Rate. If you want to use the floor, you do need to take a look every few days. So as you haven't agreed with my statement nor back tracked on yours, do I take it then that if you just set investment options as MR and today for example that is 6.3%, money joins the queue at 6.3% but if tomorrow the MR is 6.2% and yesterday's offer hasn't gone out the door, it gets reset to 6.2%? If not i.e. the money remains at 6.3% (which is how I understanded it to work) , the money is stranded. Exactly. It suits me to set my own rate (as high as optimism allows), check every couple of days, and adjust if necessary. Market rate, however, is decided upon by RS, and usually works quite well as long as the rate doesn't fall by a couple of points or more. Then you can become stranded at the earlier RS set rate above the current lending market rate. (If that happens to me it is my fault). westonkevRS Is it not possible for an existing RS set market rate to be reset down subsequently for unlent funds after a low number of days if market rate drops by 0.2%, while not altering lenders' manually set rates?
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Post by westonkevRS on Sept 24, 2014 6:25:29 GMT
Guys, I'm staring to doubt my own understanding of how it works. But I know from Customer Service that some lenders do confuse the Market Rate with Your Rate (the floor).
If you use YR to set a floor money can get stranded if unlent in the day and the markets drop irrespective of MR functionality. If you use the YR to set a floor you do need to be relatively active and take a look every few days, especially if the market is dropping. I suspect the way the MR has been rising recently, not much money has been stranded long term on realistic rates.
If you just use the MR (and trust RateSetter to get the best rate on any given day) then you can be asleep the whole time. I gotta be honest, that's what I do so I don't have active experience otherwise.
In terms of grumpy's question, if you only use MR and the market drops by a small percentgae your money will be lent and not stranded. If anyone thinks they are only using MR without the YR functionality and still has stranded funds, then direct message me and I'll get Customer Services to look directly.
Kevin.
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pikestaff
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Post by pikestaff on Sept 24, 2014 6:50:11 GMT
So as you haven't agreed with my statement nor back tracked on yours, do I take it then that if you just set investment options as MR and today for example that is 6.3%, money joins the queue at 6.3% but if tomorrow the MR is 6.2% and yesterday's offer hasn't gone out the door, it gets reset to 6.2%? If not i.e. the money remains at 6.3% (which is how I understanded it to work) , the money is stranded. That's how I think it works too. I suspect (but don't know) that a good few of the more crazily high bids on the system may be leftovers from this, with MR lenders never thinking to check. RS should have the info to determine whether or not this is so.
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