aju
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Post by aju on Nov 15, 2018 18:55:10 GMT
Zopa has added a new item to its blog that takes an interesting perspective however ... See what you think ... |
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benaj
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Post by benaj on Nov 15, 2018 19:18:06 GMT
To be honest, I think Natasha could have written a better article. I can't see any real data mentioned. Not really impressed for this 1st class neuroscience Cantab graduate. I think Zopa is more worried about Parents "borrowing" money from piggy banks than borrowing from Zopa  www.p2pfinancenews.co.uk/2018/11/14/zopa-parents-piggy-banks/Seriously? 2 fifths according to Zopa Research. |
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Post by erniec on Nov 15, 2018 19:26:17 GMT
I, too, am not convinced by that article.
I await with interest these tools they keep promising and trust they will prove what they say with my real data.
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Post by newlender on Nov 15, 2018 21:02:08 GMT
Interesting stuff - not too challenging mathematically but generally correct about the statistical trends. The use of emojis inside a bell curve is a new one on me as is the stuff about when defaults are likely to occur (the video by Andrew Lawson about this is much better and does slightly contradict what she has written). She also ignores the fact that we are effectively holding two types of Plus in our portfolios - those before and after the reduction of D/E borrowers - so those who only invested in 'old' Plus would see more defaults due to the product, nothing to do with length of holding. Just goes to show how complex P2P is if you look under the bonnet. Anyway, if Kirsty and Phil prefer P2P to property investment it must be OK (Anyone else resigned while I've been typing this?) |
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Post by propman on Nov 16, 2018 15:39:37 GMT
I would love to kinow whether they have done the analysis to confirm that returns are not significantly different from normal or whether they have assumed this like so many models and calculated the statistics on this basis based on standard deviation of actual investors. Also great to know how spread returns are, but I would like to know what the average was! Finally when saying people have exceeded the expected return, I would like to know whether this was the initial promised return on early Plus or the revised return. Post the 2008-9 debacle they always used the downwardly revised estimates.
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Greenwood2
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Post by Greenwood2 on Nov 16, 2018 19:08:01 GMT
This curve looks too smooth to represent actual results, they have the data so it would be nice to see the actual data overlayed. I would expect bigger tails at one or both ends, extremely unlikely to be a perfect bell curve.
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Post by newlender on Nov 16, 2018 19:10:46 GMT
To calculate standard deviation they would need to track every individual portfolio to establish the norm and then do the math. I doubt they do that as there are too many variables and I find it hard enough just to work out my % profit if I try to factor in just a few variables. In January I'll calculate my profit for 2018 as a ballpark figure by using the totals from the Statements pages, factoring in cash invested during the year, (as opposed to reinvested). I haven't had a negative month since I opened my ISA in June 2017 but my monthly return is showing in the range 3% to 3.5% net (p.a.) which is about right as I'm >80% in Core.
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Post by davee39 on Nov 16, 2018 19:34:12 GMT
I do not consider the Core target rate to be attractive for a risk product with a lock in of up to 5 years. I am more happy to accept 2% from a 12 month FSCS protected investment (Ford Money) with my income needs met from Stockmarket investments yielding 5 - 7%. No amount of tortured mathematics will convince me to reinvest repayments from Safeguarded Cash into the current products.
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Post by newlender on Nov 17, 2018 6:05:39 GMT
According to this week's email the 'normal' for the last four weeks across the two products has been roughly 5% p.a. (4.44% and 5.27%). Is there anyone out there, I wonder, who has a portfolio 100% invested in just one product? Or 50% in each of the two? They could easily tell us where they are on the curve this month. I'm currently on 3.9% p.a. for the year (average monthly net income to October 31st. after defaults). It would be 5.33% with no defaults, so according to both Andrew's video and the blog I should move nearer to the top of the curve in the next few months.
As has been said many times though, with no Safeguard or FSCS cover is this return worth the risk?
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benaj
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Post by benaj on Nov 17, 2018 8:13:21 GMT
Let's us all decode Zopa's email:
"Over the last 4 weeks we have matched loans to give projected returns of:
Zopa Core: 4.44 % Zopa Plus: 5.27 %"
The email does not addresses current performance of any individual portfolio, it's more like a pitch selling Zopa's lending products of the current rates.
Unless Zopa's launches some new products with FIXED RATE like RS / LW, those Core / Plus projected returns are not guaranteed.
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Post by fuzzyiceberg on Nov 17, 2018 11:49:31 GMT
Yes. What Zopa are saying is that the average rate for all loans matched in Core over the last 4 weeks, allowing for expected defaults, is 4.44%. An investors actual return will vary depending on exactly which of those loans they were allocated. A very lucky investor will get loans with a higher average rate and lower defaults; a very unlucky investor the reverse, and most investors somewhere around the averages quoted. And of course the more that is invested (the greater the number of loans) and the longer the time period the investment is held the more everyone will trend to the average, whatever the average turns out to be. That is just maths.
What is critical is how good Zopa's credit scoring is. Natasha Wear's article amounts to no more than a pat on the head and saying it will all be Ok eventually. Zopa's only real performance information - their risk data, is woefully out of date since they only update it once a year in January. Shameful since this is actually what we are paying them for. A cynic would think there is a reason they don't like to reveal this stuff.
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