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Post by bikeman on Feb 5, 2019 21:54:09 GMT
I drip fed in my investment and for a while enjoyed hundreds of loans, with minimal exposure to each and negligible losses.
However, as loans were repaid, they were reinvested at a rate of 0.5% of my increasing total. Over time the number of loans are falling - I guess this will continue towards 200 loans, each with 0.5% of the total invested.
With a rate of 5.3% it doesn't take much more than a handful of loan defaults and all profits will be wiped out.
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Stonk
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Post by Stonk on Feb 5, 2019 23:01:58 GMT
Indeed. FC, in their wisdom, have decided that 200 loans is sufficient to ensure that you receive the average return, and that having more loans would not make a statistically significant difference. Of course, they will be able to assuage your concerns by showing you a nice graph that proves it.
Except that it won't quite do so, because we all know that 500 is better than 200, and the graph will look a little bit like it was created by the marketing department rather than the mathematicians. And also, "receiving the average return" is steadily becoming more and more unpalatable.
But, that being the wisdom of FC, there is little you can do about it.
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Post by Ace on Feb 5, 2019 23:09:22 GMT
That's odd! I did much the same and seem to have the opposite effect. My number of loans is still increasing.
I took a look at the value of loans that I'm getting allocated and found that the recent average new loan size is around 0.2% of my total. It appears that there's hardly any cash drag recently, so I get allocated loans before my cash builds high enough for a 0.5% chunk.
Perhaps we're just at different stages of the cycle. I'm only about 1 year in.
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pickles
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Post by pickles on Feb 6, 2019 11:24:27 GMT
Yes, you would expect the number of businesses lent to to go up over time. The maximum at the time of purchase will be 0.5% in any one borrower, but as these amortise the loan amount will drop, and your total invested will go up. Mine is currently over 500 businesses lent to.
There seems to have been a change earlier this year as you describe - it will no longer wait until you have the full 0.5% available before buying. This may explain the slowness in the SM, there are now fewer chances of there being someone with sufficient cash to buy a whole part but they can still buy off the PM at anything over £10.
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blender
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Post by blender on Feb 6, 2019 13:02:39 GMT
I think that the FC Prime Directive is that the filling of new loans must take priority. So at time of low net cash supply the repayments are directed to new loans, the available funds are lent regardless of 0.5%, and the SM is delayed as necessary.
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benaj
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Post by benaj on Feb 6, 2019 15:09:35 GMT
My partner started investing with FC in 2012 with just one business loan, now the account has grown with 140 active business loans. So even with low diversification, the annualised return on FC today is 6.5% over 7 years, not the worst I have seen.
FC has reduced the size of min loan part in 2018, the minimum part is £10 bid on the primary market, and the minimum initial investment is £1000. So over time, the portfolio will have more than 100 part loans with reinvestment and no withdrawal.
Once your portfolio has grown to £2k, it will have more than 200 loan parts. As your portfolio grows over time, the 0.5% part becomes bigger, but the total number of loan parts are greater than 200. The most important thing is, the maximum exposure per loan part is 0.5% assuming there's never been withdrawal.
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Post by bikeman on Feb 6, 2019 17:17:19 GMT
The amount lent has steadily increased as I added more funds. I don't think I have ever lent less than 0.5% of my total at the time the loan was formed. Every new loan part is always 0.5% never any less.
BUT my maximum exposure any one business is now 0.6%
I have never made a withdrawal.
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benaj
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Post by benaj on Feb 6, 2019 17:51:44 GMT
The amount lent has steadily increased as I added more funds. I don't think I have ever lent less than 0.5% of my total at the time the loan was formed. Every new loan part is always 0.5% never any less. BUT my maximum exposure any one business is now 0.6% I have never made a withdrawal My partner started in 2012, so the min part was £20, current maximum exposure any one business is 2.2%, bought a loan part manually before the removal of manual bidding.
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pickles
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Post by pickles on Feb 6, 2019 19:24:41 GMT
The amount lent has steadily increased as I added more funds. I don't think I have ever lent less than 0.5% of my total at the time the loan was formed. Every new loan part is always 0.5% never any less. BUT my maximum exposure any one business is now 0.6% I have never made a withdrawal. Recent defaults?
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corto
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Post by corto on Feb 6, 2019 22:03:52 GMT
The amount lent has steadily increased as I added more funds. I don't think I have ever lent less than 0.5% of my total at the time the loan was formed. Every new loan part is always 0.5% never any less. BUT my maximum exposure any one business is now 0.6% I have never made a withdrawal. Got a loan just today that was at ca .15%. There were more in the last few months. All probably from the SM. Only new ones seem to be .5%
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Post by Ace on Feb 6, 2019 22:55:46 GMT
Only one of my last twenty loans picked up from the PM was over 0.4% of balance.
60% of them were under 0.25% of balance.
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Post by hammertime on Feb 7, 2019 12:54:24 GMT
Also F/C was built on diversification. The more you had the less chance of getting wiped out supposedly.But when you get low interest loans defaulting after one month. There must be something wrong with there system. Glad i got out.
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