sarahcount
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Post by sarahcount on May 20, 2019 20:30:29 GMT
My, that was all very enjoyable!
I'm somehow taking a middle position. Careful selection and management of P2P loans can produce good returns. Hold them in an ISA and they are free of income tax. For someone with relatively modest savings the 12k annual CGT allowance and 2k dividends allowance can mean that is fine to hold S&S outside of an ISA.
But yes P2P does come with all the risks mentioned of borrower fraud, platform failure, receivers fees, poor valuations etc.
So take great care with P2P would be my message. It can produce an income flow to match the returns of S&S but can be knocked sideways quite easily by unforeseen events.
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Godanubis
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Post by Godanubis on May 20, 2019 21:25:07 GMT
Thank you for spelling out what someone with "a few hundred thousand pounds" in investments should have already known a long time ago !
The items you list are indeed just some of the items I had in mind when challenging Godanubis . I chose to keep pushing becasue I was hoping that a lightbulb would click and I would, at the very least, see a mention of the words "total return".
But instead all I saw was snowflake and other terminology thrown in my direction. At which point it became clear it was a lost cause.
P.S. Regarding "misvaluation, unknown legal issues, fraud, receiver fees and platform risk in P2P" ... yup, I've seen all five of those, and all on one platform !
Just Prove your mutterings Simples I have all my figures . You have not given a reliable source, Your name says it all. You are not in favour of P2P because you don't understand it's multifaceted good points.
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Godanubis
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Post by Godanubis on May 20, 2019 21:34:27 GMT
The average annual total return of both the FTSE all share and the S&P 500 over the last 30 years is in excess of 10%. That is a fact and easy to verify from numerous sources. You do not have to be a sophisticated investor to invest in these indices and receive these returns, there are numerous ETF's and tracker products that will do the job. Of course, there are risks, some years will be down, the return is an average. To claim that the average return for investors is only 3.6% is selective and completely misleading. The source in question (Credit Donkey) is a US based and is incentivised to get people to invest in its partners products (read the disclaimer at the top "This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links.") and is therefore incentivised to downplay returns that aren't through its advertised products. I can't imagine anyone on this board invests in or even has access to invest in US mutual funds (which it claims average a return of 3.6%). Even then mutual funds invest in products other than stocks and shares (bonds, other assets etc), its really a bad comparison. Even the CreditDonley website itself says the S&P 500 historically returns 10%. Invest in that, not some obscure, niche US mutual fund with high fees that returns. P2P on average does not return anywhere near 10%. To say its impossible to lose 100% in a first charge loan or bling is also incorrect and absolutely misleading. There is always the risk of misvaluation, unknown legal issues, fraud, receiver fees and platform risk. Ask the many investors in 1st charge loans in Collateral how they are feeling with that one. The strategy being pedalled is to get in a loan and then sell before maturity so there is no risk. Two problems with that - 1) there is a risk as you can't guarantee you can sell (look at the amount of people stuck in Lendy or FS loans once the market dried up). 2) It's impossible for everyone to follow this strategy...someone has to be left holding the baby at the end, it's like a game of musical chairs (or a ponzi scheme). One thing I can say for certain. The risk of a 100% loss investing in an ETF or tracker on the FTSE all share or S&P 500 while not zero is pretty damn close to it. In my view if either of these indices hit zero we would be looking at the end of civilisation as we know it, the likes of Lendy, FS, MT would have gone 'puff' long before and the status of our investments would be the least of our worries. Please supply 100% loss figures on first charge property ? That was not a fraud. Again my point was based on small investors where it cost 20% to buy and sell via their banks into shares . where they only have £100 to invest at a time. Currently you can sell easily on FS I have bought 50 plus in last 2 days and resold more than half. If you care to put up anythig other than E&c at -1% it will sell sale. Again I refer to the smaller investor in FS anyone that met my previous mentiond criteria I will be happy to buy.
Comments were based on FS where current and historical returns >10% with 0.68% capital loss. The American link was for Wallstreet re his name if you note other links were London Stock exchange and ONS. Smaller investors don't want negative years and don't have the buffer to ride things out.
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bg
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Post by bg on May 21, 2019 2:12:35 GMT
Please supply 100% loss figures on first charge property ? That was not a fraud. Again my point was based on small investors where it cost 20% to buy and sell via their banks into shares . where they only have £100 to invest at a time. Currently you can sell easily on FS I have bought 50 plus in last 2 days and resold more than half. If you care to put up anythig other than E&c at -1% it will sell sale. Again I refer to the smaller investor in FS anyone that met my previous mentiond criteria I will be happy to buy.
Comments were based on FS where current and historical returns >10% with 0.68% capital loss. The American link was for Wallstreet re his name if you note other links were London Stock exchange and ONS. Smaller investors don't want negative years and don't have the buffer to ride things out.
Fraud is a real risk, platform failure is a real risk. It's like saying all loans that aren't a loss 100% aren't a loss. It's completely meaningless. Historical FS returns aren't 10%. Over 80% of the active loan book is late and unsellable. If you think there will be 100% capital and interest returns on the existing (which is needed to make your 10% returns quoted) then I really fear for you. I'm happy to look at any links that show 30y average FTSE total returns are 3%. The links you have posted say nothing of the sort. Saying anything put up for sale at 1% on FS will sell is misleading...anyone reading this who thinks it may be true be warned. I have £100k worth of (the better) loans that I had up for sale from day 1 that are now late and unsellable - they simply did not sell at 1% - not that I'm complaining as it was from a much larger portfolio that made more than that in returns but be warned what is stated is absolutely incorrect.
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Godanubis
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Post by Godanubis on May 21, 2019 8:21:41 GMT
There are only about 30 loans at -negative premium. Barring the very few that have large amounts the total is small
As I said any smaller investor offering £25-50 at -1% will sell. I would pick it up on my daily trawls.
There have been no unresolved failures in UK. Collateral was a FCA administrative shutdown. Restricting investments in each loan there have only been about 5 that were on sale at -1% as the were cash back purchases so were never going to sell and should not have been bought for that purpose.
Late is normal the Nuneaton property defaulted it still just paid back full capital and interest. I have only 1 loan that is still not completed that is over what is reasonable for property projects two years.
18% is overdue not 80% 7.1% defaulted.
Fraud is no greater a risk than any other business and that will be in single loans unless you are overexposed losses should only reduce your overall returns by very little.
Everyone should weight up their own attitude to risk and invest or not . Nobody forces anyone into any investment and as shown at every turn past returns are no indication of future returns. If you want safe returns they buy and rent in Scotland where numerous properties are for sale £5000 -£40000 range giving 15-25% returns. or stick to 1-2% in mainstream banks etc.
I do the work required and accept loss in individual loans as part of that. Similarly in P2P if you diversify over numerous platforms any one or two underperforming should only reduce your profit not eliminate it.
Just buying today only 3 loans offering greater than -0.6% So selling would be easy for anyone wishing to get out and buy new loans.
Make it -1% they will go in minutes unless the were offered originally with cash back you can reduce the risks if you are willing to accept the reduced returns.
The SM is a dynamic place and no one strategy will suffice you have to have a plan for the differing conditions.
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bg
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Post by bg on May 21, 2019 13:08:37 GMT
There are only about 30 loans at -negative premium. Barring the very few that have large amounts the total is small Yes, that's because the vast majority of loans are late and unsellable. That is simply not true. How about the military items, the Firs Bristol, property loan Manchester, Duke Street St Helens, Student Flats Sheffield, Anglesey Lodge Gosport, Property Loan Birmingham - these were all loans that were for sale at a 1% discount which didn't sell and are now suspended from the SM. I can list dozens more. I agree late is normal and as I have said many times before (and been slammed for it by people with unreasonable expectations) I expect the majority of loans of this nature to run late - but that is not what you are saying. You are saying any non cashback loan discounted at 1% will sell. That is untrue. No, that is also incorrect. There are 419 active (undefaulted) loans with a value of £67.4m. Of those, 297 are late and unsellable (£54.4m), of the remainder, 16 are not late but sub 30 days so unsellable (£1.1m) and there are 106 sellable, active loans with a value of £11.9m. So 82.3% of active loans by value are suspended. Most of the now suspended loans were for sale at a 1% discount in their final days and did not sell. No, that is also incorrect. Risk of fraud is significantly higher for a private company than it is for a heavily regulated and highly scrutinised PLC. In particular for a private company making high risk loans to individuals in a relatively new, under regulated sector such as P2P the risks are higher again still. Yes I agree. The issue here is, you are trying to induce inexperienced people to invest 'risk free' by saying its easy to sell out of every loan simply by selling at a discount. That is a claim that needs challenging.
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Godanubis
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Post by Godanubis on May 21, 2019 16:52:34 GMT
There are only about 30 loans at -negative premium. Barring the very few that have large amounts the total is small Yes, that's because the vast majority of loans are late and unsellable. That is simply not true. How about the military items, the Firs Bristol, property loan Manchester, Duke Street St Helens, Student Flats Sheffield, Anglesey Lodge Gosport, Property Loan Birmingham - these were all loans that were for sale at a 1% discount which didn't sell and are now suspended from the SM. I can list dozens more. I agree late is normal and as I have said many times before (and been slammed for it by people with unreasonable expectations) I expect the majority of loans of this nature to run late - but that is not what you are saying. You are saying any non cashback loan discounted at 1% will sell. That is untrue. No, that is also incorrect. There are 419 active (undefaulted) loans with a value of £67.4m. Of those, 297 are late and unsellable (£54.4m), of the remainder, 16 are not late but sub 30 days so unsellable (£1.1m) and there are 106 sellable, active loans with a value of £11.9m. So 82.3% of active loans by value are suspended. Most of the now suspended loans were for sale at a 1% discount in their final days and did not sell. No, that is also incorrect. Risk of fraud is significantly higher for a private company than it is for a heavily regulated and highly scrutinised PLC. In particular for a private company making high risk loans to individuals in a relatively new, under regulated sector such as P2P the risks are higher again still. Yes I agree. The issue here is, you are trying to induce inexperienced people to invest 'risk free' by saying its easy to sell out of every loan simply by selling at a discount. That is a claim that needs challenging. I'm not inducing anybody to do anything I always advocat due dilligence . The fact people are looking at this forum means they have the sense to check out oposing opinions and ask our esteemed members their opinions.
Apart from those that shut out debate and have an insular view there can be found here constructive debate where members can either come to a consensus or agree to disagree.
I'm happy to buy those loans that people need to sell if they are just having small amounts in any particular loans, I bought into about half the available loans today as I do most days and manage to sell even at reduced discount.
With loans > 300 days selling at discount there is always scope . Military Items paid back 2 days in a row so SM selling parts was quite vibrant today. Student flats paid back a couple of days ago I had some in each and bought at -1% on day 31 11:45 pm. I do hold onto a (relative) little sold at higher discount.
My comments are regarding fraud were FS specofic asset based loans not other P2P. Again I said at this particulsr time it is easy to sell and FS specific. That is why it take a lot of reviewing to guage the overall trends which depend greatly on when loans payback.
Lack of sales directly match lack of payback and the last six months had few large paybacks.
The past 6 months had many loans that were auto renewed by people who then wanted out and if you never buy a loan before activation you can guage the market re any particular loan. Ladybank in particular was selling from day 1 at high discount on previous loans now way down.
Statistics were those released by FS link
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iRobot
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Post by iRobot on May 21, 2019 19:49:58 GMT
18% is overdue not 80% 7.1% defaulted. No, that is also incorrect. There are 419 active (undefaulted) loans with a value of £67.4m. Of those, 297 are late and unsellable (£54.4m), of the remainder, 16 are not late but sub 30 days so unsellable (£1.1m) and there are 106 sellable, active loans with a value of £11.9m. So 82.3% of active loans by value are suspended. Most of the now suspended loans were for sale at a 1% discount in their final days and did not sell. Agree completely with the post except the quoted portion. I think if the intention is to paint a picture for Jo(e) Bloggs, then it is the number of loans that matter and not the accumulated value. This is because your average Jo(e) Bloggs is more likely to have a fixed max £ per loan than they are a fix max % based on the loan's value. So, yes there are 418 (one less than your count and maybe even fewer now, due to repayments) but I make 334 are late / unsellable (I count 32 loans at under 30 days, not sure about your 16 figure?) which gives a % of 80% unsellable by volume. So, after all that, we're still in the same ball park!  However, for the likes of me that don't like to 'double dip' on loans, out of the 84 that are 'sellable' and therefore 'buyable', a third (27) are tranches or supplemental (and, even better tranches of supplemental) loans, which makes for thin pickings if trying to stick to a max of 1% (of you platform pot) in anyone loan. Only 14% of the 'Active' market is 'buyable' to a lender conscious of diversification. Exclude the tiniest loans (eg 1727531499 £200) where's there's likely to be limited, if any, availability and also loans to the same borrower (easier said than done, although I get the impression FS are improving in this area since 'Art-gate' kicked off), and then add in the dwindling levels of loan origination (again by volume, not necessarily value) and the pool of SM opportunity is evaporating rapidly. Along with, I suspect, any strategies to trade it (in terms of making reasonable £ returns for the effort involved).
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bg
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Post by bg on May 22, 2019 13:26:09 GMT
saying its easy to sell out of every loan simply by selling at a discount.
bg Perhaps somwhat ironically for some here, the above could, however, be applied to the stockmarket. Since outside of obscure smallcaps, the larger equities pretty much always have more than sufficient liquidity (especially for the amounts your average Joe would be looking to sell).
(For the record, of course I am not suggesting the inexperienced should be hoodwinked into the stockmarket ! However bg was talking about liquidity and so on that specific point Stockmarket vs P2P liquidity is a non-brainer, Stockmarket hands down every day of the week). Yes, agree. No matter what is going on in the stock market I always have liquidity in all my holdings. The benefits of a liquid market who's prices are not held in an artificial band and can move to where the market prices them. I have decided to withdraw myself from the 'debate' I was involved in however. There's little point in having a discussion with someone who subtly moves the topic every time a point is made. For example, the claim that any loan will sell before maturity if discounted at 1% - I point out numerous loans that didn't and the counter is that some of these loans are now repaying. I do not dispute that (in fact I expect that) but the claim was that everything will sell at a 1% discount before maturity, these loans didn't (and there are lots more). Another:- discussing the risks of P2P v equities (which I believe is why you and I joined this thread), the claim is made that the risk of fraud is the same for any business. When I challenge this I am told he was only ever talking about FS. That was not the discussion. Another:- I say over 80% of the active loan book is unsellable (ie late, suspended or less than 30 days to run) and he says no its not, its 18% and provides a link to the FS statistics page which doesn't show a percentage for that statistic (the 18% is value of CURRENT loans that are late as a % of ALL loans from inception of FS. That is something else entirely).
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Post by robberbaron on May 27, 2019 10:13:01 GMT
The average annual total return of both the FTSE all share and the S&P 500 over the last 30 years is in excess of 10%. Not necessarily disagreeing with your main point but the average annual total return is a worthless statistic. What matters is the annually compounded total return.
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macq
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Post by macq on May 27, 2019 11:10:09 GMT
While most fund/IT etc annualised returns on the likes of Morningstar or Youinvest do included dividends reinvested its also always worth looking at the standard deviation as well when comparing funds to see what could be a more bumpy ride
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