|
|
Post by rooster on Jun 28, 2019 23:02:26 GMT
Does your financial adviser have any other thoughts or predictions on the situation? I think you will find an IFA will advise investments where they get an ongoing fee and P2P is not even discussed even to give you the facts for you to decide as they can never get a fee and admittedly it is higher risk. Of course you have a point though I must stress, I've had the same IFA for 25 years and have plenty invested with him. I think he was showing genuine concern. Regardless, his point was really to bemoan the FCA and their lack of accountability. Naively it seems, I told him that I understood the FCA would have checked Lendy's terms/conditions/processes as part of the FCA authorisation. To this, he outright said 'no, not at all would they have done that'.
|
|
voss
Member of DD Central
Posts: 153 
Likes: 84
|
Post by voss on Jun 29, 2019 7:22:37 GMT
Does your financial adviser have any other thoughts or predictions on the situation? No, he agreed with me that as my loans are directly with the borrowers, there's a chance of reasonable recovery. He did remind me (I knew this) that 12% pa is achievable with a 5+ year traditional investment. I explained that I wanted to try something different/new/fresh! The rest as they say, is history. Please tell us how.
|
|
djay
Member of DD Central
Posts: 121
Likes: 87
|
Post by djay on Jun 29, 2019 7:22:56 GMT
|
|
djay
Member of DD Central
Posts: 121
Likes: 87
|
Post by djay on Jun 29, 2019 7:31:03 GMT
|
|
djay
Member of DD Central
Posts: 121
Likes: 87
|
Post by djay on Jun 29, 2019 7:53:16 GMT
I think you will find an IFA will advise investments where they get an ongoing fee and P2P is not even discussed even to give you the facts for you to decide as they can never get a fee and admittedly it is higher risk. Of course you have a point though I must stress, I've had the same IFA for 25 years and have plenty invested with him. I think he was showing genuine concern. Regardless, his point was really to bemoan the FCA and their lack of accountability. Naively it seems, I told him that I understood the FCA would have checked Lendy's terms/conditions/processes as part of the FCA authorisation. To this, he outright said 'no, not at all would they have done that'. Well Liam seemed to think there was a detailed review of policies and processes by the FCA 😉https://www.finextra.com/pressarticle/74651/p2p-property-platform-lendy-wins-fca-authorisation
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Jun 29, 2019 7:56:02 GMT
So who got the 40% "introductory fee". We Still Don't know.
|
|
|
|
Post by rooster on Jun 29, 2019 8:39:31 GMT
No, he agreed with me that as my loans are directly with the borrowers, there's a chance of reasonable recovery. He did remind me (I knew this) that 12% pa is achievable with a 5+ year traditional investment. I explained that I wanted to try something different/new/fresh! The rest as they say, is history. Please tell us how. 1) He didn't say but 'reasonable recovery' I would guess because Lendy are just a collection team, our loans are and will be with the borrower, the administration can't change that 2) Oh just the normal way: investment funds, trusts etc.. (e.g. Foreign and Colonial, Invesco etc...)
|
|
|
|
Post by rooster on Jun 29, 2019 8:59:53 GMT
Of course you have a point though I must stress, I've had the same IFA for 25 years and have plenty invested with him. I think he was showing genuine concern. Regardless, his point was really to bemoan the FCA and their lack of accountability. Naively it seems, I told him that I understood the FCA would have checked Lendy's terms/conditions/processes as part of the FCA authorisation. To this, he outright said 'no, not at all would they have done that'. Well Liam seemed to think there was a detailed review of policies and processes by the FCA 😉https://www.finextra.com/pressarticle/74651/p2p-property-platform-lendy-wins-fca-authorisation Indeed. Well to my own loss, I tell you now that I did believe statements like the one you've quoted and these were cornerstones (of which Lendy had many on it's website outlining its strengths in terms of securities) of my confidence/decision to invest. If a platform CEO managing £150m goes on record to say FCA have participated in a 'detailed review of our [lendy's] processes and policies' and this isn't countered immediately by the FCA, I'm gonna trust it's true. In the same way that I trust my bank is covered by the FSCS, because they've put it writing. Perhaps I shouldn't... perhaps I should remove my savings and buy a large diamond to wear on my finger, just in case my high street bank has lied also.
|
|
sydb
Member of DD Central
Posts: 345
Likes: 316
|
Post by sydb on Jun 29, 2019 10:20:58 GMT
He did remind me (I knew this) that 12% pa is achievable with a 5+ year traditional investment. Achievable, yes, but not typical. And what does 'traditional' mean? Is it some new way of assessing risk? Trading tulips was traditional at one time.
|
|
|
|
Post by samford71 on Jun 29, 2019 10:57:10 GMT
He did remind me (I knew this) that 12% pa is achievable with a 5+ year traditional investment. Achievable, yes, but not typical. And what does 'traditional' mean? Is it some new way of assessing risk? Trading tulips was traditional at one time. What is the common element to Lendy, LCF, and Woodford? All three were offering yields substantially above the prevailing rates for their asset classes. Sorry, but many (but not all) UK retail investors are simply too greedy for yield and income. That greed causes them to invest in assets which are too risky and they pay the price through poor returns, poor liquidity, mis-selling, fraud etc. They are easy pickings for shysters. Which returns more? A 1-year development loan at 12% or a 1-year residential property loan at 6%? Well, if the development loan has a default rate of 20% and recovery rate of 50%, it returns on average 1.8%. The consumer loan meanwhile, say with a default rate of 5% and recovery of 90%, returns on average 5.5%. Yield isn't a good metric on which to base investment decisions for fixed income credit products like P2P; it's about yield vs. default and recovery.
It's the same for more mainstream asset classes. Take UK gilts. For years now, I've heard retail tell me "government bonds are too low in yield to be worth holding". Yet if you'd bought the Vanguard Long-duration Gilt Index tracker in 2011 (I'm choosing that date since it was launched then) it now would have returned you about 108%, a 9.5% compounded or 13% arithmetic return. It never yielded more than 4% though and now yields less than 1.5%.
It's the same with equities. Rather than go for the growth stocks, UK retail is still obsessed by dividends and income through "high-yield" equity portfolios. So they buy rubbish like Woodford's fund, rather than a growth fund like Fundsmith or Lindsell Train.
|
|
Godanubis
Member of DD Central
Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
Posts: 2,011
Likes: 1,013
|
Post by Godanubis on Jun 29, 2019 20:41:47 GMT
Achievable, yes, but not typical. And what does 'traditional' mean? Is it some new way of assessing risk? Trading tulips was traditional at one time. What is the common element to Lendy, LCF, and Woodford? All three were offering yields substantially above the prevailing rates for their asset classes. Sorry, but many (but not all) UK retail investors are simply too greedy for yield and income. That greed causes them to invest in assets which are too risky and they pay the price through poor returns, poor liquidity, mis-selling, fraud etc. They are easy pickings for shysters. Which returns more? A 1-year development loan at 12% or a 1-year residential property loan at 6%? Well, if the development loan has a default rate of 20% and recovery rate of 50%, it returns on average 1.8%. The consumer loan meanwhile, say with a default rate of 5% and recovery of 90%, returns on average 5.5%. Yield isn't a good metric on which to base investment decisions for fixed income credit products like P2P; it's about yield vs. default and recovery.
It's the same for more mainstream asset classes. Take UK gilts. For years now, I've heard retail tell me "government bonds are too low in yield to be worth holding". Yet if you'd bought the Vanguard Long-duration Gilt Index tracker in 2011 (I'm choosing that date since it was launched then) it now would have returned you about 108%, a 9.5% compounded or 13% arithmetic return. It never yielded more than 4% though and now yields less than 1.5%.
It's the same with equities. Rather than go for the growth stocks, UK retail is still obsessed by dividends and income through "high-yield" equity portfolios. So they buy rubbish like Woodford's fund, rather than a growth fund like Fundsmith or Lindsell Train.
The attractive thing for some with Lendy was interest was guaranteed to be paid monthly for the term. Personally I prefer no tax and buoyant secondary market without buying or selling fees. P2P has a place in varied investment portfolio with diversification and different strategies dependant on the vector chosen.
|
|
|
|
Post by brightspark on Jun 30, 2019 8:47:19 GMT
Achievable, yes, but not typical. And what does 'traditional' mean? Is it some new way of assessing risk? Trading tulips was traditional at one time. What is the common element to Lendy, LCF, and Woodford? All three were offering yields substantially above the prevailing rates for their asset classes. Sorry, but many (but not all) UK retail investors are simply too greedy for yield and income. That greed causes them to invest in assets which are too risky and they pay the price through poor returns, poor liquidity, mis-selling, fraud etc. They are easy pickings for shysters. Which returns more? A 1-year development loan at 12% or a 1-year residential property loan at 6%? Well, if the development loan has a default rate of 20% and recovery rate of 50%, it returns on average 1.8%. The consumer loan meanwhile, say with a default rate of 5% and recovery of 90%, returns on average 5.5%. Yield isn't a good metric on which to base investment decisions for fixed income credit products like P2P; it's about yield vs. default and recovery.
It's the same for more mainstream asset classes. Take UK gilts. For years now, I've heard retail tell me "government bonds are too low in yield to be worth holding". Yet if you'd bought the Vanguard Long-duration Gilt Index tracker in 2011 (I'm choosing that date since it was launched then) it now would have returned you about 108%, a 9.5% compounded or 13% arithmetic return. It never yielded more than 4% though and now yields less than 1.5%.
It's the same with equities. Rather than go for the growth stocks, UK retail is still obsessed by dividends and income through "high-yield" equity portfolios. So they buy rubbish like Woodford's fund, rather than a growth fund like Fundsmith or Lindsell Train.
I would concur with your overall analysis. I would disagree about the phrase "too greedy for yield and income". P to P was launched to small investors and supported by the Treasury as a way to lend directly to borrowers without paying the high intermediary fees charged by the traditional banks and other such institutions. These avoided fees would make the lending into attractive investments. By their nature individuals investing via such platforms did not in many cases have the benefit of financial advice warning them that 12% investments should by their nature have attached red flags. Personally I would rephrase your criticism of many retail investors into being too naive in making decisions based purely on yield. FCA would presumably wish to label them unsophisticated and so prevent them from access to many lending opportunities so we are then back where we started. Perhaps what is needed is some legally binding and better system of rating investments. it would not be perfect but it would be difficult to devise a worse system than as present exists with no hope bare land and dilapidated wrecks hyped with the collusion of some platform operators as prime opportunities. Lastly it is about time the valuation industry did a bit of heart-searching.
|
|
littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
Likes: 1,862
|
Post by littleoldlady on Jun 30, 2019 12:26:34 GMT
Dividends should be new wealth, created by the company using shareholders funds. Trading is a zero sum game so any profit is at someone else's expense (even if only an opportunity cost).
|
|
|
|
Post by samford71 on Jun 30, 2019 14:42:37 GMT
Can we please stop with this idea that somehow banks have been screwing lenders over by offering low deposit rates but raking in high fees when they lend the money out. Banks do not charge intermediary fees in loan lending because they do not intermediate. They do not take depositors money and lend it out. There is no 'money multiplier' or 'fractional reserve banking'. These ideas exist only in economic textbooks. In the modern monetary system with a fiat currency, the primary constraint is the price of money, not the amount. Banks create "inside money" ab-initio by creating loans; there is no need for depositors, only a need for regulatory reserves. Please see this link from the Bank of England. If you still refuse to believe me, I can provide equivalents links from the Fed, RBA, ECB etc.
The bottomline is that banks don't need depositors to make loans. They make loans and that creates the deposit. When they take external deposits, it is for other reasons than loan creation. Note also that banks always have BoE OSF and OMO facilities to borrow at.
Only shadow banks (Northern Rock, Lehman, pre 2008 say) would take depositors money and lend it out.
|
|
|
|
Post by brightspark on Jun 30, 2019 15:06:07 GMT
I don't pretend that the money held on low deposit by my financial institution is exactly the same money that gets lent out at a higher rate to a borrower but money is money and oils the wheels of commerce. My money fits in somewhere. Required liquidity i suppose. Otherwise if the money is ring fenced why would institutions bother with depositors?
|
|
