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Post by martin44 on Jul 31, 2019 21:31:52 GMT
After a long period of diverse and occasionally risky, self investing.. p2p is going to be ( I pretty confidently estimate) my worst investment strategy of the lot... anyone of the same ilk?
Edit.... and that includes crypto's..
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r00lish67
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Post by r00lish67 on Aug 1, 2019 8:31:00 GMT
After a long period of diverse and occasionally risky, self investing.. p2p is going to be ( I pretty confidently estimate) my worst investment strategy of the lot... anyone of the same ilk? Edit.... and that includes crypto's.. Nope, it's been ok for me, probably a solid 8-9% return (although have never calculated). But: 1) In many cases my return has been dependent on inflicting worse returns on others e.g. I really didn't lose a penny on Lendy (because my last investment there was in Dec 2016). 2) Luck. On a risk-adjusted basis, it still mostly hasn't been the best idea. I could have had a lot more in Collateral if misfortune struck a month or two earlier. 3) If I'd actually done what I had learned would be more effective in 2015 and allocated 75% of my portfolio to equities instead, I'd have done significantly better. Still, it has taught me a lot about 'the real world' I suppose. I agree with your intrinsic point though that, in many cases, P2P (esp. self-select) has been a very poor investment. We can only wait and see whether the 'safe' P2P world proves to be so too.
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ashtondav
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Post by ashtondav on Aug 1, 2019 8:47:13 GMT
After a long period of diverse and occasionally risky, self investing.. p2p is going to be ( I pretty confidently estimate) my worst investment strategy of the lot... anyone of the same ilk? Edit.... and that includes crypto's.. You're either very unlucky, picked the two dodgy platforms, not diversified by platform and loan or sold out early leaving yourself with defaults.
I've been with p2p since 2005 and ZOPA starting and have achieved consistently good - if not spectacular - returns, beating the bond market and completely avoiding the 40% hit i took on my equities in the 2008 disaster.
Anyone whio has seriously lost more than equities in 2008 is doing something VERY wrong.
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IFISAcava
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Post by IFISAcava on Aug 1, 2019 8:57:31 GMT
After a long period of diverse and occasionally risky, self investing.. p2p is going to be ( I pretty confidently estimate) my worst investment strategy of the lot... anyone of the same ilk? Edit.... and that includes crypto's.. Nope, it's been ok for me, probably a solid 8-9% return (although have never calculated). But: 1) In many cases my return has been dependent on inflicting worse returns on others e.g. I really didn't lose a penny on Lendy (because my last investment there was in Dec 2016). 2) Luck. On a risk-adjusted basis, it still mostly hasn't been the best idea. I could have had a lot more in Collateral if misfortune struck a month or two earlier. 3) If I'd actually done what I had learned would be more effective in 2015 and allocated 75% of my portfolio to equities instead, I'd have done significantly better.Still, it has taught me a lot about 'the real world' I suppose. I agree with your intrinsic point though that, in many cases, P2P (esp. self-select) has been a very poor investment. We can only wait and see whether the 'safe' P2P world proves to be so too. If you cherry pick dates then yes equities will have strongly outperformed. Hindsight etc. Alternatively, if you look at e.g. the FTSE from 1999, it has gone sideways (OK, ups and downs, but not much progression overall). Over the long term (20+ years) my gradually accumulated S&S portfolio has an XIRR of 7% or so - which is what most people say is what you can expect. It could have been more if I was less weighted in home currency (UK) shares, but most advice when I started was that the currency risk made that a safer strategy. We don't know what a long term P2P portfolio will eventually yield - and capital losses is the big known risk - but medium term it's very similar for me (~7% net). My goal for the next 20 years is to use the base of a decent (and taken quite early) index linked pension income and solid tax-free P2P income and use spare cash/earnings to multiply my equity holdings on a worldwide basis for a comfortable retirement and legacy for the kids.
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r00lish67
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Post by r00lish67 on Aug 1, 2019 9:13:56 GMT
Nope, it's been ok for me, probably a solid 8-9% return (although have never calculated). But: 1) In many cases my return has been dependent on inflicting worse returns on others e.g. I really didn't lose a penny on Lendy (because my last investment there was in Dec 2016). 2) Luck. On a risk-adjusted basis, it still mostly hasn't been the best idea. I could have had a lot more in Collateral if misfortune struck a month or two earlier. 3) If I'd actually done what I had learned would be more effective in 2015 and allocated 75% of my portfolio to equities instead, I'd have done significantly better.Still, it has taught me a lot about 'the real world' I suppose. I agree with your intrinsic point though that, in many cases, P2P (esp. self-select) has been a very poor investment. We can only wait and see whether the 'safe' P2P world proves to be so too. If you cherry pick dates then yes equities will have strongly outperformed. Hindsight etc. Alternatively, if you look at e.g. the FTSE from 1999, it has gone sideways (OK, ups and downs, but not much progression overall). Over the long term (20+ years) my gradually accumulated S&S portfolio has an XIRR of 7% or so - which is what most people say is what you can expect. It could have been more if I was less weighted in home currency (UK) shares, but most advice when I started was that the currency risk made that a safer strategy. We don't know what a long term P2P portfolio will eventually yield - and capital losses is the big known risk - but medium term it's very similar for me (~7% net). My goal for the next 20 years is to use the base of a decent (and taken quite early) index linked pension income and solid tax-free P2P income and use spare cash/earnings to multiply my equity holdings on a worldwide basis for a comfortable retirement and legacy for the kids. Fair points. FWIW, I wasn't cherry picking as such to beat up on P2P, that was just when I had a 'lifestyle change' and had the decision to make at the time. You're right though, it may potentially balance out in the end. Also, just as you have to avoid the sharks in equities, you do on P2P too - although arguably P2P as a nascent industry has been that much more shark-infested! It'll be interesting to see where we are in 5-10 years time. My handy CAPE guide reckons that global equity returns in the next 10-15 years might net out at about 4.5% p.a so it's certainly conceivable that P2P could do better. I won't be switching my pension into P2P just yet though 
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Post by propman on Aug 1, 2019 9:59:33 GMT
RS show equity returns against their average and this shows that over 5 years they are comparable. Of course the devil is in the detail and overseas equities would probably have outperformed, especially in sterling altghough I don't think that they have done the usual trick of excluding dividend reinvestment, not sure what they assume for management fees etc.
I have been relatively conservative in P2P and never relied on flipping (greater fool theory anyone?) and have received an aceptable risk weighted return. I do think that outside of property (enough said elsewhere, but given my other exposures portfolio risk impact makes this sub-optimal for me), assuming platform risk is minimal for larger platforms, only a minority of capital would be lost short of armageddon.
- PM
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r00lish67
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Post by r00lish67 on Aug 1, 2019 10:14:26 GMT
RS show equity returns against their average and this shows that over 5 years they are comparable. Of course the devil is in the detail and overseas equities would probably have outperformed, especially in sterling altghough I don't think that they have done the usual trick of excluding dividend reinvestment, not sure what they assume for management fees etc.
I have been relatively conservative in P2P and never relied on flipping (greater fool theory anyone?) and have received an aceptable risk weighted return. I do think that outside of property (enough said elsewhere, but given my other exposures portfolio risk impact makes this sub-optimal for me), assuming platform risk is minimal for larger platforms, only a minority of capital would be lost short of armageddon.
- PM I know you know my views on this, but the assumption that platform risk is minimal for larger platforms is not one I share. With the economy in still remarkably good shape; - FC is seeing an exodus of funds and its share price has dropped 75% - RS have yet to turn a profit and would have been bankrupted by their wholesale lending without a large injection of cash. - LW's provision fund is down by nearly half from a few months ago (ok they're not that big). ...and this is before our beloved Government has had the chance to enact 'The Will of the People' as per its solemn promise at the end of October!
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ashtondav
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Post by ashtondav on Aug 1, 2019 10:32:50 GMT
Re FC. Do not confuse the actions of a few posters on this board with the actions of FC's borrowers and lenders. Growth has declined not because of lending volumes declining but because of borrowing declining. The business is still growing revenue at 20% this year. Getting lenders is not their problem - getting borrowers is.
Latest musings (you would probably label fibs) from FC in advance of 1/2 year results next week:
www.investegate.co.uk/funding-circle-hldgs--fch-/rns/h1-update---fy-outlook/201907020700091211E/As for p2p as an asset, I reckon it sits just below equities with substantially less volatility. Equities over the last century delivered about 6% to 7% a year. However US equities are very highly priced now and I would be surprised if they deliver more than 2% to 3% a year for the next 10 years. Similar to what they did when valuations were ripe in 2000. In that context p2p returns of 4.5% to 6.5% in conservative accounts looks very good.
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Post by propman on Aug 2, 2019 9:26:16 GMT
Re FC. Do not confuse the actions of a few posters on this board with the actions of FC's borrowers and lenders. Growth has declined not because of lending volumes declining but because of borrowing declining. The business is still growing revenue at 20% this year. Getting lenders is not their problem - getting borrowers is.
Latest musings (you would probably label fibs) from FC in advance of 1/2 year results next week:
www.investegate.co.uk/funding-circle-hldgs--fch-/rns/h1-update---fy-outlook/201907020700091211E/As for p2p as an asset, I reckon it sits just below equities with substantially less volatility. Equities over the last century delivered about 6% to 7% a year. However US equities are very highly priced now and I would be surprised if they deliver more than 2% to 3% a year for the next 10 years. Similar to what they did when valuations were ripe in 2000. In that context p2p returns of 4.5% to 6.5% in conservative accounts looks very good. Many thanks. I don't lend on FC so am not familiar with their structure. In particular the declining reduction in the proportion of loans they are originating concerns me. If they are having to pay others to originate and have reduced control over credit quality, how secure are the promised returns to investors?
But I digress, please would you explain the following comments from the announcement:
" Segment adjusted EBITDA breakeven with the UK improving
Adjusted EBITDA loss margin to be c.25%"
B/E EBITDA sounds promising for the platform, although it is conceivable that substantial costs may be being excluded due to capitalisation of all system and hardware costs. It would be nice to know the cash position.
Re the larger platforms, I think there is significant likelihood of the collapse of atleast one in the medium term leading to a reduction in the confidence of investors and necessary retrenchment and extended lack of access to capital markets for the sector. I agree that this is effectively crystallisation of Platform risk. What my comment above was referring to was substantial loss of lenders capital as a result of platform failure that I would define as an average of >10% loss of capital. This is on the grounds that in UK at least I think it less likely that they will be tempted into substantially worse credit decisions merely to maintain volumes due to probable personal impact of likely regulatory sanctions on Directors and generally better more objective governance. The volume of their wind down portfolios should thus be attractive enough that I expect that an orderly run down at reasonable cost is likely (75% likelihood at a wild guess). Also I think regulatory interference to undercut the business model is unlikely (mini version of "too big to fail")
In contrast I am very worried that their is sufficient incentive to run smaller P2P companies for the short term leading to a weakening of credit to maintain the platform income. The combination of poor recoverability and lack of volume may then cause a breakdown of the arrangements for running the loans down. THis would lead to management by liquidators at excessive cost that is passed on to the lenders to compound their losses.
This said, I avoided the Col / Lendy so have less experience of forced winddown than others.
- PM
JMHO
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benaj
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Post by benaj on Aug 2, 2019 9:57:35 GMT
It's definitely one of the most time consuming investment strategy. Accounting for losses, recoveries or even complaints are time consuming.
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zlb
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Post by zlb on Aug 3, 2019 10:55:54 GMT
If I compare putting all of my cash into 1.5% accounts vs some cash in 1.5% and a good chunk in higher risk and/or longer term like P2P and equities, the difference in income between the two is very little given the risk involved. And that difference is quite easily lost in P2P platform collapse. Therefore I'd question the <10% investment in P2P guidelines for increasing income for most non-hnw people.
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ceejay
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Post by ceejay on Aug 3, 2019 13:13:09 GMT
... Therefore I'd question the <10% investment in P2P guidelines for increasing income for most non-hnw people. Out of interest, in which direction do you disagree? Do you think that non-hnw people shouldn't invest in P2P at all, or that they should allow themselves >10%? I've definitely not lost money on P2P (yet!), a COL hit notwithstanding, and I've quite enjoyed playing with my investments. Whether the additional return is worth the time and risk is highly debatable, and I'm currently minded to downsize both P2P and S&S as a response to the potential general economic risks to which we are being exposed.
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m2btj
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Post by m2btj on Aug 3, 2019 13:38:57 GMT
Any investment is likely to tank right now..... & for the foreseeable future. I've generally stuck to low risk, low return platforms & have outperformed any bank investment paying 1.5%'ish. This was always my goal. My returns have been around 5% even after taking a small hit on Coll.
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cwah
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Post by cwah on Aug 3, 2019 15:05:45 GMT
My worse return is Crypto then stock then P2P. But it will depend on how stock will recover as well as my bad loans.....
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zlb
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Post by zlb on Aug 4, 2019 10:15:59 GMT
... Therefore I'd question the <10% investment in P2P guidelines for increasing income for most non-hnw people. Out of interest, in which direction do you disagree? Do you think that non-hnw people shouldn't invest in P2P at all, or that they should allow themselves >10%? I've definitely not lost money on P2P (yet!), a COL hit notwithstanding, and I've quite enjoyed playing with my investments. Whether the additional return is worth the time and risk is highly debatable, and I'm currently minded to downsize both P2P and S&S as a response to the potential general economic risks to which we are being exposed. I'm not really saying a 'should', just realising what the situation is, particularly for the lower interest set and forget offers. There's some fun in self select, but not necessarily wealth. Personally, I'd like to see more investment options for non-hnw in the UK, better advice, so that it's not only those who can afford an IFA who can make money with money. Perhaps it's only low-investment options like robos which can offer this currently, until the problems with security validation and the erroneous FCA 'light touch' have been sorted.
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