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Post by mrclondon on Nov 2, 2019 0:52:34 GMT
I very rarely post polls, but after the last couple of weeks with the collapse of Funding Secure, and some disturbing deductions from a recovery at Lendy, not to mention ThinCat lenders (and no doubt lenders on many other platforms) getting the usual regular dose of grim news, it might be interesting to see how optimistic / pessimistic we are of getting our p2p investments back. So, thinking about all the capital you have invested in p2p loans, across all the platforms, if you stopped investing now in any more loans, how much of your capital would you expect to get back over the next 5 years as loans mature and redeem, or are recovered by adminstrators/receivers. I've not included a 'don't know' option deliberately, as I'm more interested in gut feel / perceptions, rather than an analytical / considered answer.
Please ignore any interest you've received in the past and any loans that have been formally written off by platforms, just consider how you expect your current investments in p2p loans be they active or defaulted to perform from today onwards.
Finally, a plea to any platform reps that find this thread, please resist the temptation to vote, it really doesn't help anyone if you attempt to influence the polls on this forum. It's more important that everyone involved with p2p has the opportunity to reflect on lender's own sentiments.
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littleoldlady
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Post by littleoldlady on Nov 2, 2019 7:48:35 GMT
I expect to get back around 95% so your bands do not really suit me. I opted for the more pessimistic 75-94% band but I hope to be right a the top of that or even higher.
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Greenwood2
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Post by Greenwood2 on Nov 2, 2019 8:41:25 GMT
Why ignore previous interest paid and defaults? My previous interest will probably easily cover past and future defaults, but I have reduced exposure and current interest rates are lower, so my future interest may well not cover pending defaults from old investments. Not a straightforward question.
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Post by Ace on Nov 2, 2019 8:47:02 GMT
I originally selected 75 to 94 as I mistakenly thought you meant excluding future interest (skim read too quickly) rather than just excluding past interest.
Surely, anyone not expecting more than 100% including future interest should immediately withdraw, otherwise you are volunteering to give money away.
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Greenwood2
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Post by Greenwood2 on Nov 2, 2019 8:51:34 GMT
I originally selected 75 to 94 as I mistakenly thought you meant excluding future interest (skim read too quickly) rather than just excluding past interest. Surely, anyone not expecting more than 100% including future interest should immediately withdraw, otherwise your volunteering to give money away. You are going to continue to get losses from old loans that you can't get out of.
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Post by mrclondon on Nov 2, 2019 11:53:29 GMT
Why ignore previous interest paid and defaults? Because I'm trying to assess how sensible it is for me to continue to invest in new p2p loans, and rightly or wrongly I don't think considering the interest I've received over the last 13 years (and minimal write offs) should influence my decision on future investments based on my current perception of the risks. The purpose of the poll is primarily to see if I'm being unduly pessimistic, and early results suggest not (I've ticked the 75-94% band) A worked example will illustrate my thinking. Lets assume a £100,000 loan portfolio I have c. 50% of my loanbook in loans in default / over 90 days late / on platforms in admin. I expect no further interest will be paid on these, and I expect to recover 70% of the capital. Recovery £50k * 0.7 = £35kBased on loan terms, and mix of retained interest vs invoiced monthly I expect to receive c. 10% interest from my active loans Interest = £5kand I expect half of those loans will repay in full Capital Repaid = £25kwith 70% recovery on the rest, Recovery = £25k * 0.7 = £17.5kso total receipts £35k + £5k + £25k + £17.5k = £82.5k i.e. 82.5%
Surely, anyone not expecting more than 100% including future interest should immediately withdraw, otherwise you are volunteering to give money away. You've hit the nail on the head, at the very least new investment seems crazy in such circumstances. As I posted yesterday ( here) any previous analysis I've done has assumed because I restrict myself to the "safer" loans my recoveries should be close to 100% ... but that didn't factor in the massive costs associated with the administration of platforms themselves. Unfortunately I regard the 70% in the worked example above as best case .... I fear the reality is going to be much worse.
I think the main conclusion I'm drawing at present, is that new investments on platforms that may go into administration is just stupid. But can we really predict the handful of platforms that will survive long term ?
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aju
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Post by aju on Nov 2, 2019 12:27:37 GMT
I went for 100% as to be honest I'm working with Zopa and RS so banking on the security of the big boys not folding unlike some of the more experienced and adventurous among us who are working outside the main ones.
As many here may have read in some of my posts I favour the approach of a better rate than banks (marcus at present) as a minimum better than inflation and a little bit on top. So far since 2006 on Zopa we have comfortably been at the 4-5% mark for a number of years (I already get the best I can from the banks it was 5% but N/W closed their 1Y rules more tightly ages ago .
Recently things have been a bit chaotic with rebalancing Zopa in the last year and removing some funds from Z over to RS and some banked for more safety and day to day use.
This had left us in a curious situation with Zopa in that the sales left us with still positive returns but increasing defaults has eaten away a little over the last few months. RS on the other hand, with a bit of work has left us with better returns in the region of +5% and not really dwindling (although the recent changes in RS have been more challenging to a rate chaser like me - the 1Y has proven lucrative so far)
All that said I'm becoming less and less confident that we might take a hit over the next 6-18 months on Zopa and my instinct is becoming more like I may need to bail on Zopa and either consolidate into marcus - although Mrs Aju has little headroom for fscs protection and I pay tax sadly I'm still wondering if we should move to RS. I will monitor closely over the next few months and review our data and experience at the end of the tax year.
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travolta
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Post by travolta on Nov 2, 2019 17:33:36 GMT
Abandon hope all ye who enter here....
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Post by wiseclerk on Nov 2, 2019 20:53:39 GMT
I've been investing on p2p lending platforms for 12 years now (since 2007). I lost a little on some german platforms and percentage wise more (but in absolute figures a small amount) on MYC4 (which was not p2p, but more microfinance). Other than that all my plattforms had positive returns so far. I exited Lendy in time and was not invested on FS or Collateral. Maybe some luck involved but for me it has been very profitable. I usually aim for ROIs of >=8% (pretax) and while I certainly missed that on some platforms (e.g. Bondmason), on the other end were returns >20% in the early years on other platforms. So compared to low interest environment (especially in the later years) I am very satisfied with results. P2P is not my largest asset class. Bulk of investment is in ETFs.
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Post by Badly Drawn Stickman on Nov 2, 2019 22:43:40 GMT
This has been rumbling in my sub-conscience for the last day, its actually a difficult question. As pointed out by others, if i felt I would lose money from this point on clearly continuing would be a little foolish.
All of my likely losses will be Lendy and Collateral based currently they don't look promising, but I suspect there may be other factors that come into play with these so really at this time hope for a good recovery. When all the dice have been rolled i will know the damage. Where I have trouble answering the question is that I had always worked on the basis that over time I would have 'got back' to parity, and moved into positive territory eventually. Whereas simply stopping would lock losses in permanently.
Obviously it is not quite that simple, and P2P may not be the best place to refill the piggy bank. Maybe its just in my case adopting a mindset where I view it more as a setback than a painful loss. I am lucky that I have enough income streams for my everyday needs so the impact is not greatly life changing. i have sympathy for anybody that was more dependent on income from P2P, but even without hindsight it was never really a smart place for people to invest that sort of money.
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littleoldlady
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Post by littleoldlady on Nov 3, 2019 17:09:47 GMT
... But can we really predict the handful of platforms that will survive long term ? I think it is possible to identify those that have a high probability of failing. The signs were clearly there to see on L, FS and C and I stopped investing new money long before they collapsed although I still have some long held loans which the platforms have not written off but which I would sell for 10%. I also predict one platform which will not go into administration - that's OC who are a tiny part of a giant financial group which I think would not want the adverse publicity that would go with it.
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bramhall17
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Post by bramhall17 on Nov 3, 2019 17:33:45 GMT
I was horrified when I saw the scale of some of the potential individual losses resulting from the collapse of Lendy. I would never have imagined having that sort of exposure to P2P and certainly not at the high risk end that was exposed to significant project and refinancing risk. There are some cases of serious personal financial distress emerging.
For me --At peak I had about 10--12% of my non-property wealth in P2P spread across six platforms and 3 sectors ( retail/B2B/property development) . When I saw the defaults growing in FC coupled to my disillusionment over the handling of the 'Short Trem for Ever Loan' and suspicious about the IPO, I started to actively reduce my holdings and trimmed all the others. In the last 15 months after becoming troubled by the Lendy loan quality and Zopa returns, I decided to substantially reduce my holdings with the goal of getting the residual holdings below what I had earned in interest. This has now been solidly achieved with FC and I'm not far away with RS,Zopa and LW. If it wasn't for the unforgivable RCC debacle I'd be there with MT. If it collapsed tomorrow I'd only need a 28% net recovery to b/e and that reduces with any loans that payback. That leaves Lendy, where unless there is some FCA compensation I'm still going to be a few thousand quid down with more limited capacity to offset losses against P2P interest with HMRC because of my defensive moves. I am confident now that if we include interest I will be fully above b/e with just a bit more trimming. Ironically the overall profit from my long term involvement with FC and the steady stream of default payments should cover any other net losses.
To me not including interest or tax relief goes against my basic rationale but unless there is a quick wholesale collapse of FC,RS,Zopa and LW (which I do not deem a realistic scenario) then on the basis requested I would be in the 75--94% category because of my now low exposure to property and B2B. HTH
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Post by mrclondon on Nov 3, 2019 20:01:09 GMT
Thanks for the votes and comments everyone, I know this question is not an easy one to rationalise. And a particular thanks to Deees and littleoldlady for attempting to provide some insight into predicting platform longevity. I think too many of us have been complacent regarding platform risk, especially underlying systemic factors affecting all similiar platforms.
The outcome of this poll probably reflects the fact that a majority of forum members will have investments in one or more of the platforms in administration, and are at present fearful of the eventual outcome given current indications.
Its been clear for a long time that active forum members have been happy (or even enthusiastic in years past) to fund 10%-13% loans on the various platforms that offered them. The loanbooks at COL / L / FS at the time of collapse I think (from memory) were c. £17m / c. £150m / c. £80m respectively ... big numbers ( approaching 1/4 billion pounds in total). None of the three platforms had the institutional funding lines seen on the likes of FC/AC/TC so the vast majority of that debt it has to be assumed has been funded by individuals (incl via family trusts / small companies etc).
I don't think its unreasonable to extrapolate the Lendy administrators estimate of c. 50% recovery on average (allowing a few % for admin costs off the mid 50's% figure they stated) across the 3 platforms. The implication being that something over £120m has been lost by a few thousand investors.
I really don't know what my next step will be. For now I'll await the next block of Lendy partial repayments to see how the deductions by RSM compares to the c. 30% they deducted from the DFL012 sale proceeds, and for the administrators proposals document for FS.
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Post by df on Nov 3, 2019 21:12:41 GMT
I've ticked 75-94%. If I turned all my reinvestments off now I would probably get about 75-80% of my capital back. That's on assumption of getting overall 50% back from the three in administration. The other one that would have an impact is the future of my funds stuck in AC's Great&Green accounts. I also have a bit stuck in BM (20% of which are Col loans) and overexposed in NUL and Racing Cars... If the return from these turn to be zero my loss will be greater than 75%.
There are many unknowns, but at this moment I don't feel like calling p2p off. There are platforms/accounts that I have some confidence to carry on with. I hope they will eventually offset the loss, but overall I'm not planning to increase my exposure to p2p.
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littleoldlady
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Post by littleoldlady on Nov 3, 2019 23:21:04 GMT
... But can we really predict the handful of platforms that will survive long term ? A quick look back on this forum from a few years back provides plenty of warnings which have proved correct eg p2pindependentforum.com/thread/678/where-all-end
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