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Post by xyon100 on Mar 7, 2015 12:20:53 GMT
When this question was posted,only 5 months back, those returning Euro would have bought about 80P.
Today they will buy you nearer 70P.
I reckon most UK investors in Bondora have lost money in the last year.
Unless you fall back on the standby of it's not a loss until you sell it I suppose.
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Post by xyon100 on Mar 11, 2015 0:54:27 GMT
I've been in Bondora a week. On the official forum (which you can only get to if you have a Bondora account) you'll see that default rates have soared lately. What's appears to be happening (or not happening) is that Bondora just aren't getting on top of defaults in the other countries. I'm drip feeding money into the safest Estonian loans, but there just aren't enough of these to go around. Added to that, my bank (HBOS) charge me £9.95 for a currency transfer each time I put money into my Bondora account. And the Euro has lost ~10% against the pound in the last 12 months - a trend that could continue. If you're into data analysis though, you can download some comprehensive loan stats and see if you can better your potential returns. When you posted this in November last year, one Euro bought 0.83. It now buys 0.71 and is dropping like a stone. Anybody investing Pounds in the last few years has surely had some spectacular results to still claim to be winning here.
Of course the other side of the coin is new Euro investments cost so much less. Currency risk should never be underestimated. If you are going to invest in other currencies then the currency exchange rate is probably a bigger factor than the default risks and interest rates.
Just my experience of 20 years between Countries.
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duck
Member of DD Central
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Post by duck on Mar 11, 2015 6:03:59 GMT
When this question was posted,only 5 months back, those returning Euro would have bought about 80P.
Today they will buy you nearer 70P.
I reckon most UK investors in Bondora have lost money in the last year.
Unless you fall back on the standby of it's not a loss until you sell it I suppose.
Certainly not at a loss over the year but coupled with a couple of bad months of +60 day defaults the UK tax positioning of taxing all profits the exchange rate has given me a couple months of negative return....... luckily I spend a decent amount of time in France (and have a bank account there) so I don't need to repatriate cash in order to spend it.
One thing that the exchange rate has an 'interesting' effect on is the actual cost of defaults. When payments are made (often +1 year after the default for the first one to be seen) if you convert to sterling the actual debt is obviously not at the same figure as it was when it defaulted. I stick with the original figure when calculating % returned on bad debts which currently gives a pessimistic view.
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james
Posts: 2,205
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Post by james on Mar 11, 2015 7:46:33 GMT
Using an exchange rate of €1.41 to the Poound I still have a positive XIRR even when assuming that all 60+ defaults are complete losses. Euro XIRR is around 15.5% on the same basis. Break even exchange rate for me is 1.471 on this 60+ write off basis. Those numbers are too pessimistic. They value all currently lent money at that exchange rate and ignore future interest payments.
This is a case where the early participants who could lend at 28% to higher quality Estonian borrowers could have a very different experience from those lending at 15% during the last year.
At the moment I'm withdrawing repayments once a month and converting them to Pounds and I expect to continue doing this. Beats reinvesting in a platform whose underwriting practices I no longer trust.
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Post by xyon100 on Mar 11, 2015 12:17:56 GMT
Well that is exactly what I'm talking about. UK people who decided to dip a toe a year or so back will surely have caught a cold when the exchange rate drops 15 percent or so. I put 2000 Euro in to Bondora ( I have Euro accounts) and I have to agree with an earlier poster who says this site takes a lot of work to maximise the returns and even then, those returns are dropping. For sure, there seems to be a lot of negativity around the changes in the last few years.
My problem is an alternative to Bondora. I've seen nothing in the Eurozone that interests me, though perhaps I'm not looking hard enough.
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