IFISAcava
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Post by IFISAcava on Jan 28, 2020 13:51:42 GMT
I am trying to work out how much interest in terms of time I would lose by selling out.
i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put.
And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early.
The end of January statement of how much interest received will make interesting reading.
I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous.
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IFISAcava
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Post by IFISAcava on Jan 28, 2020 13:53:52 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous. looked at retrospectively it is obviously less - about a year's worth of interest loss as a price for capital preservation.
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benaj
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Post by benaj on Jan 28, 2020 14:05:33 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous. I am not qualified for advice, looking at the other perspective, no losses have been declared yet if you stay put. XIRR would still above FSCS saving account since the start of investment. It's probably better to give LW more time (another 6 months), hope defaults are slowing down but the would not exceed the expected loss and interest payment getting close to the projected rate sooner. When I sold Z plus back in late 2017, the undeclared loss (after fees of 1.3% rate adjustment) was 1% and later turned into 0.8% realised overall gain. I couldn't imagine myself selling @ 5.4% discount at the time.
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IFISAcava
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Post by IFISAcava on Jan 28, 2020 14:25:15 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous. I am not qualified for advice, looking at the other perspective, no losses have been declared yet if you stay put. XIRR would still above FSCS saving account since the start of investment. It's probably better to give LW more time (another 6 months), hope defaults are slowing down but the would not exceed the expected loss and interest payment getting close to the projected rate sooner. When I sold Z plus back in late 2017, the undeclared loss (after fees of 1.3% rate adjustment) was 1% and later turned into 0.8% realised overall gain. I couldn't imagine myself selling @ 5.4% discount at the time. Yeah, it's a difficult decision. Nevertheless the selling fee would be £880 and I have had just over £3000 in interest from LW, so I'd still be way ahead. I fear things might get worse, and I fear people running for the hills so that an exit wont be possible at any cost.
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IFISAcava
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Post by IFISAcava on Jan 28, 2020 14:30:47 GMT
looked at yet another way, NOT selling now and drawing down instead gains me the 5.5% selling fee plus the (probably minimal for the forseeable future) interest.
Decisions, decisions.
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Post by dan1 on Jan 28, 2020 14:31:00 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous. That XIRR doesn't sound right. To end Dec 19 you should have received advertised rates on your loans, my guess is that you largely funded in the 2nd half of 2019 with pretty long cash drag resulting in your current XIRR? That 5.5% fee is 0.5% early release fee and 5.0% rate adjustment (or whatever LW call it). If you were on 6.5% contracts then you'd expect 1.1% reduction (6.5-5.4%) per year on the balance, which would imply your loans have 4.5 years remaining. I'm not sure how amortising changes all that back of the fag packet stuff.
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IFISAcava
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Post by IFISAcava on Jan 28, 2020 14:35:26 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous. That XIRR doesn't sound right. To end Dec 19 you should have received advertised rates on your loans, my guess is that you largely funded in the 2nd half of 2019 with pretty long cash drag resulting in your current XIRR? That 5.5% fee is 0.5% early release fee and 5.0% rate adjustment (or whatever LW call it). If you were on 6.5% contracts then you'd expect 1.1% reduction (6.5-5.4%) per year on the balance, which would imply your loans have 4.5 years remaining. I'm not sure how amortising changes all that back of the fag packet stuff. the long term XIRR is over 5% (includes some cash drag and also some early investments at lower than 6.5%) - I'm talking about XIRR from Jan 2020 onwards - it may be a tad higher, have to wait and see how much interest is actually paid in Jan. I have been withdrawing rather than investing in latter part of 2019. However they calculate it, my interest rate adjustment would be about 5-5.5%, my loans average when they still stated it was around 6%, so my estimated XIRR tallies with that.
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Post by dan1 on Jan 28, 2020 14:37:55 GMT
That XIRR doesn't sound right. To end Dec 19 you should have received advertised rates on your loans, my guess is that you largely funded in the 2nd half of 2019 with pretty long cash drag resulting in your current XIRR? That 5.5% fee is 0.5% early release fee and 5.0% rate adjustment (or whatever LW call it). If you were on 6.5% contracts then you'd expect 1.1% reduction (6.5-5.4%) per year on the balance, which would imply your loans have 4.5 years remaining. I'm not sure how amortising changes all that back of the fag packet stuff. the long term XIRR is over 5% (includes some cash drag and also some early investments at lower than 6.5%) - I'm talking about XIRR from Jan 2020 onwards - it may be a tad higher, have to wait and see how much interest is actually paid in Jan. I have been withdrawing rather than investing in latter part of 2019. However they calculate it, my interest rate adjustment would be about 5-5.5%, my loans average when they still stated it was around 6%, so my estimated XIRR tallies with that. I see, my misunderstanding. Looks like the rate reduction is being taken upfront, a painful year whether you stay or go.
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benaj
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Post by benaj on Jan 28, 2020 14:39:08 GMT
I'm not sure how amortising changes all that back of the fag packet stuff. There are a few new terms introduced since Jan 2020. Lender Rate, Review Point, Projected Interest Rate, Interest Rate Adjustment, Interest Rate Margin. Section 19 and 20 in the T&Cs are not expected from most LW investors.
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Post by closetotheedge on Jan 28, 2020 18:59:00 GMT
I was offered a fee free exit in December. I thought this was offered to everyone. Am I wrong?
There was very minor interest shortfall to pay but this was refunded to me as there was a technical glitch at the time.
In all I withdrew about £34000 from the old 5 year account with zero fees and about £50 of interest shortfall that they kindly refunded.
Had been with LW for about 4 years or so.
The ISA part took them a bit long to transfer out but they were always very communicative and displayed good customer service.
May be back but with really far too much in RS and AC just wanted to reduce overall so the free exit seemed a good offer.
I am sure this was offered to all but perhaps it was only those in certain accounts?
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Post by skidrow on Jan 28, 2020 22:18:42 GMT
I am trying to work out how much interest in terms of time I would lose by selling out. i.e. how long would it take me to earn the current 5.5% selling fee if I stayed put. And the problem is I can't because I don't know how much I am currently getting - although my best guess currently is 0.67% XIRR (with a promise this may go up or down next quarter). That would mean I am losing ~8 years of interest by selling early. The end of January statement of how much interest received will make interesting reading. I'm leaning towards selling out despite the fee - this seems to be becoming rather ominous.
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Post by skidrow on Jan 28, 2020 22:30:38 GMT
A tough one.
At times like this I feel that it is usually best to just get out while you can. Accept that things haven't gone well and just move on.
I'm assuming of course that you can afford to do so.
I felt much better having pulled the plug although that was in December and so didn't suffer for it.
LW will either recover or not but just think how you will feel if the answer is "not".
This is in no way offered as advice. I'm not qualified. I just think that I know what I would do.
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IFISAcava
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Post by IFISAcava on Jan 28, 2020 22:50:56 GMT
I was offered a fee free exit in December. I thought this was offered to everyone. Am I wrong? There was very minor interest shortfall to pay but this was refunded to me as there was a technical glitch at the time. In all I withdrew about £34000 from the old 5 year account with zero fees and about £50 of interest shortfall that they kindly refunded. Had been with LW for about 4 years or so. The ISA part took them a bit long to transfer out but they were always very communicative and displayed good customer service. May be back but with really far too much in RS and AC just wanted to reduce overall so the free exit seemed a good offer. I am sure this was offered to all but perhaps it was only those in certain accounts? no, everyone was offered it, and i took it up for about 50%. But I hadn't understood that the interest rate cut was not from 6.5% to 5.4% as advertised, but instead was cut to something under 1%. You took the right option and I wish I had done it too for all of my investment, not just half.
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Ukmikk
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Post by Ukmikk on Jan 29, 2020 9:13:58 GMT
I was offered a fee free exit in December. I thought this was offered to everyone. Am I wrong? There was very minor interest shortfall to pay but this was refunded to me as there was a technical glitch at the time. In all I withdrew about £34000 from the old 5 year account with zero fees and about £50 of interest shortfall that they kindly refunded. Had been with LW for about 4 years or so. The ISA part took them a bit long to transfer out but they were always very communicative and displayed good customer service. May be back but with really far too much in RS and AC just wanted to reduce overall so the free exit seemed a good offer. I am sure this was offered to all but perhaps it was only those in certain accounts? no, everyone was offered it, and i took it up for about 50%. But I hadn't understood that the interest rate cut was not from 6.5% to 5.4% as advertised, but instead was cut to something under 1%. You took the right option and I wish I had done it too for all of my investment, not just half. Agreed, the offer was there, but the true cost of not cashing out in December was not communicated otherwise many more lenders would have done so. Presumably the reason why LW failed to clarify the true position.
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jester
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Post by jester on Jan 29, 2020 10:49:13 GMT
Matthew it's admirable that you continue to return here to reply to concerns, even more so during paternity (congratulations) However admirable only goes so far and I think you've got to ask why a whole range of informed investors feel confused and misled about recent changes. I think the vast majority of us who read your updates on changes thought the ongoing rate for each cohort would be what is displayed in the bar chart, whereas it appears this is the rate for the duration of the loans and rates will be stripped close to zero to recover the 6.5% loans you wrote for us when it was clear the PF was in trouble. You've got to question why so many of us misunderstood this, our collective stupidity or misleading information? I haven't even started on the now punitive charges to withdraw, a by product few of us anticipated!
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