bigfoot12
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Post by bigfoot12 on Nov 23, 2014 23:46:48 GMT
niceguy37, ramblin rose, mikes1531Please don't misunderstand me. I do not think that the current algorithm is any good. I was explaining that it was quite easy to understand that removing un-lent money might lead to a sale. The current GEIA seems poor. I think that it would be okay to have a simple algorithm make a reasonable investment then have another re-allocate funds and loans in the background to fine tune things. I just don't think that the current algorithm seems to be good enough. I understand that production code is much more complicated than this, with transactions that need to be double entered, fear of deadlocks and other problems with multi threaded code however i would have thought it fairly easy to improve on the current code. How about this... If there are n possible investments for the GEIA kept in some sort of order, Pos is the customer's holding in loan i, cash is customer's current cash holding and there is some sort of list structure Available<List> of available investments sorted by decreasing available size, then a mixed up pseudo code might be:-
TOTAL = sum(Pos[1::n]) + cash;
MAX_HOLDING = TOTAL / 5;
for (i = 1 to n)
if Pos[i] > MAX_HOLDING then
flag_for_sale(i, Pos[i] – MAX_HOLDING);
while (Available.isNotEmpty() AND cash>=0.01) do
{
investment = Available.remove();
loan = investment.getNumber();
if (Pos[loan] < MAX_HOLDING) {
quantity_bought = buy (loan,
min(MAX_HOLDING – Pos[loan],cash,Available.getQuantity());
##quantity might be zero is purchase fails
cash = cash – quantity_bought;
Pos[loan] = Pos[loan] + quantity_bought;
}
}which is run whenever a customer increases or decreases an investment in GEIA. Note each 'buy' is still a single transaction for a single loan, which might fail (perhaps because somebody else bought it first).
It loops through current positions and any that are bigger than 20% are put up for sale. Any spare cash is invested, up to the limit of 20%, in available loans.
In the background another process may diversify things further.
mrclondon I think that there should be list of positions.
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bigfoot12
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Post by bigfoot12 on Nov 24, 2014 12:23:07 GMT
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mikes1531
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Post by mikes1531 on Nov 24, 2014 20:44:24 GMT
Would the 20% limit mean that some of my holding of the 20+% loan actually was up for sale as soon as that happened? I may have the answer to that question... There was an entry in my GEIA statement this afternoon informing me that 13p of Mo had been sold. Since the account was not fully invested and I did not ask for anything to be sold, this must have been the result of the system realising that it had overbought that loan for my GEIA and trying to dispose of the excess. Without any easy way to know how much of each loan is held in my GEIA, I can't tell whether there is more of this loan still up for sale, or whether there is any other of my holdings that are up for sale. I think this is further evidence that the algorithm that controls the purchasing of loan parts for the GEIAs really needs tweaking. And for anyone who hasn't been following my saga closely... this sale means that I now have 33p of my experimental GEIA uninvested.
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mikes1531
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Post by mikes1531 on Nov 24, 2014 21:27:43 GMT
Further to the transaction reported above, there were two more entries in my GEIA statement today... I presume the interest represents the 9.75% payable on this loan for the period I have held my loan parts, and the PF payment represents the difference between that and the GEIA interest rate of 7%. (This is consistent with the numbers, as the PF payment is the interest payment times 2.75/9.75.) So if I held £100 of this loan for a full year, based on the above I'd expect to earn £9.75 of interest, and see debits totalling £2.75 for the PF. My concern regards exactly what will be reported to HMRC at the end of the year. Will it be both of those amounts? Or will it be just the £7 difference? If the former, is there any chance that I'll be asked to pay tax on the £9.75? I'd appreciate it if someone from AC -- chris? andrewholgate? -- could answer these questions. |
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bugs4me
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Post by bugs4me on Nov 24, 2014 22:37:53 GMT
Would the 20% limit mean that some of my holding of the 20+% loan actually was up for sale as soon as that happened? I may have the answer to that question... There was an entry in my GEIA statement this afternoon informing me that 13p of Mo had been sold. Since the account was not fully invested and I did not ask for anything to be sold, this must have been the result of the system realising that it had overbought that loan for my GEIA and trying to dispose of the excess. Without any easy way to know how much of each loan is held in my GEIA, I can't tell whether there is more of this loan still up for sale, or whether there is any other of my holdings that are up for sale. I think this is further evidence that the algorithm that controls the purchasing of loan parts for the GEIAs really needs tweaking. And for anyone who hasn't been following my saga closely... this sale means that I now have 33p of my experimental GEIA uninvested. Okay now this is where I'm really confused. Going by the 'rules' that exposure to any one loan will not exceed 20% of your total investment, according to a quick peep there are currently 5 WT's on the AM - most with considerable amounts looking for a new home. So in theory, £100 invested should easily be gobbled up with these alone without breaching the 20% rule. Am I on the right track or totally off it?? 33p is probably an irrelevance but any lenders funds not invested will or may result in that 7% projection being just a projection and as it stands, is way below what can be earned by managing the portfolio oneself albeit without the PF.
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mikes1531
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Post by mikes1531 on Nov 25, 2014 1:52:16 GMT
Okay now this is where I'm really confused. Going by the 'rules' that exposure to any one loan will not exceed 20% of your total investment, according to a quick peep there are currently 5 WT's on the AM - most with considerable amounts looking for a new home. So in theory, £100 invested should easily be gobbled up with these alone without breaching the 20% rule. Am I on the right track or totally off it?? 33p is probably an irrelevance but any lenders funds not invested will or may result in that 7% projection being just a projection and as it stands, is way below what can be earned by managing the portfolio oneself albeit without the PF. Yes, with five WTs available it ought to be easy to distribute any new GEIA investments among them, putting it all to work and staying within the specified 20% maximum, and doing the job without having to iterate. And reading the FAQs, the limit appears to be 25% rather than 20%, which would make it even easier to satisfy -- though the description of the GEIA refers to 20%. Nothing like a bit of consistency, AC! (In looking for that, I came across the description of BtL loans, which refers to "the 5% income for the lenders", so the 20%25% issue isn't the only problem in the website info.) It isn't clear how the GEIA would deal with investment allocation if there were less than five -- or four -- WT loans available at the time. Will the investor end up with a large chunk of uninvested funds? That would make a real dent in the income achieved compared to the 7% target. Yes, 33p is somewhat an irrelevance. But I added my £20 in two steps. Not to mention that my account appears to be trying to sell off some of my holdings. And if I were to withdraw the 33p because it wasn't earning anything, I suspect the system would try to sell even more of my holdings. Try explaining that to a newbie! Also, another experimenter -- Vero -- invested £100 in the GEIA. At last report the buying activity in that account had stopped with £10.76 uninvested. That is not an irrelevant amount. I'd say the allocation algorithm needs a bit of tweaking -- if not a good swift kick!
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Post by batchoy on Nov 25, 2014 8:18:35 GMT
Further to the transaction reported above, there were two more entries in my GEIA statement today... I presume the interest represents the 9.75% payable on this loan for the period I have held my loan parts, and the PF payment represents the difference between that and the GEIA interest rate of 7%. (This is consistent with the numbers, as the PF payment is the interest payment times 2.75/9.75.) So if I held £100 of this loan for a full year, based on the above I'd expect to earn £9.75 of interest, and see debits totalling £2.75 for the PF. My concern regards exactly what will be reported to HMRC at the end of the year. Will it be both of those amounts? Or will it be just the £7 difference? If the former, is there any chance that I'll be asked to pay tax on the £9.75? I'd appreciate it if someone from AC -- chris? andrewholgate? -- could answer these questions. The situation seems somewhat unclear, and may change because those platforms who currently charge lenders are fighting it, but from what I have read for the Tax Year 2014/15 HMRC will accept Net Interest figures (Interest minus fees but not capital losses) but from April 2015 will require Gross Interest figures (Interest before fees). Thus with the way AC are stating the return and the fee in your GEIA statement you will have to give HMRC and be taxed on the £9.75 figure not the £7.00 figure.
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niceguy37
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Post by niceguy37 on Nov 25, 2014 8:59:55 GMT
Further to the transaction reported above, there were two more entries in my GEIA statement today... I presume the interest represents the 9.75% payable on this loan for the period I have held my loan parts, and the PF payment represents the difference between that and the GEIA interest rate of 7%. (This is consistent with the numbers, as the PF payment is the interest payment times 2.75/9.75.) So if I held £100 of this loan for a full year, based on the above I'd expect to earn £9.75 of interest, and see debits totalling £2.75 for the PF. My concern regards exactly what will be reported to HMRC at the end of the year. Will it be both of those amounts? Or will it be just the £7 difference? If the former, is there any chance that I'll be asked to pay tax on the £9.75? I'd appreciate it if someone from AC -- chris? andrewholgate? -- could answer these questions. The situation seems somewhat unclear, and may change because those platforms who currently charge lenders are fighting it, but from what I have read for the Tax Year 2014/15 HMRC will accept Net Interest figures (Interest minus fees but not capital losses) but from April 2015 will require Gross Interest figures (Interest before fees). Thus with the way AC are stating the return and the fee in your GEIA statement you will have to give HMRC and be taxed on the £9.75 not the £7.00 figure. Surely from a customer-satisfaction point of view it would be best for AC to simply give the GEIA investor the net 7%, rather than rub his/her nose in how much they are being charged for a provision fund. And obviously it's just asking for a tax bill. If I'd signed up for 7% returns I'd be very unhappy to get 9.75%, less 2.75%, which is not the same at all thing after tax.
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oldgrumpy
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Post by oldgrumpy on Nov 25, 2014 9:12:54 GMT
Huh! That means, after 20% tax I would get 5.05% rather than 5.6% ... not worth the bother. Why can't AC pay 7%. Then put the 2.75% into the provision fund themselves from the witheld interest?
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Post by batchoy on Nov 25, 2014 9:20:34 GMT
Huh! That means, after 20% tax I would get 5.05% rather than 5.6% ... not worth the bother. Why can't AC pay 7%. Then put the 2.75% into the provision fund themselves from the witheld interest? Or at 40% tax 3.1% rather than 4.2% and the figures get worse the higher the underlying rate on the loan. It would seem that the the people who thought up the GEIA and wrote the proposal didn't talk to the programmers as a result people are not getting 7% capped they are getting the original loan interest minus a fee to bring it back to 7% which is not the same thing particularly when HMRC get involved.
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niceguy37
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Post by niceguy37 on Nov 25, 2014 10:33:14 GMT
Huh! That means, after 20% tax I would get 5.05% rather than 5.6% ... not worth the bother. Why can't AC pay 7%. Then put the 2.75% into the provision fund themselves from the witheld interest? As a 40% tax-payer it's even worse for me. I guess it's a bot more complicated on the programming side of things, but it's not too hard for the program when it's calculated interest to check if the loan part is in a GEIA investment, and allocate the interest from the loan directly into the provision fund and the 7% lender return. If AC get it right then I think the GEIA, with a "green" provision-protected 7%, could attract a lot of lenders over from mainly Zopa, but some also from RS. But the relevant parts of the website need to be slick, fairly bug-free and display stats (lender's, and overall) as this is what Z and RS are accustomed to.
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bugs4me
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Post by bugs4me on Nov 25, 2014 11:29:01 GMT
Huh! That means, after 20% tax I would get 5.05% rather than 5.6% ... not worth the bother. Why can't AC pay 7%. Then put the 2.75% into the provision fund themselves from the witheld interest? As a 40% tax-payer it's even worse for me. I guess it's a bot more complicated on the programming side of things, but it's not too hard for the program when it's calculated interest to check if the loan part is in a GEIA investment, and allocate the interest from the loan directly into the provision fund and the 7% lender return. If AC get it right then I think the GEIA, with a "green" provision-protected 7%, could attract a lot of lenders over from mainly Zopa, but some also from RS. But the relevant parts of the website need to be slick, fairly bug-free and display stats (lender's, and overall) as this is what Z and RS are accustomed to. It's largely irrelevant whether you're a 40% or 20% taxpayer IMHO. The point is that you'd be required to declare 'interest' on monies that you have not received and has been diverted to the PF. Once the 5% PF target has been obtained then you would effectively be liable for tax that was being diverted to AC themselves. So this requires clarification as a matter of urgency. Also requiring attention is the problem that the GEIA is not fully allocating funds where (it appears) possible. If I invest say £100 and there are 5 x WT's on the AM then whether it's 20% or 25% maximum exposure it follows that all of the £100 should be invested. Perhaps andrewholgate or another member of the AC team would care to clarify these relevant points as a matter of urgency. At this rate I can see the GEIA not taking off!!!
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oldgrumpy
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Post by oldgrumpy on Nov 25, 2014 11:57:22 GMT
Quite so, Buggsy! Think of all those people flocking in in the total belief that they are investing in a 7% product mainly protected by a provision fund, fully expecting to pay tax on that 7%. Where on the site does it state clearly that they actually will pay tax on 9.5%-9.75%?
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Post by yorkshireman on Nov 25, 2014 12:26:42 GMT
Is someone deliberately trying to make investing with AC difficult or is it just a lack of foresight? Since the website revamp things have become unnecessarily opaque and / or complicated.
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oldgrumpy
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Post by oldgrumpy on Nov 25, 2014 12:30:34 GMT
A year ago AC was the place to be.
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