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Post by Ace on Aug 14, 2021 17:29:49 GMT
Me too.
I lend up to 20% of my platform limit per loan on Q. So far all loans have been fully amortising so plenty of the original funds get paid back fairly quickly.
My reasoning went something like this... I assumed 1 new loan every 2 months. By the time the 6th loan was due I would have received enough amortised capital back from the first 5 to fund that loan. From then on the capital returned over two months would be sufficient to fund a new loan, and that ignores the considerable interest that would have been paid during that time. After 22 months there would be 12 loans in play, which would be sufficient diversification for me on a single platform.
This breaks down if loans are longer than 24 months (which 1 of them is) or if there is more than 1 loan every 2 months, but it's easy enough to reduce the amount pledged per loan to keep within my platform limit.
EDIT: my apologies are in order, the crossed out section above turned out to be incorrect. See my next post in this thread for details.
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littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,017
Likes: 1,835
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Post by littleoldlady on Aug 14, 2021 21:32:51 GMT
Me too. I lend up to 20% of my platform limit per loan on Q. So far all loans have been fully amortising so plenty of the original funds get paid back fairly quickly. My reasoning went something like this... I assumed 1 new loan every 2 months. By the time the 6th loan was due I would have received enough amortised capital back from the first 5 to fund that loan. From then on the capital returned over two months would be sufficient to fund a new loan, and that ignores the considerable interest that would have been paid during that time. After 22 months there would be 12 loans in play, which would be sufficient diversification for me on a single platform. This breaks down if loans are longer than 24 months (which 1 of them is) or if there is more than 1 loan every 2 months, but it's easy enough to reduce the amount pledged per loan to keep within my platform limit. That's smart. I think I will copy you. Pity I did not start with that strategy.
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Post by Ace on Aug 15, 2021 0:01:32 GMT
Me too. I lend up to 20% of my platform limit per loan on Q. So far all loans have been fully amortising so plenty of the original funds get paid back fairly quickly. My reasoning went something like this... I assumed 1 new loan every 2 months. By the time the 6th loan was due I would have received enough amortised capital back from the first 5 to fund that loan. From then on the capital returned over two months would be sufficient to fund a new loan, and that ignores the considerable interest that would have been paid during that time. After 22 months there would be 12 loans in play, which would be sufficient diversification for me on a single platform. This breaks down if loans are longer than 24 months (which 1 of them is) or if there is more than 1 loan every 2 months, but it's easy enough to reduce the amount pledged per loan to keep within my platform limit. That's smart. I think I will copy you. Pity I did not start with that strategy. Oops, sorry, I just rechecked my calculations and noticed that I've made an error. I had double counted some repayments 😔 It works fine for the 6th loan, but there are insufficient repayments to fully fund the loans from the 7th loan onwards while still maintaining the original Desired Platform Total (DPT). If you started at 20% of DPT per loan there would only be sufficient repayments to fund 15% on the 7th loan, then 11.25% on the 8th loan. The repayments would then steadily increase, starting at 12.2% for the 9th loan. I'm still OK with this strategy, as in practice it's simple to operate. I.e. lend whatever would take your total deployed funds up to your DPT but limited to 20% of your DPT per loan. It's obviously a fairly high risk strategy originally as any early defaults in the early loans would cause losses that would take a long time to recoup. As time goes on the damage from single defaults lessens through amortisation and the lower percentage of DPT per loan. In future the frequency of loans is likely to increase, which would further increase diversification and reduce the impact from a single loan default, as smaller percentage of DPT would be available for each new loan. Obviously, the above strategy could be simply modified to reduce the impact of early single loan failures by reducing the maximum per loan to a lower percentage at the expense of taking longer to get funds deployed.
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Post by birdie on Aug 18, 2021 15:00:19 GMT
A new investment has opened today, Range Plus Ltd, lower interest rate than previous offers.
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