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Post by GSV3MIaC on Mar 30, 2015 7:52:08 GMT
I'd guess the problem is that without the PF, you need lenders to be able to see, and choose among, the different borrowers (or at least different risk bands) and to bid/receive different rates for each. Sudden!y a lot more complicated.
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duck
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Post by duck on Mar 30, 2015 8:01:20 GMT
What is the disadvantage to making the provision fund optional, such that an investor can either opt in or opt out? That would have the effect of making RS less boring and that would never do
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jonbvn
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Post by jonbvn on Mar 30, 2015 8:10:02 GMT
Not wishing to divert this thread but the effect of the PF has been of direct interest to me over the past week.
My partner is risk adverse when it come to her investments so she has never been interested in P2P / P2B preferring to stick with next to no interest but 'protected'.
Recent Tax planning with my accountants required a decent amount of my capital be moved to her. I have a decent sum in RS (6 figures) so that seemed an ideal place to start moving cash from. In explaining the RS system the PF was a major help in convincing her that she had to open an account with RS and start investing her new found wealth! Without the PF I suspect I would not have succeeded.
So whilst personally I am more than happy to invest with other platforms without PF's I suspect I am in a small minority of the 'ordinary' population and it is people exactly like my partner who RS need to attract as lenders.
Don't concern yourself westonkevRS out of one account into another, plus a little extra
I hate to tell you this, but I think we may be married to the same woman Seriously - my wife is also massively risk averse....
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spiral
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Post by spiral on Mar 30, 2015 8:24:27 GMT
I'd guess the problem is that without the PF, you need lenders to be able to see, and choose among, the different borrowers (or at least different risk bands) and to bid/receive different rates for each. Sudden!y a lot more complicated. Not sure you would necessarily. Zopa used to advise of the expected real rate in any given risk band based on the rate you were offerring so perhaps an expected return of 6% equated to a lent rate of 7% in low risk markets and 10% in higher risk markets. If RS were to adopt this option, I would expect you to still offer at the expected return rate i.e. as you do currently. An upward adjustment could then be made similar to Zopa's now defunct Rate Promise as a 1 off or on a monthly basis. This should equate to the amount that the PF would receive which is greater for the more risky loans. You wouldn't need to be selective based on risk profile as the adjustment would compensate you to a greater degree for the more risky loans and TBH, RS themselves are much better suited to grading this than you or I. The bigger problem I would see in this from RS current platform perspective would be diversification of loans. Zopa used to suggest you needed at least 200 loans to be properly diversified. RS's current platform doesn't lend (no pun intended) itself to doing this easily. I don't think if you had £10K to invest you would want it all in 1 loan with no PF backup whereas with PF that is almost a non issue.
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spiral
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Post by spiral on Mar 30, 2015 8:28:31 GMT
I hate to tell you this, but I think we may be married to the same woman Seriously - my wife is also massively risk averse.... Mine is so risk adverse, she worries about what I do with my money! Should I be concerned that she watches so many forensic programmes on the telly?
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Post by p2plender on May 12, 2015 10:01:56 GMT
Been getting heck of a lot of early repayments of late. Much more than I can ever remember. Just hope it's borrowers paying early rather than defaulting... On a brighter note one was a very large chunk lent at 5.2%.
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Post by p2plender on May 15, 2015 6:45:17 GMT
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jonbvn
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Post by jonbvn on May 15, 2015 8:58:02 GMT
Interesting article with the obvious US bias. Lending club valued at $7 billion!!! Maybe a recent valuation of another P2P platform wasn't far off the mark then? (Although I would not invest).
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Post by westonkevRS on May 15, 2015 12:38:01 GMT
These valuations should certainly be taken with a pinch of salt. It isn't that the mathematics is wrong, i.e. New cash invested buys x% equity giving y valuations. The fact is this is only really true if the new equity has equal share types to the incumbents. If the new money has a different share type, commonly known as "preference" then it really makes the valuation not fair value. But it's good for Marketing and newspapers that like to talk about "unicorns" and big numbers. @ westonkevRS.
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