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Post by mkernow on Mar 26, 2015 12:39:48 GMT
Hello all, I'm new to the forum and I have a few probably very basic questions regarding Saving Stream - their site is a bit sparse on help and information. I've dabbled with Ratesetter and Abundance Generation before, though no longer, and I am a long time user of Funding Circle and The House Crowd. I also like 'Nutmeg' if that's relevant.
1. Where is the secondary market? I can see the list of live loans, but where would I click to sell stuff?
2. In Saving Stream I understand that diversification is still a good idea in case a particular loan encounters difficulties. However would I be right in saying that, with the good LTVs and the provision fund, diversification is not as imperative as with, say, Funding Circle? I sort of get the impression that since everything is 12%, and because of the safety provisions, I can more or less just slam all the dosh in one loan and then forget about it until it matures.
3. How do I tell the difference between a loan where parts are available second hand, and a loan which is still being subscribed for the first time (e.g. "Property Bridging Loan 027" right now), I'm interested because I'm under the impression that in most of the latter cases you don't start earning interest until it's fully subscribed and accepted, signed off, etc.
4. What does "drawndown" mean?
5. As Saving Stream becomes more popular - at 12% I think I could get £100k together and live off the interest in liberty in some sort of hovel, that's the dream lads - is it quite likely that the 12% on offer will be knocked down to 11%, 10%, as more and more capital is made available to the Saving Stream?
6. It all looks too good to be true. If I'm getting 12%, and with apparently reasonable liquidity, where's the risk, where's the catch?
I apologise for asking so many questions and for the lack of understanding they probably display,
Thanks,
mkernow
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SteveT
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Post by SteveT on Mar 26, 2015 12:57:17 GMT
1) Click on the Loan Part in your list of Live Loan Parts (via the Dashboard) and you'll see the option to sell
2) Lots of other threads here about the overriding issue that you are always lending to Saving Stream, or rather Lendy, rather than direct to the Borrowers. However diversification probably still helps (at least in avoiding all your money being returned at once)
3) All the loans listed under "Live Loans" are live and paying interest. The small ones tend to get bought up very quickly (as do loan parts listed later for resale). The large ones can have parts available for an extended period. See "Pipeline Loans" for those yet to come to market.
4) "Drawndown" means that the Borrower has drawn down the money, which triggers the payment of rolled-up interest to those who have bought loan parts before draw-down
5) Keep dreaming, and who knows.
6) See 2)
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gc
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Post by gc on Mar 26, 2015 12:57:32 GMT
If you have invested at SS, then do the following.
Go to Dashboard > Live Loans (tab) > (select one of the live loans you have listed) > Scroll down to where it says "Selling Your Loan Part" > Use the slider to select how much of it you wish to sell > Press blue "Sell Loan Part" button, and you're done.
Regarding your method of investing, that is entirely your call though I wouldn't just "slam all the dosh in one loan and then forget about it".. Probably not the best method (all eggs in one basket and all that) ;-)
Your interest is accrued from the day you invest.
Regarding investing 100k, again that is your personal call, though it seems to me like you are looking for the "quick fix" get lots of money scheme and this is how most people get burnt. (some very lucky ones don't but I personally wouldn't be wanting to take that sort of gamble) Again, eggs all in one basket.
From your questions, I would STRONGLY (excuse the shouting) advise that you spend time reading a lot of the stuff on here.
Hope that helps.
*edit* - Sorry, seems like Steve answered your Q's already.
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bloodycat
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Post by bloodycat on Mar 26, 2015 15:27:14 GMT
I won't bother repeating what has already been answered, but as for 5 and 6 I have several comments.
There is the obvious risk that rates will drop as more people become comfortable lending to such platforms, especially if returns elsewhere remain low. You also need to factor in inflation so you actually need to earn somewhat more so your capital invested increases over time to maintain the same standard of living.
Unlike traditional savings accounts your investment has no guarantee should the company fail, you certainly wouldn't want to have all your money in one place. It is up to you to assess what the level of risk is, and how much risk you are prepared to take. It could take only one of the larger loans to default to wipe out the provision fund and it could take a long time to realise the value of the security, which may well be considerably less than the stated value when the loan was taken out. Whilst, assuming no fraudulent activity on the part of SS, you are unlikely to lose al your investment, you could be waiting a long time to get your money out.
To a large extent the rates reflect the potential actual or percieved risk. Personally I wouldn't risk more than ~10% of my spare capital in any individual platform and still have over 50% of my savings in traditional, low yielding but protected savings accounts and about 30% in shares spread over a number of companies in varying sectors.
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webwiz
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Post by webwiz on Mar 26, 2015 18:11:54 GMT
I won't bother repeating what has already been answered, but as for 5 and 6 I have several comments. There is the obvious risk that rates will drop as more people become comfortable lending to such platforms, especially if returns elsewhere remain low. You also need to factor in inflation so you actually need to earn somewhat more so your capital invested increases over time to maintain the same standard of living. Unlike traditional savings accounts your investment has no guarantee should the company fail, you certainly wouldn't want to have all your money in one place. It is up to you to assess what the level of risk is, and how much risk you are prepared to take. It could take only one of the larger loans to default to wipe out the provision fund and it could take a long time to realise the value of the security, which may well be considerably less than the stated value when the loan was taken out. Whilst, assuming no fraudulent activity on the part of SS, you are unlikely to lose al your investment, you could be waiting a long time to get your money out. To a large extent the rates reflect the potential actual or percieved risk. Personally I wouldn't risk more than ~10% of my spare capital in any individual platform and still have over 50% of my savings in traditional, low yielding but protected savings accounts and about 30% in shares spread over a number of companies in varying sectors. Some would say that you should not put more than 10% of your capital into all your p2p/p2b investments aggregated together.
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Liz
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Post by Liz on Mar 26, 2015 18:33:21 GMT
10% Alison, so put the other 90% into the bank earning 1%.
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mikes1531
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Post by mikes1531 on Mar 26, 2015 19:13:41 GMT
3) All the loans listed under "Live Loans" are live and paying interest. Minor correction of the above. All Live Loans are accruing interest, but only those that are drawn down are paying interest. The first interest payment is made at the time the loan draws down, and that can be some considerable time after the investment was made. Take PBL018 as an example. I invested in that loan on 5/Dec, and it still hasn't drawn down yet. If it draws down next week, I'll receive my nearly 4% of accrued interest. If it doesn't, then I'll still be waiting to see any return on my investment. PS. The above doesn't apply to any boat loan other than the Super Yacht. The smaller boat loans don't pay any interest until they are repaid. SS have said that they are phasing out smaller boat loans as they mature and are repaid.
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Post by mkernow on Mar 26, 2015 19:19:11 GMT
Thank you all for your advice, it's much appreciated. Can I ask something else?
Do you think there is any truth in the thought that there is some advantage in sticking with larger platforms in terms of the likely continuance of those platforms? What I mean is, even if FC isn't the best thing ever, it's almost certainly going to still be here in a few years, whereas some of the smaller platforms like Property Moose or "Funding Empire" might just pack up and call it a day.
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gc
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Post by gc on Mar 27, 2015 0:25:11 GMT
Any platform could just pack up and call it a day given the right scenario and I am sure that some will fall by the wayside along the journey, though the more established ones are probably a safer bet.
My advice would be to do your homework, read up on the platforms you are looking to invest in and then ask yourself "Why this specific company?" Make sure you feel comfortable with the way they do things.
You have to choose the ones you are comfortable to invest with and don't just let the ROI percentage blind your decision.
Can't really tell you which ones are good or not as there are some that I won't play with but others are more than happy to, just down to personal choice (after doing your homework)
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bugs4me
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Post by bugs4me on Mar 27, 2015 9:42:22 GMT
Thank you all for your advice, it's much appreciated. Can I ask something else? Do you think there is any truth in the thought that there is some advantage in sticking with larger platforms in terms of the likely continuance of those platforms? What I mean is, even if FC isn't the best thing ever, it's almost certainly going to still be here in a few years, whereas some of the smaller platforms like Property Moose or "Funding Empire" might just pack up and call it a day. Already some good advice given so no need to repeat. I think every lender/investor has their own way of assessing a platform but in my case, I always try and do some basic DD on the platform itself before even looking at what's on offer. Also it's worth remembering that platforms themselves change over time. So whilst you may be important in the early days, if or when an institution comes along with some serious $$'s, are you still as important or are the institutions being allowed to pick the cherries off the tree whilst you collect the droppings. I managed to have a look at the LC in the USA before the IPO and everything was geared to the private lender. They even stated that private lenders would always remain their top priority. Now those private lenders are restricted to 20% of loans with institutions taking 80%. How good that 20% is I have no idea but I wouldn't expect the institutions would be happy campers unless they were top of the tree.
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webwiz
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Post by webwiz on Mar 27, 2015 11:42:38 GMT
It's important to consider what happens to your investment if a platform folds. This differs across platforms and depends on the reason for the folding eg insolvency or not. You mention Property Moose which is an equity platform so any investment with them should be OK if they packed it in, even if they went bust, as you would still own the shares. However disposing of the shares could be very messy if they collapsed without any run down system in place. This is very unlikely IMHO but it is just a personal opinion so do your own DD.
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Post by parag on Mar 27, 2015 12:42:57 GMT
Thank you all for your advice, it's much appreciated. Can I ask something else? Do you think there is any truth in the thought that there is some advantage in sticking with larger platforms in terms of the likely continuance of those platforms? What I mean is, even if FC isn't the best thing ever, it's almost certainly going to still be here in a few years, whereas some of the smaller platforms like Property Moose or "Funding Empire" might just pack up and call it a day. Hi mkernow. Just to confirm we have absolutely no plans to 'pack up and call it a day'. We have taken a number of precautionary steps, as we believe all platforms should, to ensure that in the unlikely event Funding Empire is unable to continue to trade, our lender's funds are protected: - All un-lent lender funds are held in our segregated client money account with Lloyds Bank.
- Security provided by borrowers is held by our security trustee company on behalf of our lenders.
- We have a back-up servicing agreement, with another FCA regulated firm, which would step in and manage the orderly run down of our loan book and return any repayments due to lenders from borrower loan repayments.
Another point to note is that our solicitors, JMW in Manchester, are very experienced in peer to peer lending and crowdfunding models. They have advised us from day one and continue to advise us on an ongoing basis. They also advise 'Bank of Dave' for those of you that saw the documentary on Channel 4. If anyone would like further details of these safeguards, please feel free to drop me a line. Kind Regards, Parag
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Apr 7, 2015 12:16:15 GMT
6. It all looks too good to be true. If I'm getting 12%, and with apparently reasonable liquidity, where's the risk, where's the catch? Sorry to be arriving late on this one - been away and it's taking me a while to catch up with stuff. You've had some great responses, but I just wanted to add that lenders shouldn't forget that these returns are pre-tax. You probably are fully aware of that as you've been p2p lending elsewhere, but people only used to standard banks often forget that they need to factor tax into the equation. If you don't pay income tax, that's great. If you are a 40% tax payer it makes a big difference.
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