webwiz
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Post by webwiz on Oct 7, 2015 10:18:12 GMT
OK I see, security in that specific sense (of assets) rather than generally.
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james
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Post by james on Oct 7, 2015 10:53:54 GMT
OK I see, security in that specific sense (of assets) rather than generally. Right. The unquoted following sentence in the post that quote by me came from was "Platforms that combine both security and a protection fund or buyback mechanism of some sort should be lower risk except possibly on platform or currency (Mintos) risk", which I'd hoped would have made the meaning of the word security clear. Still, no harm in having a few more posts on the subject. Which might you (you individually, but also other readers) think safest given a choice between: 1. A 3.5% of unsecured lending protection fund like RateSetter 2. Property security at perhaps 75% LTV, if the sale of security falls short the platform or its owners take the first 5% of the lent value in loss, then a protection fund can step in, the Wellesley combination? If you think that RateSetter is the lower risk of those two, how about lending to a business that does better in recessions, pawn, with 50% LTV and a borrowing pawn shop that takes the losses unless it also fails (at a time when its business would normally be booming!)? With MoneyThing on top of that also providing some assurance of using its own money? 50% LTV, counter-cyclical business and two levels of protection fund, would you still consider RateSetter to be lower risk? RateSetter still has early mover advantage, excellent marketing and in general an excellent product but in terms of risk there are some interesting alternative options out there.
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registerme
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Post by registerme on Oct 7, 2015 11:29:44 GMT
Those are exactly the sort of questions I ask myself james eg 3%-6.5% securitised and diversified with a provision fund of unknown value during a tail event on Zopa / RateSetter or 12% with a provision fund of unknown value on specific resi / commercial property loans with a defined LTV on SS given a tail event of a 20-30% drop in property prices. The one thing I am reasonably confident of is that if there is a 30% drop in property prices in the UK there will be knock on effects on all other SME / consumer borrowers. I'm sceptical that any provision fund will make much difference in circumstances like that. |
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webwiz
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Post by webwiz on Oct 16, 2015 21:38:50 GMT
No need to wonder about which platform will be bottom, you included Bondora.  Only because he did not include Trustbuddy
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webwiz
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Post by webwiz on Oct 16, 2015 21:45:19 GMT
Which might you (you individually, but also other readers) think safest given a choice between: 1. A 3.5% of unsecured lending protection fund like RateSetter 2. Property security at perhaps 75% LTV, if the sale of security falls short the platform or its owners take the first 5% of the lent value in loss, then a protection fund can step in, the Wellesley combination? If you think that RateSetter is the lower risk of those two, how about lending to a business that does better in recessions, pawn, with 50% LTV and a borrowing pawn shop that takes the losses unless it also fails (at a time when its business would normally be booming!)? With MoneyThing on top of that also providing some assurance of using its own money? 50% LTV, counter-cyclical business and two levels of protection fund, would you still consider RateSetter to be lower risk? RateSetter still has early mover advantage, excellent marketing and in general an excellent product but in terms of risk there are some interesting alternative options out there. As said before, it all depends on what you mean by safest. If you mean lowest risk then lowest risk of what? I don't think it is possible to totally eliminate risk and I don't think it makes sense to minimise the risk of any loss. All that counts in the end is net return.
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upland
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Post by upland on Oct 17, 2015 7:48:23 GMT
As said before, it all depends on what you mean by safest. If you mean lowest risk then lowest risk of what? I don't think it is possible to totally eliminate risk and I don't think it makes sense to minimise the risk of any loss. All that counts in the end is net return. Good points. I have the largest amounts of money in what I perceive as the safer platforms/ best offer and not much in the more risky situations. As with many things in life these are 'emotional' decisions and there are lots of conflicting arguments. I like the bigger platforms as I imagine that if they went pop that it would be big enough that somebody would sort it all out. I believe that FCA rules require that there should be enough money for it to be run down in an orderly fashion (Is that true - anyone  ). As having been an equitable life investor I am often dubious about regulatory involvement and safeguards that I thought were givens. With small platforms I think that they may be as shaky as some of the investments. If they got into a mess whats to say that the resulting administrative pickle would cost a lot in relation to the size of it to unravel. Perhaps there should be a poll to establish whish is the most risky place ?
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shimself
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Post by shimself on Oct 17, 2015 13:22:13 GMT
I believe that FCA rules require that there should be enough money for it to be run down in an orderly fashion (Is that true - anyone ). As having been an equitable life investor I am often dubious about regulatory involvement and safeguards that I thought were givens. With small platforms I think that they may be as shaky as some of the investments. If they got into a mess whats to say that the resulting administrative pickle would cost a lot in relation to the size of it to unravel. What TC say is that they think their slice of each repayment (ie if we are getting 10% the borrower is paying 11%ish) is enough to cover the rundown costs. The danger is probably more on the lines of some lender deciding to try to get ahead by lawyering - the hope being that a judge would understand the collective aspect.
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Post by Financial Thing on Nov 4, 2015 12:51:15 GMT
Risk involves far more than interest rate levels.
Can the platform sustain long term as a business? Are the Directors using the investors money as intended? Is the quality of underwriting high? Are the security valuations correct? How will the platform sustain if 2 or 3 big loans default?
SS for example. Consumers deem safe because of security held but they've only generated less than £1m interest on loans that have been repaid. Not much history there. Is it really safe?
Safety is a consumer perception made by many assumptions.
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). As having been an equitable life investor I am often dubious about regulatory involvement and safeguards that I thought were givens. With small platforms I think that they may be as shaky as some of the investments. If they got into a mess whats to say that the resulting administrative pickle would cost a lot in relation to the size of it to unravel.
