baldpate
Member of DD Central
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Post by baldpate on Oct 11, 2015 19:58:02 GMT
I had reached a steady-state peak investment at just about the time FC switched to fixed-rate : about 2/3 property (only at 10%+ with CB iincluded) and 1/3 unsecured. The only unsecured loans I will now buy are Es and (some) D's for a 5-month hold, but the numbers of these being offered to the part-loan market seems to be dwindling, as does the number of property loans I will consider (8% +1% CB, which looks like the coming new norm, doesn't cut it for me).
So, unless something changes for the better, with some regret I expect to start a slow withdrawal from FC before Christmas.
As others have noted, the 1% fee (which I found at least tolerable under the old regime) has now become the nail in the coffin.
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Post by aloanatlast on Oct 11, 2015 19:58:41 GMT
Can't see the owners salvaging much from that. Abandoned only weeks from completion, so lots of money spent, and the value now looks like only the site value, less the cost of clearing it to start again, and with no relevant permissions yet.
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mec1
New Member
Posts: 1
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Post by mec1 on Oct 12, 2015 7:20:11 GMT
FC has been fun. Ive managed better than the advertised average, but not by lots. It's probably been a poor investment if I account for the hours I've spent playing with it. I will have to do something useful with my time now instead.
BAck on the stock market, several PIBs , and for example, Nat West preference shares (NWBD) yield 6.5-7% - about the same as FC promise us. On the other hand, they might behave differently in the future. If interest rates rise, the value of my NWBD will fall. Whereas the value of my FC investments would be unaffected directly, though you may expect an indirect effect from increased defaults.
SavingStream is looking attractive with a 12% return, though I assume there must be a high risk attached, and I don't fully understand how high it is.
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pikestaff
Member of DD Central
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Post by pikestaff on Oct 12, 2015 7:59:05 GMT
FC has been fun. Ive managed better than the advertised average, but not by lots. It's probably been a poor investment if I account for the hours I've spent playing with it. I will have to do something useful with my time now instead. BAck on the stock market, several PIBs , and for example, Nat West preference shares (NWBD) yield 6.5-7% - about the same as FC promise us. On the other hand, they might behave differently in the future. If interest rates rise, the value of my NWBD will fall. Whereas the value of my FC investments would be unaffected directly, though you may expect an indirect effect from increased defaults. SavingStream is looking attractive with a 12% return, though I assume there must be a high risk attached, and I don't fully understand how high it is. I have some NWBD (and other similar shares) but the price is quite volatile depending on both interest rate expectations and perceived credit risk. I wouldn't put too much in, just in case long-term inflation and rates rise sharply. I'm not expecting to this to happen but it might. My view of any site offering a straight 12% is if it looks too good to be true it probably is.
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SteveT
Member of DD Central
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Post by SteveT on Oct 12, 2015 9:26:04 GMT
I agree that SS is far from risk-free but commercial property bridging loans at 1.5 - 2%pm are not a new innovation, traditionally being the preserve of specialist lenders and HNWIs. What SS have done rather neatly is find the sweet-spot that enables them to finance large-scale bridging loans quickly (£2m / £3m / £5m) using funding provided by small - medium-size lenders happy to lend at 1%pm (there are some pretty serious players on SS, as well as us little guys). Not too hard to see how one might make money borrowing at 1%pm and lending it at 2%pm. However, there's minimal asset diversification across SS loans so that puts a firm cap on the amount I'm willing to lend there. The obvious risk is that a sharp downturn in commercial property triggers problems across multiple loans in short order, overwhelming the capacity of the provision fund to cover losses. That said, provided you diversify as widely as possible across the loan book and seek to reduce / exit loans as they head towards term, the risk of substantial capital loss is probably no higher than on AC and a lot lower than on FC (IMO).
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Post by pete101 on Oct 20, 2015 10:11:31 GMT
Despite having been in on FC at the start, I am a reluctant winder downer; with the variable rate model, I could look at the figures, make an assessment of risk and reflect it in my bid rate. Effectively, I was enhancing the FC risk assessment. Although FC have vastly improved, I still cant understand how a borrower can be A+ and have reducing turnover/credit rating. You cant use the new fixed rates and achieve the same enhancement.
P2P is a great idea and I support the concept, but its not a savings account and the loss risks have to be carefully considered, along with the minimal profit possibilities. I think FC will have to work very hard to make its business attractive to active investors, such as those on this forum. Indeed, the most sensible approach is just to buy into the FC preferred solution and turn on AutoBid, which I suspect is where FC would like us to go.
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Post by mostlywrong on Oct 20, 2015 10:52:41 GMT
I joined FC over 3 years ago and have, generally, stuffed in cash on a monthly basis. I have also, generally, followed a buy and hold strategy based on diversification, taking the hit of companies defaulting because that was part and parcel of the P2P business. But I have reached the point where the risk/reward ratio appears to have deteriorated and I have had a swathe of companies (A, B and C) default after only a few repayments. In my opinion, most small companies should now be in a much better financial position because their energy and transport costs have dropped sharply over the last 12 months. So, why am I suffering? Frankly, I don't know because I cannot see any particular reason for the swathe of defaults.
In terms of return, my XIRR is currently showing 7.8% pa before tax which is relatively stable. My share trading account is currently showing ~12% pa before tax over the same period but that is hugely volatile. But I reckon I have spent far more time on FC than I have researching the stock market. But then, FC appears to provide a more regular and predictable return (at least, after 3 years).
Overall, my investment in P2P lending has met my expectations although I under-estimated the effort involved in keeping track of everything! I also did not appreciate that, once the defaults started, I was locked into those loans for 5 years or more. Mea culpa!
My decision, therefore, is that I will abstain from any further cash investment and I will recycle my interest payments into short-term A+ property loans because interest rates must rise soon and lending at <9% for 4-5 years is probably not sensible. I might take a punt on the investment trust, if it arrives, but that will be with recycled interest payments.
MW
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