stevio
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Post by stevio on Sept 7, 2016 13:04:37 GMT
I've been playing with the calculations for effective yield and struggling. I've read a few threads on here but i can't get my head around it. Can someone post a clear list of calculations that are made to get an effective yield/loss to the buyer/seller? If a buyer gets a £100 loan at -4% discount. 1) Bought for £97.38 by the seller. 2) 35 days gone. 3) 147 days remaining. 4) Accrued interest (£100*14%/365)*35=£1.34). 5) Remaining Interest (£100*14%/365)*147=£5.64. Can someone continue the steps? A £100 loan offered at 4% discount (which, incidentally, is most unlikely!) with 35 days accrued interest at 14% (£1.34) should cost the buyer £97.34 (rather than £97.38) The "Effective Rate" for the Buyer would then be calculated over an assumed 148 days remaining term (183 - 35), assuming the full 183 days of interest (£7.02) will be paid at completion plus the £100 capital. Therefore the % return from the Buyer's perspective is [Profit Made / Price Paid] / [Days Held / 365]. So in this case = [(£107.02 - £97.34) / £97.34] / [148 / 365] = 24.5% Take it this would be an ANNUAL rate if the investment was held for 365 days - here it is held for 183 days, so unless you can replicate the same or similar deal, then you have to take that into account, in much the same way that most of FS's loans used to be 12% for 6m, so only 6% unless reinvested in another 12% 6m loan And that is also not including the TAX calculation........
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SteveT
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Post by SteveT on Sept 7, 2016 13:07:23 GMT
Take it this would be an ANNUAL rate if the investment was held for 365 days - here it is held for 183 days, so unless you can replicate the same or similar deal, then you have to take that into account, in much the same way that most of FS's loans used to be 12% for 6m, so only 6% unless reinvested in another 12% 6m loan Yes, all % rates quoted on FS are annualised of course, otherwise everyone would get REALLY confused  And in the example above, it is held for 148 days, not 183
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SteveT
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Post by SteveT on Sept 7, 2016 13:16:36 GMT
That was a good bit of business then (assuming the loan repays, of course!)
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stevio
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Post by stevio on Sept 7, 2016 13:18:46 GMT
Take it this would be an ANNUAL rate if the investment was held for 365 days - here it is held for 183 days, so unless you can replicate the same or similar deal, then you have to take that into account, in much the same way that most of FS's loans used to be 12% for 6m, so only 6% unless reinvested in another 12% 6m loan Yes, all % rates quoted on FS are annualised of course, otherwise everyone would get REALLY confused And in the example above, it is held for 148 days, not 183 Sure, just thought it important to note, as some will just see the high rate and compare that rate to other platforms and not take into account that you are receiving that higher rate for a relatively small proportion of time and therefore the actual amount of interest is relatively small, despite at a higher rate Additionally, the reason for that higher rate is due to the increased risk - loan paying back early, perceived greater risk of default at the end of the loan as FS only pay interest at the end of the loan and possible tax liabilities. Those risks could wipe out any perceived gains and actually end up with the buyer being out of pocket
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Post by wickedxuk on Sept 7, 2016 13:34:01 GMT
A £100 loan offered at 4% discount (which, incidentally, is most unlikely!) with 35 days accrued interest at 14% (£1.34) should cost the buyer £97.34 (rather than £97.38) The "Effective Rate" for the Buyer would then be calculated over an assumed 148 days remaining term (183 - 35), assuming the full 183 days of interest (£7.02) will be paid at completion plus the £100 capital. Therefore the % return from the Buyer's perspective is [Profit Made / Price Paid] / [Days Held / 365]. So in this case = [(£107.02 - £97.34) / £97.34] / [148 / 365] = 24.5% Take it this would be an ANNUAL rate if the investment was held for 365 days - here it is held for 183 days, so unless you can replicate the same or similar deal, then you have to take that into account, in much the same way that most of FS's loans used to be 12% for 6m, so only 6% unless reinvested in another 12% 6m loan And that is also not including the TAX calculation........ Hi SteveT this is an actual sale made between me and my wife's account so the numbers have come directly from Fs. I also calculated the sale price at £97.34 but I didn't fund until 1 day after the loan went live so assumed this was the discrepancy in the interst accrued.. I can investigate that further anyway. I was using full term for Days Held/365 which was why I was getting skewed results. Your worked numbers have helped massively! Thank you very much! 🖒
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Post by wickedxuk on Sept 7, 2016 13:35:31 GMT
A £100 loan offered at 4% discount (which, incidentally, is most unlikely!) with 35 days accrued interest at 14% (£1.34) should cost the buyer £97.34 (rather than £97.38) The "Effective Rate" for the Buyer would then be calculated over an assumed 148 days remaining term (183 - 35), assuming the full 183 days of interest (£7.02) will be paid at completion plus the £100 capital. Therefore the % return from the Buyer's perspective is [Profit Made / Price Paid] / [Days Held / 365]. So in this case = [(£107.02 - £97.34) / £97.34] / [148 / 365] = 24.5% It is unlikely, but not impossible, I'm guessing it was wickedxuk who nabbed the £100 piece of Burnham on sea from under me nose earlier.   Lucky for me you didn't get it! It was just a test transfer between my wife's account and mine! So yes if it was at -4% discount then yes it was me!
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stevio
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Post by stevio on Sept 7, 2016 13:44:07 GMT
It is unlikely, but not impossible, I'm guessing it was wickedxuk who nabbed the £100 piece of Burnham on sea from under me nose earlier. Lucky for me you didn't get it! It was just a test transfer between my wife's account and mine! So yes if it was at -4% discount then yes it was me! What was it testing? Surely a transfer at 0% would have been simpler and less risky..........unless your trying to move a tax liability...... 
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Post by wickedxuk on Sept 7, 2016 13:53:42 GMT
Lucky for me you didn't get it! It was just a test transfer between my wife's account and mine! So yes if it was at -4% discount then yes it was me! What was it testing? Surely a transfer at 0% would have been simpler and less risky..........unless your trying to move a tax liability...... 🔨📍😲...🤑
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stevio
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Post by stevio on Oct 5, 2016 12:05:58 GMT
Excel wiz - how do you get excel to pull out the details from FS downloaded spreadsheet to work out what you have paid for SM parts and the interest paid at the end of the loan? Also, does anyone have a FS specific spreadsheet where you enter the downloaded spreadsheet data and it works out your total loan parts etc? The CSV download provided by FS can easily be imported into Excel, and the entries decoded via a simple look-up table, but it doesn't provide enough information on SM transactions for you to be able to calculate SM premiums / discounts and accrued interest (just gives the total capital purchased/sold and the total price paid/received). I have to add these manually to my FS tracking spreadsheet after each SM transaction. I then total using a pivot table. can't find your original post when you asked for additional information in the download from FS with regards to SM purchases - but they mention in the Newsletter and seems an additional column has been added - imagine another column or two needs to be added by the user, but does this help? Does it allow some excel wizardary to get the figures you talked about?
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SteveT
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Post by SteveT on Oct 5, 2016 12:42:55 GMT
The CSV download provided by FS can easily be imported into Excel, and the entries decoded via a simple look-up table, but it doesn't provide enough information on SM transactions for you to be able to calculate SM premiums / discounts and accrued interest (just gives the total capital purchased/sold and the total price paid/received). I have to add these manually to my FS tracking spreadsheet after each SM transaction. I then total using a pivot table. can't find your original post when you asked for additional information in the download from FS with regards to SM purchases - but they mention in the Newsletter and seems an additional column has been added - imagine another column or two needs to be added by the user, but does this help? Does it allow some excel wizardary to get the figures you talked about? No, not really, since the capital amount purchased is already included within the text of the first column (so we now have it twice). What's really needed (and hopefully what fundingsecure is working on) is another column in the My Activity download that gives the % premium or % discount at which each SM trade was made. That way, the £ premium / discount and the £ accrued interest can easily be calculated.
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stevio
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Post by stevio on Mar 18, 2017 9:02:36 GMT
In a personal account, if your looking to sell prior to the end of a loan, is there greater return from:
- holding a loan for the longest period before selling
- selling as soon as possible
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stevio
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Post by stevio on Mar 18, 2017 10:05:15 GMT
I suppose it all depends on the premium/discount. I have only sold at a discount, between 0.8% and 1.25%, selling between 30 and 50 days to go, and generally clearing 4%- 4.5% on my original investment at at approx 5 months so equivalent to paying 20% tax. As a higher rate taxpayer, this is to my advantage. I would rarely go over £75 per loan so I am not in the bonus game at FS. (Do people really buy at a premium?) Yes, I was thinking this Longer hold the more accrued interest but more discount needed
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Liz
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Post by Liz on Mar 18, 2017 22:54:33 GMT
I suppose it all depends on the premium/discount. I have only sold at a discount, between 0.8% and 1.25%, selling between 30 and 50 days to go, and generally clearing 4%- 4.5% on my original investment at at approx 5 months so equivalent to paying 20% tax. As a higher rate taxpayer, this is to my advantage. I would rarely go over £75 per loan so I am not in the bonus game at FS. (Do people really buy at a premium?) Yes, I was thinking this Longer hold the more accrued interest but more discount needed Yes loans sell at a premium. I sold £400 today @ 1% premium
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elliotn
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Post by elliotn on Mar 19, 2017 1:33:46 GMT
Yes, I sold at 2% premium last week.
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stevio
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Post by stevio on Mar 19, 2017 7:36:07 GMT
Does anyone know the maximum premium allowed at say 0 days, 1m,2m,3m,4m,5m or a quick way to work out on average 13% loan?
I know SM restricts anything less than 4% return for buyer
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And in the example above, it is held for 148 days, not 183
