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Post by khampson on Jun 1, 2016 12:24:01 GMT
Hi new to FC, what advice can you give to a new lender? Do I go with auto bid or do I do it manually, I have had a look at various credit reports but I don't really understand them, what are the key points to look for when viewing these businesses? Do I need my own strategy and rules, obviously I will only pay £20 max into anyone business to diversification my loan book, so just looking for a little guidance. I have £1500 sat in my bank and really like the look of FC, I have previously dabbled in zopa, Rc and property partner and I am perfectly happy with the risk involved.
Thank you keith
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SteveT
Member of DD Central
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Post by SteveT on Jun 1, 2016 12:39:46 GMT
My suggestions would be:
A) don't dream of switching on Autobid
B) buy what you like the look of
C) seriously consider selling anything you buy after 6-7 months, especially Es and Ds (I no longer buy anything other than Es and Ds)
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Post by betterthanworking on Jun 1, 2016 12:40:52 GMT
That's a big question. I think anyone answering would first want to know how much time you are expecting to put in.
edit. crossed with Stevet
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Post by khampson on Jun 1, 2016 13:02:57 GMT
the time scale is at least 3years
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blender
Member of DD Central
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Post by blender on Jun 1, 2016 14:14:34 GMT
This will shock people but with £1500 to invest in £20 parts and not being familiar with credit reports, surely it is not worth the bother of doing anything other than switching on Autobid, perhaps making the secondary market settings high to avoid buying rejects, and using the time saved in more profitable ways?
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Post by betterthanworking on Jun 1, 2016 14:14:36 GMT
the time scale is at least 3years Ah, I meant how much of your own time can you spend on FC. Stevet's answer above will almost certainly give a better return than FC's 'average', but at the expense of several hours per week in front of the screen. I also never use autobid, but it is fairly 'fire-and-forget' if that is what you want.
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Post by khampson on Jun 1, 2016 16:25:20 GMT
I can spend a couple of hours each day if necessary, time is not a problem. Just need to know warning signs when I see the  I don't mind using auto bid if that's what it takes. |
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Post by Deleted on Jun 1, 2016 17:32:40 GMT
Read the reports, can you see where the cash comes from? Could you describe to your SO where the cash comes from? Answer should be YES Can you think through a scenario where the cash does not come in? Will the business be able to survive for some time until it does? YES Does the changes being suggested make any sense to you? Again YES Would you buy "I'm taking over this restaurant despite the fact I've never run a restaurant but I once ate in one"?? NO Take little steps, write down each one you are going to invest in and why (spread sheet it if you like). Build up knowledge based on what you read and what you decide. This is a marathon not a sprint. It took me 18 months to get my "pot" lent. The knowledge will prove invaluable when (not if) you get your first default. If in doubt ask us about a deal, what do we like or dislike for instance. I've learnt so much from the people here. Autobid doesn't teach you anything, why would you trust a robot over your own brain?  |
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Post by betterthanworking on Jun 1, 2016 17:47:32 GMT
I can spend a couple of hours each day if necessary, time is not a problem. Just need to know warning signs when I see the I don't mind using auto bid if that's what it takes. So you can take time to select the obviously better proposals, instead of letting autobid pick up the leftovers and discards for you. I would broadly agree with stevet above, just adding that you should be aware that most loans are not secured. Those that are, are generally property loans (interest only) and are therefore arguably safer, whilst still carrying the same (or even better) rates. The secondary market can also be a good source (tho' supply and demand does fluctuate). Any small premium that you might have to pay is compensated for by avoiding dead cash time that is inevitable when buying on the primary market.
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Post by jackpease on Jun 1, 2016 18:02:46 GMT
When i started out i was very pleased with myself and appeared to do well - but there is an inbuilt lag before the defaults start to roll in.
Despite being fully diversified i ended up doing worse than had i done autobid.
Now i am more picky and just about beat autobid - but sometimes you stumble across some real lemons eg struggling solar power firms which would get shovelled into your portfolio with autobid.
I think there's a cycle involved in all this - nervousness - excitement - boredom - worry - anger - acceptance - new realism - grudging respect, the latter is where i am with Funding Circle.
As Funding Circle was my first one, i have now learned that doing well may simply be down to having young loans which can lull you into thinking you have superior skills at picking good 'uns.... now i know i have no special skills i can cut out the anger bit and just accept the weary inevitability that defaults happen to oneself as well as everyone else!
Jack P
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Post by GSV3MIaC on Jun 1, 2016 19:54:37 GMT
The issue I have with autobid is that it specialises in things nobody else wanted .. it'll rarely get a look-in on Es or even Ds, and it can't tell cashback from no cashback. As SteveT said, you also need to be aware that it'll buy things on the secondary market, as long as they are sold with no markup - unless you set the bar very high. That makes it the dumping ground of choice for 'shop soiled' loan parts (one which were maybe late, but are now up to date, or ones where the press know the company is in trouble but FC haven't figured it out yet). If I didn't want to pick & choose, I think I might as well go with the FC Investment Trust or the AC GBBA/GEIA accounts - 7%-ish with little hassle, and at least you get a representative sample, rather than 'left overs'. Look at the default curves on the FC statistics page - you can see that the 'sell after 5 months' keeps you away from the worst issues in many cases. Guess who buys after 5 months? Yep, autobid, mostly. |
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Post by goldservice on Jun 2, 2016 8:09:07 GMT
khampson - whatever you decide to do, READ THIS BOARD daily. And I'll bet that you end up doing something different within 12 months!
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Post by GSV3MIaC on Jun 2, 2016 8:40:55 GMT
khampson - whatever you decide to do, READ THIS BOARD daily. And I'll bet that you end up doing something different within 12 months! But that'll take most of his couple of hours a day!?
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Post by pmac67 on Jun 2, 2016 9:09:28 GMT
Yes you should devise your own strategy or adopt somebody else's When reading a Company's financial report i look at a few key factors 1. Is the company value greater than it's liabilities ? If not that loan would lose a lot in bad debt if it defaulted. 2. Is it profitable ? Steady? Growing? What percentage of turnover is realized as profit? 3. Loan to Value ? Big percentages are riskier 4. Research the company... View it's website if applicable... Research the Director's history <Too many closed directorships is a turn off for me> 5. Pay attention to the reason they are borrowing.... Growth and expansion is the most reassuring.... Consolidating existing debt is a bit like juggling credit cards and is not as reassuring Take your time funding your loan book... Don't fill it with  just to get your pot loaned out... Once it is loaned out, stay on top of it, dump your least attractive loans in favour of better looking ones Welcome to FC and good luck ! |
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Post by ogwellian on Jun 2, 2016 11:22:36 GMT
I only buy C and D (very rarely get an E) and sell at par a couple days before third payment. 11.4% average return and no losses.
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I don't mind using auto bid if that's what it takes. 
just to get your pot loaned out... Once it is loaned out, stay on top of it, dump your least attractive loans in favour of better looking ones