ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 11, 2016 17:38:21 GMT
The point of diversification is to narrow the range of possible weighted outcomes. It's better to have a (predicted) range of a 10%-20% loss of capital with a mean of 15%, than a (predicted) range of a 0-100% loss with the same mean. Diversification is for insurance against rare outlier events happening, such as the board of a FTSE-100 company adopting a strategy (buying telecom assets for cash at bubble prices) that destroys the company in a few months. Very true... This is the primary reason I take part on this forum, to take on advice from those far more knowledgeable than me  I will start to diversify my portfolio; I've already got accounts with MT & ABL, and have my eye on some of the others. As soon as my funds start to increase, I'll invest them in alternative platforms. Better warn Ed, Andy & David - the Dude is coming, prepared to be scrutinised. Sure a chill's just gone down their spines ;-)
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stevio
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Post by stevio on Jun 11, 2016 17:47:37 GMT
The point of diversification is to narrow the range of possible weighted outcomes. It's better to have a (predicted) range of a 10%-20% loss of capital with a mean of 15%, than a (predicted) range of a 0-100% loss with the same mean. Diversification is for insurance against rare outlier events happening, such as the board of a FTSE-100 company adopting a strategy (buying telecom assets for cash at bubble prices) that destroys the company in a few months. Very true... This is the primary reason I take part on this forum, to take on advice from those far more knowledgeable than me I will start to diversify my portfolio; I've already got accounts with MT & ABL, and have my eye on some of the others. As soon as my funds start to increase, I'll invest them in alternative platforms. Be interesting to see which platforms you end up choosing - what with your keen 'due diligence', be interesting to see your reasoning for platforms and also bring your questioning ability to bear on other platforms loans (as I for one don't always have the time for as much depth as I would like)
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Greenwood2
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Post by Greenwood2 on Jun 11, 2016 19:28:02 GMT
Which results in exactly the kind of run-on-the-bank / avalanche breakdown (technical term. 8>.) which we would all like to avoid. At least in the case of SS there is no mechanism for 'race to the bottom' price cutting, but a sudden rush to sell would still be uncomfortable for all. Historically SS have not been great at repayments happening when they are supposed to (not alone there, see also Failed Completion's property loans) so you/we really ought to work on the basis of 'we may be able to get most of our money out within a few months of the loan end date', and if that's not a sustainable option then it's time (IMO, not of course advice) to spread it around more. Not going to disagree with any of that. I don't currently envisage having to withdraw my money quickly anyway, and my reserves from personal and business amount to £10,000 which should cover any unforeseen situations. Diversification is currently something I've been looking at. Problem is, as I see it, by diversifying I increase the actual risk of losing some of my money (if any one of the platforms fails), as opposed to the risk of just SS failing (and losing all of my money). That may sound strange when read, but the way I see it is that the likelihood of one of the many P2P platforms failing is high, whereas the likely hood of the one that I'm solely invested in (SS) failing is low. However.... eggs & basket (I know, I know...). I do feel that with the current stable P2P climate I can take my time with my strategy, and hope to have the details ironed out before any disasters occur with SS or the P2P market. If you were currently investing in Zopa or RS I might or might not agree with you, but investing in one of the newish platforms with ALL of your funds must be terribly risky. Some of these platforms will fail, which ones is pot luck and if they don't fail completely some of these platforms will be found to have poor credit risk, again pot luck. Time to sort it out may not be something you have, but I wish you luck.
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Liz
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Post by Liz on Jun 11, 2016 20:05:55 GMT
hi all,
just though i would would ask what your reasons for using SS are?
are you using it to create an income or are you investing for the future or something else?
for me personally I have never really been into saving or investing until last year and then I decided that I wanted to save hard.
a few months ago I found RS and loved getting 6% and then human nature set in and I wanted more. That's when I found SS with its mighty 12% at 1% a month 
I decided des that I am not touching the money in the account and will add to it every month for as long as possible whilst reinvesting every penny for maximum interest compounding.
so what are your plans?
At the moment, it is simply savings for me (reinvesting all the interest), but in the future (the distant future) I'm hoping it could become an income so that I can work less and enjoy life a bit more. That's only in regards to my personal SS A/C; I also have a business SS A/C. I keep my income (wage & dividends) from my business to just below the higher rate, and reinvest any excess the business has with the SS business account; the idea being, in the future the interest from the SS business A/C could provide me a basic wage.
Due to the above, I probably hold too much (which others would consider not sensible) of my available funds in SS (95% Personal, 80% Business), so this could be is considered a high-risk strategy. The reason that I am (currently) comfortable in doing so, is because of the availability of the SM, and because the SM is currently liquid. Any sign that the liquidity of the SM starts to wane, I will reduce my portfolio with SS.If you do want diversity, you could always try Thincats, it does have some good property loans. Just don't expect a quick and simple website or any communication.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Jun 11, 2016 20:06:03 GMT
Not going to disagree with any of that. I don't currently envisage having to withdraw my money quickly anyway, and my reserves from personal and business amount to £10,000 which should cover any unforeseen situations. Diversification is currently something I've been looking at. Problem is, as I see it, by diversifying I increase the actual risk of losing some of my money (if any one of the platforms fails), as opposed to the risk of just SS failing (and losing all of my money). That may sound strange when read, but the way I see it is that the likelihood of one of the many P2P platforms failing is high, whereas the likely hood of the one that I'm solely invested in (SS) failing is low. However.... eggs & basket (I know, I know...). I do feel that with the current stable P2P climate I can take my time with my strategy, and hope to have the details ironed out before any disasters occur with SS or the P2P market. If you were currently investing in Zopa or RS I might or might not agree with you, but investing in one of the newish platforms with ALL of your funds must be terribly risky. Some of these platforms will fail, which ones is pot luck and if they don't fail completely some of these platforms will be found to have poor credit risk, again pot luck. Time to sort it out may not be something you have, but I wish you luck. What convinced me to first sign up to SS, was the fact they had lent £90m (when I joined) and only had one default, but when I recently look into the numbers further, I found that SS have only repaid 15% of their loan book to date. This low percentage is largely due to the fact that Saving Streams loan book accelerated in size over the last year. As sam i am mentioned earlier in this thread, I think that I may have been lulled into a false sense of security. Due to the above, and comments about my strategy, I am now more inclined to diversify.
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am
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Post by am on Jun 11, 2016 20:10:26 GMT
Not going to disagree with any of that. I don't currently envisage having to withdraw my money quickly anyway, and my reserves from personal and business amount to £10,000 which should cover any unforeseen situations. Diversification is currently something I've been looking at. Problem is, as I see it, by diversifying I increase the actual risk of losing some of my money (if any one of the platforms fails), as opposed to the risk of just SS failing (and losing all of my money). That may sound strange when read, but the way I see it is that the likelihood of one of the many P2P platforms failing is high, whereas the likely hood of the one that I'm solely invested in (SS) failing is low. However.... eggs & basket (I know, I know...). I do feel that with the current stable P2P climate I can take my time with my strategy, and hope to have the details ironed out before any disasters occur with SS or the P2P market. If you were currently investing in Zopa or RS I might or might not agree with you, but investing in one of the newish platforms with ALL of your funds must be terribly risky. Some of these platforms will fail, which ones is pot luck and if they don't fail completely some of these platforms will be found to have poor credit risk, again pot luck. Time to sort it out may not be something you have, but I wish you luck. Note that the failure of SS would not under most circumstances result in the loss of all your money. The assets are still there, you're still the beneficial owner, and the FCA required that run-off management be pre-arranged.
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Post by brianac on Jun 11, 2016 21:10:25 GMT
But only for new T&C's loans
Brian
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nick
Member of DD Central
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Post by nick on Jun 11, 2016 21:57:11 GMT
If you were currently investing in Zopa or RS I might or might not agree with you, but investing in one of the newish platforms with ALL of your funds must be terribly risky. Some of these platforms will fail, which ones is pot luck and if they don't fail completely some of these platforms will be found to have poor credit risk, again pot luck. Time to sort it out may not be something you have, but I wish you luck. Note that the failure of SS would not under most circumstances result in the loss of all your money. The assets are still there, you're still the beneficial owner, and the FCA required that run-off management be pre-arranged. It probably won't lead to the loss of all your money, but it is likely to result in some loss. The cost to pay a third party to run-off the loan book is likely to be significant. When Trustbuddy went bust only 75% of loan value was realised after fees (although the nature of the loan book was very different - pay day loans). The other risk that is always present, but often overlooked is fraud risk. This risk is somewhat mitigated by regulation, but is far from eliminated. This is again illustrated by the failure of Trustbuddy, which as a listed company, was subject to significantly regulatory scrutiny and to full statutory audits, but still managed to perpetuate a ponzi scheme for several years that led to significant investor losses. Unfortunately P2P platforms aren't covered by the Financial Services Compensation Scheme, which is the usual backstop to safeguard client money/assets in the banking, investment and insurance industries. Personally, I try to manage this risk by spreading my investment across many platforms weighting my allocation to those that are most established in terms of age and size.
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Post by earthbound on Jun 11, 2016 22:10:26 GMT
andyb I need someone to grab me by the throat and shake some sense back... like you , i was not content with 5 or 6% and then found 12% p2p.. beware.. once in and earning 12%.. it's not (psychologically) easy to get out while things are going along smoothly,..... it will be impossible when things turn rough. 
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andyb
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Post by andyb on Jun 11, 2016 23:09:42 GMT
andyb I need someone to grab me by the throat and shake some sense back... like you , i was not content with 5 or 6% and then found 12% p2p.. beware.. once in and earning 12%.. it's not (psychologically) easy to get out while things are going along smoothly,..... it will be impossible when things turn rough. Warning took on board mate  I have money spread about so if the SS bubble does ever burst I will be ok but I am defiantly going to carry on allocating any surplus cash here
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Post by harvey on Jun 11, 2016 23:11:20 GMT
I invest to provide me with an income without eating away at my capital.
I suppose you could say I am asset and savings rich but income poor. I worked in a well paid profession for over 30 years and i always saved a bit when i could and was careful and fortunate to be able to amass a reasonable amount of wealth and own my property without a mortgage.
For health reasons I am unable to work much at the moment and there are a few years before I can draw my pensions, although I could if I was prepared for them to be actuarially reduced if you know what I mean. So I have a little gap to fill before I take my pensions. Investments like these enable me to provide myself with a livable monthly income and maintain my lifestyle without depleting my capital too much before I officially retire.
So I withdraw all my interest from all my Savings and Investments every month and live off it. I also have protected Building Society type savings bonds set up to pay me monthly interest into my bank. Obviously I don't have the majority of my money in peer to peer things but the amount I have provides me with a very helpful income for the time being.
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freddy
Member of DD Central
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Post by freddy on Jun 12, 2016 1:34:56 GMT
Following a company restructure I had the opportunity to take early retirement 2 years ago. At the time I had just turned 50 so qualified for unabated pension plus a reduced redundancy payment. I sold up, moved abroad, built a house and swimming pool. My monthly pension provides me with enough to live on reasonably comfortably however my aim now is to re-grow my remaining capital until such time as I reach a more traditional retirement age of 60. Then spend it.
I've put the max possible into premium bonds. This is my safety net. The return is rubbish but the cash is safe. The odds of winning big are also ridiculously long but I just like the monthly 'Good News from Ernie' anticipation. Adding to which the return has been greater than I would have got from a savings account.
And so, my remaining capital is invested with SS and MT. I reinvest my interest monthly. I accept that this is a high risk strategy however if the worst happened I'd be OK. I'm determined not to fall into the trap of continually saving and never spending. At 60 I'm going to start topping up my monthly income from my capital and do more travelling. 7 years to go.
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Post by justdabbling on Jun 12, 2016 2:57:15 GMT
Freddy, you are probably more diversified than most posters, as SS relies on the UK property market increasing in value and you have property abroad, and therefore also diversified currency wise, although perhaps you have a risk of income in one currency,nana expenditure in another.
Some posters are suggesting diversification into another P2P with UK property loans and whilst this does spread the risks associated with the different P2Ps such as fraud, competence etc. it does not diversify against the risk of UK property prices stalling, but your strategy does.
Soros has bought a load of gold, which has no returns and even cost money to keep. I wonder how many SS investors hold gold as part of their portfolio.
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jimbob
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Post by jimbob on Jun 12, 2016 5:48:29 GMT
The liquidity of the secondary market is the main+ point for me Psychologically I certainly feel it is easier to buy rather than sell with SS right now - of course this adds to the desirability of the loans by increasing scarcity on the secondary market - but you must sell as your plan demands |
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Post by dualinvestor on Jun 12, 2016 6:58:49 GMT
Note that the failure of SS would not under most circumstances result in the loss of all your money. The assets are still there, you're still the beneficial owner, and the FCA required that run-off management be pre-arranged. It probably won't lead to the loss of all your money, but it is likely to result in some loss. The cost to pay a third party to run-off the loan book is likely to be significant. When Trustbuddy went bust only 75% of loan value was realised after fees (although the nature of the loan book was very different - pay day loans). The other risk that is always present, but often overlooked is fraud risk. This risk is somewhat mitigated by regulation, but is far from eliminated. This is again illustrated by the failure of Trustbuddy, which as a listed company, was subject to significantly regulatory scrutiny and to full statutory audits, but still managed to perpetuate a ponzi scheme for several years that led to significant investor losses. Unfortunately P2P platforms aren't covered by the Financial Services Compensation Scheme, which is the usual backstop to safeguard client money/assets in the banking, investment and insurance industries. Personally, I try to manage this risk by spreading my investment across many platforms weighting my allocation to those that are most established in terms of age and size. Good luck with 75% especially if Lendy Ltd were insolvent. Remember in a significant number of loans it is the principal and any liquidator is going to treat the lenders in those loans as unsecured creditors of Lendy Ltd. Further whatever the quality of the loan book debtors of an insolvent company have a million and one reasons not to pay, rarely are any justified but without the management of the platforms there to challenge them difficult and costly to defeat. Add to that the quality of the loan book in the first instance. .......
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