Speed of lending; cash drag

I to am happy with most aspects of BM. I like the concept, I like the website, I am happy to pay the fees if I get quality loans and low defaults (only time will tell on this one), I am happy to wait for the advised 4 weeks to be fully invested, I am investing for the long term, 4 weeks is no problem.

So what am I not happy about? Well the advised 4 weeks is just not correct - it is not happening. If BM cannot get this right, what else are they being "economical with the truth" about?

In round terms I invested 4k 2 months ago. I increased this to 8k one month ago after the 5k min came along and SF advised that rate of lending was proportional to the amount invested, i.e. double the amount, double the allocations, same time to be fully invested.

So if the advised 4 weeks was correct my 4k would have been about fully invested when I added the next 4k - it was not, I was under 3k invested. Now 9 weeks after the first 4k added, and 4 weeks after second 4k added I only have £5044 invested, i.e. 63% invested.

Am I unlucky? or is this normal? I  assume I have a normal allocation rate for the last 9 weeks. In which case why do BM continue to claim a 4 week allocation period.

As I say I do like the overall BM model. I would like to put a lot more money in, but one thing I do require of my p2p platforms is honesty, and at the moment BM is failing on that one.

Edit : I would like to make it perfectly clear that I do not think BM are deliberatly misleading their lenders. At some point no doubt they believed that a 4 week investment period was achievable, and may even have managed that in the past before I joined. However they are not doing that now and I think their documentation should give a reasonable and better estimate based on current performance. Then we will be better informed and can make our decisions accordingly. I do not like making my financial decisions based on information that is false or out of date.

stevefindlay  thank you very much for your reply. Let me first say that I really appreciate your presence here and your input to this forum. I know that it is time consuming and sometimes difficult to deal with all comments in a reasonable way.

Secondly  I really like the new format for the 'My Summary' page, although from a BM point of view it is what Sir Humphrey would probably call a 'brave decision' as the chart illustrates with great clarity that BM have been missing their own targets, as explained in the text below the graph , by a mile. Indeed after I doubled my investment my rate of lending did not double as I expected (based on previous information from yourself), but it actually decreased!



I do think you should change the text under the graph, viewed alongside the graph it is so very obviously incorrect. Indeed for the 4 weeks after I had 8k in, far from being 7-14 days to be fully deployed it looks like it will be more like 60-70 days to be fully deployed.

OK - I support your decision to maintain loan quality and if that means a slower rate of investment then so be it. However your current model will ensure that cash drag remains a major gripe amongst your lenders.

However it seems to me that there is an easy solution to this,

The BM model for automated diversified lending is very appealing, but it goes too far. It appears to make the assumption that a BM lender has all of their p2p money in this one basket and that they will not be adding any more. In these circumstances diversifying across 50 or 100 loans is the right thing to do. However I bet the vast majority of your lenders are on multiple p2p platforms and many will have only a tiny % of their p2p money on BM. In this case even with a 2% setting this will result in maximum individual allocations of say 0.02% or even much less as it is in my case, of overall p2p money. Who needs that level of diversification?

I decide for myself what % of my overall assets to put into p2p, and then what % of that to put into which p2p platforms. Only I can decide how I want to diversify at that level. So BM then enforcing a max 2% allocation of the small amount of cash I have deployed on BM is just silly. Furthermore the cash drag/idle money then inhibits me from putting in more money to get more sensible allocations. We have chicken and egg problem.

The obvious solution is to allow us to define a target BM investment. By default this could be set to cash on the platform, then if it is not changed everything would continue to work as it does now. However if I were to change my target to say £50k, while still having £8k on the platform, then that would increase my maximum allocation from £160 to £1000 with a 2% setting, or £500 with a 1% setting. That would give me the level of control I feel I want and I would then be happy for BM to take over and do everything else, and hence earn their 1.5% fee. I can then top up as needed to keep things flowing.

As I have made clear I do like many aspects of the BM model and would like move a lot more from other platforms to BM, however as it is it is just not working for me, so it will remain a minority holding.

It looks better if you have been invested for more than 2 months, although admittedly the compression of the x-axis does help.

Wow; this board is comatose!  Can't just be the effect of the hot weather, as some platforms continue to get high volumes of posting.  Maybe it's a good sign, in that no-one has anything to question or complain about - in which case success for a hands-off platform 

Just to report that after 2 investment-months @2% I finally got to 80% effectively placed - unfortunately surplus repayments the next week saw a decline to 75%.  Hey-ho, guess things have slowed down even more, so that the predicted 28 day AVERAGE (previously changed from 7 - 28 days) time to full investment may have to be revised again!  However, and more importantly, my Default and Watch lists are pleasingly empty, and if that largely prevails I'll be happy with the trade-off.

Yes, but I have 4 defaults - loans originated in Sept./Oct. 2016 with no visible action. If they turn into crystallised losses they will wipe out all the interest I earned, producing an overall loss (even heavier after tax).

I also find the reduction in traffic here slightly odd. Still at least Steve Findlay doesn't have to limit himself to a weekly roundup post or manage a blacklist :-)

I'm not sure whether small investors tend to be more proactive and prolific while larger investors are content to 'set and forget'.

Personally, I took my ball and flounced off when the charges were increased but subsequently returned on 1 June. 15% invested after 21 days so some work needed before I'm fully invested.