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Post by retired2005 on Aug 7, 2016 11:11:38 GMT
Those of you who have a 'policy' of selling loans once they reach less than 'XX' days to repayment .......
What do you do if there's nothing better to buy (like now....)
I recently sold some loan parts I was not happy with but find myself in the position where I have nothing to replace them with ....therefore losing circa 10.5% per month (assuming the money is invested elsewhere at a measly rate)
How do others treat this situation...??
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Aug 7, 2016 11:16:19 GMT
Those of you who have a 'policy' of selling loans once they reach less than 'XX' days to repayment ....... What do you do if there's nothing better to buy (like now....) I recently sold some loan parts I was not happy with but find myself in the position where I have nothing to replace them with ....therefore losing circa 10.5% per month (assuming the money is invested elsewhere at a measly rate) How do others treat this situation...?? Although I do see loans that fall within my XX limit as riskier, I do believe that a diverse portfolio is just as important. In order of importance... 1. DD 2. LTV (90day if available) 3. Days Remaining 4. Recent Updates 5. Gut feeling
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Post by dualinvestor on Aug 7, 2016 11:31:18 GMT
Those of you who have a 'policy' of selling loans once they reach less than 'XX' days to repayment ....... What do you do if there's nothing better to buy (like now....) I recently sold some loan parts I was not happy with but find myself in the position where I have nothing to replace them with ....therefore losing circa 10.5% per month (assuming the money is invested elsewhere at a measly rate) How do others treat this situation...?? Presumably you are confusing annual rates with monthly rates. You might be "losing" c.0.95% per month if you can't re-invest, but if you are following the policy described to minimise risk you don't know what you are "saving" until the particular loan you are selling either repays or not. Having any policy because others do it is not necessarily the best method of investing, so far on SS there has only been one default where the final outcome is known and another where the realisation of the security and/or the intervention of the provision fund is, as yet, unknown. As the standard financial warning goes "past performance is not necessarily a guide to future performance" but you would be much better using the check list provided by cooling_dude for both existing and new loans rather than an inflexible, I am going to sell when remaining days fall below x days.
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Post by retired2005 on Aug 7, 2016 11:42:46 GMT
Thanks both .....
I already use a very simlar checklist to Coolly Diligent (!!) which is what caused me to sell the loanparts in the firstplace .....
And yes, apologies for tryping (sic) too quickly without thinking, and confusing annual with monthly interest !!
Guess I was trying to establish whether others put their criteria, (whatever they may be, but often 'days remaining....) before the allure of 12% PER ANNUM (haha!! not per month .....) or, if nothing better was available, stayed invested anyway ....?
EDIT: thanks to all ...... including those posting as I was!!
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ilmoro
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'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 Aug 7, 2016 11:46:01 GMT
Those of you who have a 'policy' of selling loans once they reach less than 'XX' days to repayment ....... What do you do if there's nothing better to buy (like now....) I recently sold some loan parts I was not happy with but find myself in the position where I have nothing to replace them with ....therefore losing circa 10.5% per month (assuming the money is invested elsewhere at a measly rate) How do others treat this situation...?? Move the cash to somewhere there is something to buy. I move money between platforms & 'holding' current accounts in response to ebbs & flows. Nothing on SS but Collateral, ABL, MT & FS all have upcoming loans at comparable rates. Might take a short term interest hit but nothing major
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Post by Deleted on Aug 7, 2016 12:21:07 GMT
I do exactly the same as ilmoro, once you have built up a quality loan book with 1% as a max, you end up with a stream of returning capital at a pretty steady rate. If you've mixed up your 6 month up to 5 year loans then you will get on average everything back every 2+ years or say 4% a month. Not sure what is the point in loaning to something you don't like. I'd rather earn zero and not lose 100%  |
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ben
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Post by ben on Aug 7, 2016 12:23:09 GMT
Why buy a loan orgianally you are not happy to hold?
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Post by geraldine1210 on Aug 7, 2016 12:33:01 GMT
Why buy a loan orgianally you are not happy to hold? I may be wrong, but I'm guessing the loan was not so much unwanted, as one that was OK, but not one that was desperately wanted.
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Post by dualinvestor on Aug 7, 2016 12:45:18 GMT
Why buy a loan orgianally you are not happy to hold? I don't know but it does seem to be a policy followed by at least a few on here, not wanting to hold on to maturity.
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oldgrumpy
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Post by oldgrumpy on Aug 7, 2016 12:56:09 GMT
Example (fictitious). Garden Centre. I want a six month loan. I sell at 5 months 30 days (or less). Lucky me. I didn't want a 13 month loan with no chance of selling my loan parts.
Real example in another place. Epping. Ipswich. Didn't hold to term. Well, well. Borrower plays silly b*gg*rs. I have no waiting for my money and no (eventual) capital loss. In the meantime my cash has been earning interest elsewhere.
We always have to trust that a borrower will repay, but selling before maturity dispenses with some of the risk. I cannot answer the question of why others are prepared to take the risk from me.
Don't really know why the question was asked by a non-"newby".
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adrianc
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Post by adrianc on Aug 7, 2016 12:59:06 GMT
Why buy a loan orgianally you are not happy to hold? There's very little risk initially - right up until the point at which the borrower's pre-paid interest has all been distributed. Then the risk grows massively, as the borrower suddenly has to start digging in their pocket for the first time, and start transferring money back to the platform. That money either needs to be more interest, or the principal.
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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 Aug 7, 2016 13:14:43 GMT
Example (fictitious). Garden Centre. I want a six month loan. I sell at 5 months 30 days (or less). Lucky me. I didn't want a 13 month loan with no chance of selling my loan parts. Real example in another place. Epping. Ipswich. Didn't hold to term. Well, well. Borrower plays silly b*gg*rs. I have no waiting for my money and no (eventual) capital loss. In the meantime my cash has been earning interest elsewhere. We always have to trust that a borrower will repay, but selling before maturity dispenses with some of the risk. I cannot answer the question of why others are prepared to take the risk from me. Don't really know why the question was asked by a non-"newby". Yep, AC has done a great job teaching me that the rate may be great but you might never escape! Fun fact The book One Thousand and One Nights was originally written to keep Persian rug sellers entertained while they waited for the transactions to complete. Still relevant in the modern world as FS is amply demonstrating 
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Post by harvey on Aug 7, 2016 13:35:17 GMT
I've got less money invested in SS than I had a month or so ago - because there were some loan parts I wanted to sell, for various reasons, and there were no other available loans I wanted to increase my stake in. A bit of that money has been invested in MT loans but at present I've got a little bit more cash than normal sitting idly in a bank deposit account earning almost no interest. However I see this as only a short term situation and it's ready for reinvestment as and when opportunities arise that I'm happy with. I'd rather keep my money safe than keep it in loans I don't like, or throw diversification caution out of the window, just for the sake of a bit of interest.
If SS soon go live with new loans that look OK to me, than my investment on the SS platform will go back up again.
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stevio
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Post by stevio on Aug 7, 2016 14:16:08 GMT
Why buy a loan orgianally you are not happy to hold? There's very little risk initially - right up until the point at which the borrower's pre-paid interest has all been distributed. Then the risk grows massively, as the borrower suddenly has to start digging in their pocket for the first time, and start transferring money back to the platform. That money either needs to be more interest, or the principal. Can you expand on this? How does this work? The borrower pays a certain amount of interest up front? It is interesting to see at what stage people think a loan is most risky
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adrianc
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Post by adrianc on Aug 7, 2016 14:18:56 GMT
There's very little risk initially - right up until the point at which the borrower's pre-paid interest has all been distributed. Then the risk grows massively, as the borrower suddenly has to start digging in their pocket for the first time, and start transferring money back to the platform. That money either needs to be more interest, or the principal. Can you expand on this? How does this work? The borrower pays a certain amount of interest up front? Yep. The interest for the entire period is added to the loan up-front, and retained by SS for distribution to lenders through the term.
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