dinisrr
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Post by dinisrr on Aug 22, 2016 11:08:58 GMT
Do you know some ways to leverage investments in P2P loans?
An easy way would be to use a broker's margin account, but it is very risky:
-I have about 20% of my portfolio in P2P loans, the rest is in ETFs (mostly stocks).
-I could get a margin account in my broker to borrow money - it would be collateralised by the ETFs but invested in P2P loans.
-This would mean a risk of a margin call if the stock market goes down, in this situation the money would be in illiquid assets (P2P loans) and I would be unable to deposit it in the brokerage account in the required time.
Do you know any P2P lending platforms that offer the possibility to leverage our investments?
Is there any better way to leverage these loans?
Thanks
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Post by GSV3MIaC on Aug 22, 2016 11:15:58 GMT
/mod hat off
IMO ANY leveraging of P2P is very risky. P2P may be appropriate for money you can afford to lose, or have tied up for ages, it is not appropriate for money you can't afford to lose, and doubly not appropriate for money you don't even actually have.
YMMV, but then some people like to play Russian Roulette too, apparently.
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locutus
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Post by locutus on Aug 22, 2016 11:29:49 GMT
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Post by buttchopf23 on Aug 22, 2016 11:55:42 GMT
as p2p investing is seen risky you should not leverage (i don't know any ways to do it). generally I would suggest to leverage never in General, the odds are against you
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Aug 22, 2016 12:20:25 GMT
Do you know some ways to leverage investments in P2P loans? An easy way would be to use a broker's margin account, but it is very risky: -I have about 20% of my portfolio in P2P loans, the rest is in ETFs (mostly stocks). -I could get a margin account in my broker to borrow money - it would be collateralised by the ETFs but invested in P2P loans. -This would mean a risk of a margin call if the stock market goes down, in this situation the money would be in illiquid assets (P2P loans) and I would be unable to deposit it in the brokerage account in the required time. Do you know any P2P lending platforms that offer the possibility to leverage our investments? Is there any better way to leverage these loans? Thanks If you do want to leverage try these methods. Much safer than getting a margin call. Remortage any property you own at a low rate. Pay all your day-to-day expenses on 0% credit cards. Get a low rate personal loan from your bank. Transfer savings from a flexible Cash ISA (remember to put them back before end of tax year). I confess to having used 3 of these methods. EDIT: You might even get a Xmas card from Mark Carney 
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Aug 22, 2016 12:36:10 GMT
Warren Buffett got rich by leveraging. He used the money from investors in his fund.
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dinisrr
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Post by dinisrr on Aug 22, 2016 15:23:35 GMT
Do you know some ways to leverage investments in P2P loans? An easy way would be to use a broker's margin account, but it is very risky: -I have about 20% of my portfolio in P2P loans, the rest is in ETFs (mostly stocks). -I could get a margin account in my broker to borrow money - it would be collateralised by the ETFs but invested in P2P loans. -This would mean a risk of a margin call if the stock market goes down, in this situation the money would be in illiquid assets (P2P loans) and I would be unable to deposit it in the brokerage account in the required time. Do you know any P2P lending platforms that offer the possibility to leverage our investments? Is there any better way to leverage these loans? Thanks If you do want to leverage try these methods. Much safer than getting a margin call. Remortage any property you own at a low rate. Pay all your day-to-day expenses on 0% credit cards. Get a low rate personal loan from your bank. Transfer savings from a flexible Cash ISA (remember to put them back before end of tax year). I confess to having used 3 of these methods. EDIT: You might even get a Xmas card from Mark Carney I agree about getting a mortgage, it seems one of the cheapest ways. Though it is something that you have to be really sure you want to do, it is a long-term commitment with steep upfront fees. The personal loans could be ok, but it depends a lot on the country you live in, usually it is too expensive, I believe you are from the UK and it is probably cheaper there. I already do the 0% credit card for 20-50 days. Regarding the risk to leverage risky investments (P2P loans, stocks, bonds, property, ...), of course it's risky (the investor has to be more careful if he uses leverage) but it is a common practice in more mature asset classes, both directly and indirectly: -Most stock brokers have margin accounts where you can leverage between 1.5x and 5x your investment. -There are specific funds and derivatives to leverage investments in the stock and bond market, and in specific sectors/geographies. -Mortgages are just a way to leverage an investment in property. -As you invest in a leveraged company (eg. most banks are leveraged between 10x and 50x) you are indirectly leveraging your investments. In this way you also benefit from the risk management done by the company where you invest. As it happens in more mature asset classes, P2P lending platforms will probably develop a way to offer leverage to their investors, as it is easier to manage if both investment and funding are done in the same place.
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nick
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Post by nick on Aug 22, 2016 16:47:40 GMT
Do you know some ways to leverage investments in P2P loans? An easy way would be to use a broker's margin account, but it is very risky: -I have about 20% of my portfolio in P2P loans, the rest is in ETFs (mostly stocks). -I could get a margin account in my broker to borrow money - it would be collateralised by the ETFs but invested in P2P loans. -This would mean a risk of a margin call if the stock market goes down, in this situation the money would be in illiquid assets (P2P loans) and I would be unable to deposit it in the brokerage account in the required time. Do you know any P2P lending platforms that offer the possibility to leverage our investments? Is there any better way to leverage these loans? Thanks The simplest way to leverage your P2P exposure would be to buy CFDs or spreadbets in some of the P2P close ended investment funds, eg FC's SME Income fund, P2P Global Investments etc. However, you would be exposed to basis risk (ie movements in the premium/discount to NAV the fund trades at). The bid-ask spreads on the funds can also be quite large, 1-2%, so probably only worth doing to invest over the medium to long term. IG margin 10% on CFDs and spreadbets on FC's fund, but this goes up to 20% for nominal investment of above c£2k and escalate further for nominal values above c£10k. Interest on margin amounts is charged at libor + 2.5% pa (so currently about 2.75%pa). I have small CFD and spreadbet positions in FC's SME Income fund where I have obtained 10 times leverage. I choose FC's fund as I'm already familiar and comfortable with its UK platform and risk/return profile of loans on it which make up over 50% of the fund's investment. The fund is also itself leveraged and is fairly liquid and normally trades within a 1% bid-ask spread. I am weary of the basis risk and for funding purposes assume a potential blow-out in the NAV discount from currently circa 1% premium to a 40% discount. For risk purposes, I always focus on the notional gross value of any derivative position as it movements in this that invariably flow through to future margin requirements. I wouldn't advocate leveraging up any P2P loan exposures unless you are very comfortable with the underlying risk of the P2P loans along with any risks (such as basis risk for closed end funds) all of which will be amplified by leverage.
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david42
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Post by david42 on Aug 22, 2016 17:36:10 GMT
I leverage my P2P investments along the lines dinisrr suggested. This doubles the risk and doubles the return. It is complicated and needs a lot of monitoring and maintenance. I have been doing it for nearly a year. I release cash by selling my FTSE 100 tracker funds, and replacing them with FTSE 100 futures bets purchased through IG.com. I invest most of the cash released in Peer to Peer. Costs Futures are cheap at the moment, because the future financing cost is linked to interest rates. I don’t have enough information to back calculate the inbuilt future financing cost but it seems to be less than 1% pa. I use the same approach for the S&P 500. But other futures I have looked at, like the FTSE 250, have prohibitively high bid-offer spreads. Risks and Mitigation Margin calls: when the index falls, I need to repay the cash that I released. I protect against crashes by buying put options at around 20% below the current index (cost around 1% pa). And I keep enough idle cash to cover market falls of up to 20%. Benefits As well as releasing extra cash for P2P investing, this approach has tax benefits compared to direct stock market investment because share index gains accumulate tax free and the dividends are built into the futures price so they accumulate tax free. |
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jonah
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Post by jonah on Aug 22, 2016 19:20:35 GMT
Once I've reread the above from nick, david42 and samford71 a few times I'll thank them then... It will take me that long to make sure I've understood them! Personally, I'm technically leveraging... 50% of my p2p cash is from 0% credit cards but I can cover that from other funding as needed. But I (think!) I understand that particular game. The golden rule with something like this is to make sure you really really know what you are doing else it is a great way to lose cash. |
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 22, 2016 19:28:29 GMT
I leverage my P2P investments along the lines dinisrr suggested. This doubles the risk and doubles the return. It is complicated and needs a lot of monitoring and maintenance. I have been doing it for nearly a year. I release cash by selling my FTSE 100 tracker funds, and replacing them with FTSE 100 futures bets purchased through IG.com. I invest most of the cash released in Peer to Peer. Costs Futures are cheap at the moment, because the future financing cost is linked to interest rates. I don’t have enough information to back calculate the inbuilt future financing cost but it seems to be less than 1% pa. I use the same approach for the S&P 500. But other futures I have looked at, like the FTSE 250, have prohibitively high bid-offer spreads. Risks and Mitigation Margin calls: when the index falls, I need to repay the cash that I released. I protect against crashes by buying put options at around 20% below the current index (cost around 1% pa). And I keep enough idle cash to cover market falls of up to 20%. Benefits As well as releasing extra cash for P2P investing, this approach has tax benefits compared to direct stock market investment because share index gains accumulate tax free and the dividends are built into the futures price so they accumulate tax free. Was it difficult to get started in this - I've signed up for demo accounts in the past but wasn't sure where to begin. Do you have any recommendations for websites/forums?
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stevio
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Post by stevio on Aug 22, 2016 20:02:31 GMT
Personally, I'm technically leveraging... 50% of my p2p cash is from 0% credit cards but I can cover that from other funding as needed. What sort of figures have you managed to fund? I am doing this too that's all, but not managed more than a low 5 figure amount
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Post by martin44 on Aug 22, 2016 20:15:14 GMT
If you do want to leverage try these methods. Much safer than getting a margin call. Remortage any property you own at a low rate. Pay all your day-to-day expenses on 0% credit cards. Get a low rate personal loan from your bank. Transfer savings from a flexible Cash ISA (remember to put them back before end of tax year). I confess to having used 3 of these methods. EDIT: You might even get a Xmas card from Mark Carney This is an area of investment that i have been pondering over for some time now, i have 4 BTL properties , no mortgages and all tenanted, TBH the only thing holding me off the mortgage leveraging is my nerve, and that's even considering the rents would far outweigh the mortgage re-payments. I think i need to man up. 
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gibmike
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Post by gibmike on Aug 22, 2016 20:53:48 GMT
I have £35,000 left on my mortgage at 4.5%. I could pay it off, or I could invest in P2P which is what I have done, I then use this to slowly reduce the balance over time. Technically leveraging...;-)
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Post by martin44 on Aug 22, 2016 20:59:50 GMT
quite right. or pay off your mortgage, re-mortgage @ 2.5% and then invest it in p2p?
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