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Post by barberbookie on Nov 27, 2016 9:40:07 GMT
Hello all ,
After around 6 months of investing with FC , i have incurred 4 losses in a row . with another 2 currently having been downgraded and the dreaded ccj wording mentioned. 3 of these were A rated loans.
Is this the norm do you think? I have noticed that 2 of them have gone pop after only 1 repayment.
My losses now are now 29% of my interest earned to date. Interest earnings is therefore well short of the 7.2% rate after fees and bad debt.
Any advise , or is this just the way things are at the moment.
Wondering if i should just cut and run.
Tony
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Post by barberbookie on Nov 27, 2016 9:55:27 GMT
Hello all , After around 6 months of investing with FC , i have incurred 4 losses in a row . with another 2 currently having been downgraded and the dreaded ccj wording mentioned. 3 of these were A rated loans. Is this the norm do you think? I have noticed that 2 of them have gone pop after only 1 repayment. My losses now are now 29% of my interest earned to date. Interest earnings is therefore well short of the 7.2% rate after fees and bad debt. Any advise , or is this just the way things are at the moment. Wondering if i should just cut and run. Tony , very similar to the experience of lenders at Rebuilding Society.com, I and many others lending into P2B through that Portal have experienced much the same, please consider visiting our sector of the P2P Independent Forum for an insight. Thanks Magenta. I will look into that.
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SteveT
Member of DD Central
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Post by SteveT on Nov 27, 2016 10:33:44 GMT
Certainly not abnormal, just a little unlucky so early. Remember that FC's quoted average rate of return is inclusive of bad debt recoveries, which may take many years to reclaim.
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voss
Member of DD Central
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Post by voss on Nov 27, 2016 10:48:46 GMT
How well diversified were you?
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blender
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Post by blender on Nov 27, 2016 21:10:22 GMT
I have to agree with hor about FC's unsecured loans. I am not buying any more, and those I have go after 6 months.
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jeff
New Member
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Post by jeff on Nov 27, 2016 21:56:57 GMT
I was just about to transfer funds to FC when I read this post. You mention a loss of 29% on 7.1% interest which still leaves you at over 5%. In my eyes that is still not bad unless I am missing something.
Can I ask are you lending at 1% per business and what bands are you lending to?
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blender
Member of DD Central
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Post by blender on Nov 27, 2016 23:02:10 GMT
I was just about to transfer funds to FC when I read this post. You mention a loss of 29% on 7.1% interest which still leaves you at over 5%. In my eyes that is still not bad unless I am missing something. Can I ask are you lending at 1% per business and what bands are you lending to? That 29% will be on gross interest, while the 7.2% will be expected average net annual return after fees (1%) losses and recoveries. Whether a loss of 29% of gross interest is good or bad depends on the mix of risk bands. On A+ it would be bad and on E it would be good. But of course it is hard to draw conclusions after only 6 months - and there are all those lovely recoveries still to come. Whether you think 5% before tax is good rather depends on what the funds are currently earning. You should get at least 6% from FC Autobid, with all its faults. But you could do better than that with FC, and of course on other platforms.
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fp
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Post by fp on Nov 27, 2016 23:24:33 GMT
You can't rely on FC to accurately risk band loans, A rated Loans should not be defaulting as soon as they quite often seem to do.
My first lending was on FC, but I quickly got out due to the amount of time I had to spend cherry picking loans, and the amount of A/A+ loans I had to miss because I felt they were incorrectly banded. IF.... I was to invest there again, it would only be in secured property loans with a sensible (low) LTV, with the plan to sell before the end of term, but then, similar loans give me 10-14% elsewhere.... so it's highly unlikely.
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pip
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Post by pip on Nov 29, 2016 19:58:16 GMT
Hi, I think that as long as you are well diversified you shouldn't get overly concerned about your defaults so far. As other posters here have indicated I also go for secured loans now as I think their risk/reward ratio is a lot better. Yes of course property (which most of the secured loans are against) has its own risk, but at least you have a decent chance of at least recovering something, even if the valuations etcetc were dodge.
I think the two biggest things I have learnt is 1) diversify and 2) expect defaults. At start I was not fully diversified and had a default which wiped out half a years interest. Diversification should be both in platforms and across platforms. Defaults are never nice, but really they are part of the game. Nobody is going to pay you the returns on p2p without big risks and sometime the risk means you don't get paid back.
I think some people on this board clearly can't take defaults, they will moan moan moan. I sometimes feel sorry for the sites they never get thanked for loans that repay, a few dodgy ones and people kick right off. Well I can tell you from experience any company that loans money will have dodgy loans that never make a repayment whether due to fraud or the company in retrospect never having been suitable for a loan.
It's sometimes gut wrenching to see potentially thousands in defaults, argh that's my money that is being written off! However for me I have learnt to live with it, as overall my returns have been good, even if I am sure there have been a few terrible lending decisions in the process. As I previously said diversification has helped so much, it makes defaults far more prefictable and in not so stomach churning chunks!
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Post by jackpease on Nov 29, 2016 20:16:58 GMT
Also bear in mind that mature platforms such as FC and Rebs are being tested/have been tested in 'real time' so defaults are rolling in - mine seem to be around 30% despite not using autobuy
Most on this board have forsaken unsecured lending and going for 'secured' lending at 12% mostly on property. The property sector/SS/MT etc etc have not been tested through a property crash - a number of individual property loans have gone pop and the 'security' has proved insecure begging the question what would happen in a wider property correction. It is 12% for a reason.
I persist with FC non-property loans simply because there is little else out there.
Jack P
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