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Post by corriefan on May 24, 2017 18:51:53 GMT
Thanks, though my viewpoint is a lot shorter than the Bank of England's.
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Post by df on May 25, 2017 0:03:44 GMT
Exactly right. The liquidity has been very good such that a 5 year loan can easily be offloaded almost immediately. So you wouldn't need to limit to short term loans. As others have pointed out, diversity is the key to managing risk... not just with FC but with all P2P platforms. That's why I am perplexed by the FC bashers that decry the individual loans that go bad whilst ignoring the overall returns. The main strength of FC is the loan flow. It didn't take me long to diversify at 0.9%. I don't use autobid, but I would imagine it can be even quicker with autobid. I'm quite confident that my estimated return (after fees and bad debts) will be as it says (7.1%) if not more (gross yield 10.7%). Two of my 255 loans are just about to default, but that is a drop in the ocean. With use of autobid the return is likely to be lower, but still worth for those who don't have time to pick individual loans and okay with 6%+ interest. Another positive feature is the absence of auction - this combined with plentiful loan flow reduces cash drag. Most loans I bid on go live within 10 hours or less. Despite all the negatives (unsecured loans, default rates, lack of info etc.) I'm not planning to reduce my funds in FC in near future. FC works well for me so far.
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sl125
Member of DD Central
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Post by sl125 on May 25, 2017 7:22:29 GMT
It's a good point about the lack of an auction bringing about a reduction in cash drag (i.e. Cash sitting in the holding account earning nothing).
When FC abandoned the auction system in favour of fixed rates, I thought at the time that my opportunities for making good money out of FC was over. But what I realised was that the auction system itself bred some very perverse behaviours from investors (myself included, as I competed with the other bidders): as soon as an auction was announced place bids at 15% then drop slowly in increments as I was outbid. Occasionally a borrower would close early, giving those bidders lucky enough to be at the top rate an arbitrage opportunity by selling at a premium on the SM.
Looking back, this was an unsustainable model: the website had to cope with a ridiculous volume of bids, whilst the lenders were placing bids with little hope of the deal being struck.... leaving money sitting in the holding account for up to 2 weeks earning no interest.
Along with Zopa and RS, FC is by far the largest and longest established of the P2P players. Its track record shows that it has consistently achieved over 7% to those who just blindly diversify, and it has such a good volume of both borrowers and investors that diversification is easy to achieve and liquidity is good should one need to exit in a hurry. That is why I would recommend it to the OP given the criteria stated.
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david42
Member of DD Central
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Post by david42 on May 25, 2017 16:09:45 GMT
There are three drawbacks with using Autobid on FC that have not been mentioned:
1. Autobid misses out on the best loans, because manual bidders buy these very quickly but Autobid runs quite slowly.
2. Before I left FC, one way of getting rid of dodgy loans was to sell them at par so that Autobid would blindly buy them. So autobidders were expected to end up with the worst loans. You might be able to avoid this at the expense of increased cash drag by telling Autobid to use only the primary market.
3. Autobid buys loans at the prices you set, regardless of whether the same loan is available more cheaply.
So autobidders are at a disadvantage to manual bidders. If the average of all investors were still 7%, autobidders must expect to do rather worse. In the days when I used FC, manual bidders were generally beating the average by around 3% - meaning the Autobidders must be doing significantly worse to make the average 7%.
FC has the advantage that the risk is more predictable than on any other platform because of the large number of loans and the full history published in the loan book. If Autobid was able to acheive the average performance of the loan book, I would be more interested.
I apologise if FC have found ways to fix the issues with Autobid in the two years since I last looked at FC.
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Post by gidoppp01 on May 26, 2017 5:42:59 GMT
There are three drawbacks with using Autobid on FC that have not been mentioned: 1. Autobid misses out on the best loans, because manual bidders buy these very quickly but Autobid runs quite slowly. 2. Before I left FC, one way of getting rid of dodgy loans was to sell them at par so that Autobid would blindly buy them. So autobidders were expected to end up with the worst loans. You might be able to avoid this at the expense of increased cash drag by telling Autobid to use only the primary market. 3. Autobid buys loans at the prices you set, regardless of whether the same loan is available more cheaply. So autobidders are at a disadvantage to manual bidders. If the average of all investors were still 7%, autobidders must expect to do rather worse. In the days when I used FC, manual bidders were generally beating the average by around 3% - meaning the Autobidders must be doing significantly worse to make the average 7%. FC has the advantage that the risk is more predictable than on any other platform because of the large number of loans and the full history published in the loan book. If Autobid was able to acheive the average performance of the loan book, I would be more interested. I apologise if FC have found ways to fix the issues with Autobid in the two years since I last looked at FC. I know Autobid is not everyone's cup of tea, but I really like Autobid in FC. Pros: - Ensure FC loans are 100% funded asap and helps FC liquidity - No hassle for FC newbies and manage risks and returns closed to expected levels - Allow investors to select investment risk from A+ to E - Can be turn on or turn off any time - It makes sense on FC since there are so many loans available and people does not have time to look at them Cons: - Autobid has it own algorithm to select loans, it does not pick up every single loan according to risk preference even when money is available to bid Having said that, life is not always fair. If someone is making 10% on FC, then there has to be someone making 4% on FC, because of the principle of Yin and Yang. There are many factors affect returns on FC, autobid does not automatically reduce the profitability, but active management helps. The bottom line, the FC default rates are still within expected level and even the worst performance @ 4% still beat RateSetter 1 year @ 2.1%
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Post by df on May 27, 2017 1:39:51 GMT
There are three drawbacks with using Autobid on FC that have not been mentioned: 1. Autobid misses out on the best loans, because manual bidders buy these very quickly but Autobid runs quite slowly. 2. Before I left FC, one way of getting rid of dodgy loans was to sell them at par so that Autobid would blindly buy them. So autobidders were expected to end up with the worst loans. You might be able to avoid this at the expense of increased cash drag by telling Autobid to use only the primary market. 3. Autobid buys loans at the prices you set, regardless of whether the same loan is available more cheaply. So autobidders are at a disadvantage to manual bidders. If the average of all investors were still 7%, autobidders must expect to do rather worse. In the days when I used FC, manual bidders were generally beating the average by around 3% - meaning the Autobidders must be doing significantly worse to make the average 7%. FC has the advantage that the risk is more predictable than on any other platform because of the large number of loans and the full history published in the loan book. If Autobid was able to acheive the average performance of the loan book, I would be more interested. I apologise if FC have found ways to fix the issues with Autobid in the two years since I last looked at FC. I know Autobid is not everyone's cup of tea, but I really like Autobid in FC. Pros: - Ensure FC loans are 100% funded asap and helps FC liquidity - No hassle for FC newbies and manage risks and returns closed to expected levels - Allow investors to select investment risk from A+ to E - Can be turn on or turn off any time - It makes sense on FC since there are so many loans available and people does not have time to look at them Cons: - Autobid has it own algorithm to select loans, it does not pick up every single loan according to risk preference even when money is available to bid Having said that, life is not always fair. If someone is making 10% on FC, then there has to be someone making 4% on FC, because of the principle of Yin and Yang. There are many factors affect returns on FC, autobid does not automatically reduce the profitability, but active management helps. The bottom line, the FC default rates are still within expected level and even the worst performance @ 4% still beat RateSetter 1 year @ 2.1% I don't use FC autobid, but I like that there is a choice for slightly lower returns in exchange for not spending time managing it. RS is a joke, can get better rates from banks/BS with FSCS protection.
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Post by nellerdk on Jul 13, 2017 22:44:09 GMT
Mintos
-excellent reviews
-buyback guarantee
- decent loan volume
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am
Posts: 1,495
Likes: 601
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Post by am on Jul 14, 2017 0:18:59 GMT
Mintos -excellent reviews -buyback guarantee - decent loan volume Using a non-Sterling platform adds currency risk.
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justme
Member of DD Central
Posts: 203 
Likes: 89
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Post by justme on Jul 15, 2017 9:25:01 GMT
In my newbie p2p brain foreign platforms are associated with platform risk - what is to stop people who run the platform disappearing with money (fraud) or bankruptcy? I know British ones may do so as well-( or may be not ? - I am aware of requirement for winding down procedures and main ones have FCA registration ) but I am more suspicious of foreign ones.
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fp
Posts: 1,008
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Post by fp on Jul 15, 2017 12:20:09 GMT
In my newbie p2p brain foreign platforms are associated with platform risk - what is to stop people who run the platform disappearing with money (fraud) or bankruptcy? I know British ones may do so as well-( or may be not ? - I am aware of requirement for winding down procedures and main ones have FCA registration ) but I am more suspicious of foreign ones. If you feel uneasy about lending a platform, then the common sense approach would be to avoid the platform. With an FCA approved platform, whilst you have no guarantees, at least you they have systems in place which have been subject to FCA scrutiny. I trust my gut feeling a lot....
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Post by nellerdk on Jul 15, 2017 15:49:37 GMT
Mintos -excellent reviews -buyback guarantee - decent loan volume Using a non-Sterling platform adds currency risk. You mainly invest in euros on Mintos. I think the sterling has a much bleaker future, because of brexit, buddy.
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am
Posts: 1,495
Likes: 601
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Post by am on Jul 15, 2017 16:17:58 GMT
Using a non-Sterling platform adds currency risk. You mainly invest in euros on Mintos. I think the sterling has a much bleaker future, because of brexit, buddy. Regardless of the future trajectories of Sterling and the Euro, the question was about the safest platform, not the platform with the highest expected return. Investing in a currency other than the one in which your outgoings are paid adds additionally variability to returns. (Also, if markets are rational and efficient the uncertainties in returns should be balanced between positive and negative. Additionally there is the point that paying spreads/brokerage fees in both directions is a drag on performance, which is especially significant for a person, such as the original poster, with a short term horizon.)
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Post by yorkshireman on Jul 16, 2017 17:39:07 GMT
Using a non-Sterling platform adds currency risk. You mainly invest in euros on Mintos. I think the sterling has a much bleaker future, because of brexit, buddy. And the euro - Greece, Italy? 
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Post by nellerdk on Jul 24, 2017 15:27:40 GMT
You mainly invest in euros on Mintos. I think the sterling has a much bleaker future, because of brexit, buddy. And the euro - Greece, Italy? nothing is 100% safe. Personally, I can't see how the british pound is more safe than the euro.
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Post by yorkshireman on Jul 24, 2017 17:27:00 GMT
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