How I Make Over 15% On Funding Circle

Hi Henrik . Just one tip right off the bat for your blog, you might want to move the little 'go down here' double arrows elsewhere. Made me wince a little clicking on your cartoon crotch to access more information.

I would say that the annualised return numbers are meaningless without the actual total returns for comparison.

For example if you have £100 invested and get a £50 referral you will have a decent annualised return but its fairly meaningless.  Likewise you could put £100 in an E for a week and sell out to cash and again your %'s would look amazing but again fairly meaningless.

The sceptic in me worries that this is sophisticated click-bait.  Note, I haven't bought the book, but I did watch the video and a couple of the blog posts.  A few random things to consider:-

1.  You don't discuss risk adjusted returns.
2.  You've been investing on FC for less than a year, that doesn't give you enough data to say convincingly that your strategy is in and of itself effective, or whether you've just been lucky and ended up towards the right hand side of the returns bell curve.  There's a reasonable chance that you'll see reversion to the mean.
3.  You haven't addressed any of the numerous failings / problems / issues with FC.  Just take a read through many of the threads here for examples......
4.  Any investment book or strategy for sale that both relies on and illuminates market inefficiencies and informational asymmetries has, by definition, to be self-limiting.
5.  So the main financial reason to write such a book is that you think you will earn more from selling it than you will from following your (currently) successful strategies.
6.  I wonder do you need any FCA authorisation to write such a book?  I don't know the answer but if it's not considered "investment advice" I'd be surprised.
7.  As with 5. one additional advantage of having such a site is referrals and click-throughs......

But I'll say this, it is sophisticated  .

Not necessarily many E's.  The annualised rate of a 60m D is around 19.5%.  Also large E's tend to hang around for several minutes these days.

You've made £2.5k net.  It's not enough to prove a strategy.  If it was £100k it would be more impressive.

Your net annualised return is around 15% and is on a very immature portfolio.  Less than a year is not long enough.

Another issue is scalability.  Doing it on small amounts is relatively easy (if you can invest the time).  Trying to ramp it up to your £1m target is a completely different matter.  There just aren't enough loans (at the moment).

Nice try though.

mmmmm, Not strictly true
There were 1077 C,D,E's since September 2016
So you'd only have to invest on average £6000 in each to invest 6.6million therefore earning 1million from 15% interest
Note: there wouldn't be the loan volume to support many participants in this million pound lunacy, but in theory its achievable.

Ok I'm going to try to answer this as best as I can

registerme

1. This is actually a topic that really interests me. If you invest in D & E loans at less than 8% I would say that is very risky given that the estimated bad debt ratio is 8%. If you invest in them at 17.9% and 21.9% then the margin you get (assuming FC's stats are correct) is 11.9% and 12.9% after fees. You could get unlucky with an E but you could get unlucky with an A+ loan as many have. There the margin is 5.9% so there is less of a saftey net, in theory. I think a lot depends on how accurate FC's stats are and the accuracy will decrease with D & E loans because a) there are less of them b) they haven't been around as long. That makes it difficult to know what risk we're adjusting for. I use other methods to mitigate the risk and I talk about these in the book. There are points on the curve for example where the debt becomes risky to hold.

2. I completely agree with this point. This is why I've been transparent about how long I've been investing for. There are 64,000 investors on FC so it's likely some just get lucky.

3. I'm a big fan of FC but I'm critical of some things. Please see my post on property loans www.fundingcircleblog.com/the-problem-with-property-loans/ as well as my post on the autobid function www.fundingcircleblog.com/robot-wars-invest-autobid/. I think FC is a good manual investing platform but when it comes to auto investing I'm not convinced. 

4. I agree with this as well. However I think that FC is growing so quickly that even if everyone used my strategy the limiting effects would be minimal. Things don't stay the same either so sometimes you have to adapt. FC could withdraw the E loans or introduce an F. That would change everything.

5. That is correct. Let's say that if everyone uses my strategy then it will limit my return by a couple of percent (the loans I want become 2% more expensive to buy on the secondary market for example). That will cost me 2% of the amount that I invest (currently 25k so let's say £500). If the book helps lots of people with their investing and becomes wildly popular then I think I can make more than £500. For that to happen I think other people would have to have success with the strategy, in which case it's a win-win situation for everybody.

6. I have a large disclaimer on the first page of the book. Everything I write about is what I do. There are loads of books on Amazon about how people make millions on the stock market. My book is comparatively modest and no one has to buy it they don't want to.

7. Referrals would be nice. I don't actually expect that many tbh as I assume most people get these through friends or family. The more money I make the more I'll pour into experiments. I've put £2k in a separate FC account for example and invested everyhting into autobid. I'm going to report on this so people can find out more about the returns. I don't want to invest in autobid but I think it will be useful to learn and attract more people to the blog