How I Make Over 15% On Funding Circle

note: the 1077 C,D,E's in the last year is already ignoring Whole Loans


On re-reading, What I think he meant, was how to earn a total of 1 million (Not how to earn 1 million interest)

And he's saying is you start with 0 and invest 1000 a month, then at 15% interest after 18 years you'd have 1 million total.

In reality in the final year you'd have to invest 766,000 which is easily achievable given the current loan volumes

@ spiker

In my first few months I didn't but since I came up with my strategy I invest more or less only in D & E. If there is a way to avoid defaults then you might as well only invest in these. I would probably only invest in E if I could but there aren't enough for me to properly diversify. 

You can get hold of as many of them as you like on the secondary market. There are certain prices I'm willing to pay and certain time frames that I'm willing to hold them for but you can read about that in the book

Please note that the website below has referral links


Hi!

I've been investing in Funding Circle for very nearly a year now and my annualised return runs at 17.3%. The strategy I use has nothing to do with flipping, something that I think is quite risky and I suspect also time-consuming.

Instead, I focus on the notion that no two businesses are exactly the same. If two businesses are in the same risk band and have the same loan term, then they pay exactly the same rate. If they are different, then one must be better to lend to than another. The only thing you need to do is distinguish between them.

My strategy has run so well that I decided to write a book on the details of it. I've also set up a blog that is dedicated to investing in Funding Circle, whilst also providing comment on other platforms and general P2P lending news.

Although the blog and the book are aimed at people with and without knowledge of P2P lending, I would be really grateful if people here could have a look and provide me with some feedback. I've never written a blog before so it would be great to know what you think. Please take a look:

www.fundingcircleblog.com

Well, he's not going to get rich selling this book - its quite a niche area.

Most of his promotional material in his site and videos are not offensive. I was curious so I've just bought it.

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

Instead, I focus on the notion that no two businesses are exactly the same. If two businesses are in the same risk band and have the same loan term, then they pay exactly the same rate. If they are different, then one must be better to lend to than another. The only thing you need to do is distinguish between them.

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The "distinguish between two" is, I think misleading.  If we each knew the loans that wouldn't default, pay late, etc we wouldn't be here.  That is a matter of prescience.  An approach I found useful to read (and didn't pay for) is 

p2pblog.co.uk/funding-circle-review/