justme
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Post by justme on Jul 31, 2017 7:43:44 GMT
I started p2p with FC 6 months ago with small quantities of money testing the water. I had autobid switched on for first 6 weeks , then switched it off and added some more money which I invested manually.
So far 4 of my loans are downgraded so if I was to sell now I would have had 2%loss. If all money from those loans werebto be recovered I would have had 9% gain.It is fun , like playing dragons den. Out of those 4 loans only one I would have bought today so hopefully with autobid off, loans paying 8 % only sold and not buying any 15+ loan without notes against them the next 6 months will be better.
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Post by wayne12 on Jul 31, 2017 7:48:38 GMT
Yeah, pretty new to p2p and investing in general. Don't have a huge amount to invest but I found FC to be the most easy to understand and I do find it to be a sort of fun hobby to invest small amounts every so often.
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easylender
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Post by easylender on Jul 31, 2017 15:02:30 GMT
In another thread here link I tried to explain how insufficient diversification, while greatly reducing the probability of losing all your money, actually increases the chance of making an overall loss. My advice for FC, and many other platforms, is to manage a portfolio of over 100 loans to avoid this effect. Another tip is to avoid the secondary market and autobid until you really understand them. The problem with the SM is that loans are not correctly priced for risk and some operators, called flippers, exploit this at the expense of the newbs. It's like this: borrowers are usually making monthly payments and so you're unlikely to discover that the borrower can't pay until the repayment date, so most of the risk is concentrated on that date. Flippers try so sell on the SM just before the repayment date. That's why it's wise to avoid autobid too, because it can buy loans from the SM. I do hope that this doesn't put you off and that you go on to become a profitable P2P lender. |
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justme
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Post by justme on Jul 31, 2017 16:08:43 GMT
Concentrating the risk towards the end would apply to property loans. I sold/sell ones that autobid got me before the end and I do not buy them much as interest rates are too low on many.
I remember your other post. I must say I could not understand why exactly insufficient diversification resulted in higher chances in overall loss ( please note I do not talk about scenario where one has 2 loans and one of them defaults resulting in 50% loss). I remember your calculations shown this curious effect at about 50/70 loans , exactly the amount I had/have. So I just trusted it without understanding how exactly it happens.
I must say as well without this forum I probably would not dare to enter p2p world while now I am dreaming of it evolving in serious income stream. My appreciation of you , contributors and organisers, is immense.
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Post by davee39 on Jul 31, 2017 17:21:36 GMT
Can you tell me where you get your rose tinted spectacles?
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easylender
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Post by easylender on Jul 31, 2017 17:55:53 GMT
Yes, I forgot to warn you about property development loans on the SM. As you can imagine the borrower is not really in a position to pay capital or interest until the property has sold. However FC think it necessary to pay monthly interest and so some of the loan goes into a pot to pay this. By selling the loan on the SM near the end of the term the flipper gets most of the interest and the buyer gets the risk. Why FC persist in maintaining this mispriced SM at the expense of naïve lenders I don't know. Perhaps they're busy flipping too.
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easylender
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Post by easylender on Jul 31, 2017 18:07:47 GMT
Can you tell me where you get your rose tinted spectacles? Yes, I've got a UTI and it's making me grumpy. Hopefully the antibiotics will kick in tomorrow.
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Post by ratrace on Jul 31, 2017 19:25:35 GMT
My aim is to treat my FC investment as a serious long term income stream.
l have been with FC for over 2 years now and with manual bidding and a few simple rules l am able to currently get a return 9.8%.
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Post by wayne12 on Jul 31, 2017 21:42:40 GMT
Hey ratrace, any advice for a newbie who has yet to reach his all important 100 loans lent mark?
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Post by ratrace on Aug 1, 2017 18:14:30 GMT
Hey ratrace, any advice for a newbie who has yet to reach his all important 100 loans lent mark? Hi wayne Yes if you wish to invest in FC for the long term l would offer the following advice. 1 Manual bidding and been willing to put in the time and effort to understand about investing in FC is a must. 2 Over the long term look to get your max holding in any loan down to around 0.5%. 3 lf you hope to get a much better return then the average,then you will have to be willing to put most/all of your money into B to E loans. 4 With D and E loans its wiser to buy the shorter term loans. 5 Don't overlook the older loans on the SM, because at times there is some very good value on offer.
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Post by diversifier on Aug 2, 2017 19:46:39 GMT
Newbie Report after *2* months D-class loanbook, diversified as requested (100 loans) - I went for yield, with risk. Manually selected (?!) based mostly on their financial account (allegedly profitable business, no one-man-bands, no obvious balance sheet lunacy) 2 in liquidation, one notified late payer two months late (downgraded). That's an annual default rate approx 15%, obviously unsustainable. What do people think? a) Random variation - wait for reversion to the mean b) This is the peak default period at the start of young loans. Hold loans to term for improvement C) FC default rate much higher than claimed, but temporary market conditions, wait for  to subside D) Ditto, but permanent. Write it off to experience, head for the hills! E) D-class yield is intended to seduce fools like me. The world is better, if not perfect, down at A or B F) My manual selection is actively wrong - even autobid would be better. G) ?It's all in the wrists. There's some technique (flipping or other) which works well, and the idlers like me get the remaining below-par-results |
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Post by GSV3MIaC on Aug 2, 2017 20:40:20 GMT
That's probably in line with FCs forecast for Ds, if we assume that an average defaulted loan is 'only' a 40% capital write-off. For unsecured loans FC/LC/ReBS are all being taken for a ride by some of the more unscrupulous (or desperate) members of society .. the ones who can't borrow from a bank at 5%. In some cases (read the forums) they can't even stay out of prison.
Proper secured lending is slightly better, IMO, albeit at lower rates (a mere 10-14% gross), but you still have to kick the tyres and check for dodgy valuations of the supposed 'security'.
If you can take home 6%+ at the end of the day (when the fat lady sings, all the pigeons have come home to roost, you have paid FC et al their fees, etc) you are doing OK (and still better than some of the alternatives). If you think you are going to take home that 12-14-20%, you need to ditch the rose coloured spectacles. *grin*.
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Post by diversifier on Aug 2, 2017 21:35:54 GMT
Thanks GSV3, that's a very helpful view.
Seems I did have rose-tinted specs on, and was hoping for 18%-6% =12% take home, like the bigger boys promised.
So, I hadn't realised this assumed only 40% write down on defaults, which Smells Unlikely to me. Particularly when I look at the two defaults, and fairly sure that if it were my money (oh look, it is), I wouldn't waste the petrol to attempt to get it back. I could have offloaded one of them by regular googling DD and spotted that they laid all their staff off two weeks before default. But I don't have the time to do that for 100 loans.
Implies that probably I should go for lower risk band, secured, reducing the highly uncertain amount assumed in recovery.
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justme
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Post by justme on Aug 2, 2017 22:20:43 GMT
Could it be that there was higher chance of loans defaulting straight after you bought them because someone knew there will be an issue with loans they sold and it will be better from now on?
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ceejay
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Post by ceejay on Aug 3, 2017 7:26:39 GMT
Newbie Report after *2* months D-class loanbook, diversified as requested (100 loans) - I went for yield, with risk. Manually selected (?!) based mostly on their financial account (allegedly profitable business, no one-man-bands, no obvious balance sheet lunacy) 2 in liquidation, one notified late payer two months late (downgraded). That's an annual default rate approx 15%, obviously unsustainable. The question I'd ask is - how old were the loans when you bought them? Getting into 100 D loans in 2 months sounds like you bought a lot of them on the SM, just as they are coming up to peak risk. I believe that FC's averages are based on an assumption of buying new and then holding: but the risk of failure for a given loan is clearly not constant, and if investor A is shifting his share of the risk downwards, there must be an investor B whose risk has been shifted upwards. Do you want to be A or B?
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to subside
