P2P: Saving Stream (AKA SavingStream)

jamesd

Platforms like Ablrate and MoneyThing have typically offered 12% before compounding, so around 13% with. Those two have been my recommendation to newcomers for a while and both recently received their full rather than interim approval from the FCA. Both have sometimes done loans at higher rates and I currently have quite nice amounts in 16% and 15% (an old loan not yet visible and traceable on the secondary market) as well as 14% and 12%, all before compounding. It's some time ago now but one of them did a beta loan at 18% that I had a few tens of thousands in.

Collateral and Funding Secure also have interesting propositions.

None of these has a protection fund of the type you're used to at RateSetter so some allowance for bad debt is needed and I usually describe them as ten percent after allowance for bad debt.

While many loans are for property development and bridging lending that would be slow to repay after trouble in their markets there's a fair variety of other stuff out there.

I do more concentrated lending than would be suitable for most people but for me it fits my risk tolerance and amounts available to invest. I typically have between a hundred thousand and a quarter of a million in P2P lending or commitments to lend. Nothing at Lendy.

masonic

AnubisHorus wrote: »

There are currently 13 defaulted loans assuming I had £1000 (unlikely more like 500) and I had loan from the start I would have invested £13000. I would have had £780 in interest (assuming not SBL) leaving £12220 of capital at risk. Assuming 50% loss after recovery I would in theory loose £6120. This is at 12% which is my lowest P2P return I get. This equates to about 2 months interest. £30000 invested over 6 months at 12% compunded gives £18500 in interest . Take off the £6120 and you would still have a 4.1% (8.2% APR) return on total investment. Even if you lost the lot you would still be getting 4.2% APR return. 40 times the bank's . SPREAD THE MONEY LOWER THE RISK

The calculation I have put in bold is a factor of 10 too large. £30,000 over 6 months at 12% compounded is about £1,845. Take off the £6,120 potential capital loss after recovery of defaulted loans and you would have a loss of 14% of the original £30,000 capital sum (presumably this £30,000 represents what you hold in total at Lendy?)

For 6 month loans (in which you'd effectively get 9 months interest because of Lendy's policy of servicing interest for up to 3 months), paying 1% interest per month and assuming a more realistic 25% capital loss, it would take about 30% of your loans to default for you to wipe out your interest completely. Right now, about 29 out of 82 live loans (35%) are at various stages of difficulty.

That's during the good times. And I haven't adjusted that figure to account for capital tied up on loans where interest is no longer being paid.

So that's a great example of why simply spreading money around all of the loans at Lendy is not a wise move. I can understand why some may choose to hold some investment at Lendy in carefully selected loans they have researched thoroughly, but there are enough dodgy loans on the platform to make a serious dent on returns if you just invest in everything available.

Biggles

jamesd wrote: »

The poster did not say that. They wrote about their investments "I've" and "her Savings" as two different things.

Speculation that they are also controlling her investments under a PoA is just that: speculation.

I felt it was a reasonable assumption that they were connected, as his mother's savings were specifically included in a paragraph on P2P investing.

As regards a PoA, it wasn't me that suggested that. But possibly said 91-year-old mother has a laptop and controls her investments from her care home.

TheShape

Fatbritabroad wrote: »

Where are you getting12- 16% return? Surely even diversified they are going into higher risk loans? What about in the event of economic downturn these loans are likely to be the first to default. And how long did it take you to diversify 1 million quid I wouldn't think there was enough platforms to diversify that much money. Not disbelieving genuine question Ive literally just parked a grand in ratesetter to get the bonus so in no position to back either viewpoint here!

I've got approx £6k across the platforms mentioned by jamesd where you'll typically find returns between 10 & 14%. You sometimes have to wait for loans to show on secondary markets to get those 14% or 16% loans and you might have to pay a premium on the capital to get a share.

Some very different loan types on offer for residential property, commercial property, pawned jewelry, airplanes (both intact/flying and being dismantled for parts), supercars etc.

I building my investmest by drip feeding as new loans are made available or by buying from the secondary market. Obviously you are not very well diversified initially but by spreading new money across different loans on different platforms you can diversify quite well. You can also make very small initial deposits on most of the platforms so you can slowly build your investment.

Fatbritabroad

Thanks I had a look at ablrate and money thing before doing rate setter to get the intro offer but will be building my p2p investment to around 5k once I've got my cash back up a bit. So stupid question (as the three main ones automatically spread your money over many loans) but by diversify you literally may put down say 200 to 300 put of 6 k toward a loan request? What's the minimum you can invest in each loan? And you can do the same on the secondary market? And do you do any due dilligence or assume the platform has done it. The property loans loon interesting but I thought I had to bung my hole 5k in I hadn't really looked at it in detail yet

Sorry for multiple questions. Appreciate I can just look at the sites in question to answer this but I learn better from having it explained to me!

TheShape

Fatbritabroad wrote: »

Thanks I had a look at ablrate and money thing before doing rate setter to get the intro offer but will be building my p2p investment to around 5k once I've got my cash back up a bit. So stupid question (as the three main ones automatically spread your money over many loans) but by diversify you literally may put down say 200 to 300 put of 6 k toward a loan request? What's the minimum you can invest in each loan? And you can do the same on the secondary market? And do you do any due dilligence or assume the platform has done it. The property loans loon interesting but I thought I had to bung my hole 5k in I hadn't really looked at it in detail yet

Sorry for multiple questions. Appreciate I can just look at the sites in question to answer this but I learn better from having it explained to me!

I've deposited as little as £1 at Ablrate and invested as little as that in loans on the secondary market. As I've built my investment slowly I sometimes have quite small interest payments to reinvest.

Moneything also lets you invest as little as £1 in a loan and I can't see a minimum deposit amount. My smallest deposit amount is £24.99. Smallest loan £1.

Funding Secure has a minimum deposit of £5 but I'm pretty sure the minimum investment is £25 per loan (I've got no spare funds there to test).

Can't see a minimum deposit or loan amount on Collateral so I'm assuming you can deposit and invest from £1.

I've generally started by investing lots of small amounts in loans as they've become available or on secondary markets, sometimes £10 or £25 at a time. Sometimes you can only invest a small amount on loans that have bid limits. I'm starting to invest larger amounts as I go now but my largest loans are only £900, £300 and £250.

As for due diligence; at £25 per loan it simply isn't worth much effort, at that level it's the diversification across many loans that probably counts. On a property loan I'd prefer first charges on properties and avoid loans covered by second or lower charges or loans that rank behind other large loans. At £250 or more, I'll look more closely at the associated documentation and also check the p2p independent forum. You'll often find people discussing the relative merits of different loans and I'll often take on board their opinions when making a decision.

If you do happen to ever use Funding Secure, be sure to read the warnings on the Secondary Market because the way it functions introduces some tax implications for your investments. I don't currently use it.

Hope that info from my limited experience helps.

masonic

TheShape wrote: »

Funding Secure has a minimum deposit of £5 but I'm pretty sure the minimum investment is £25 per loan (I've got no spare funds there to test).

It's all multiples of £25 at FS.

If you do happen to ever use Funding Secure, be sure to read the warnings on the Secondary Market because the way it functions introduces some tax implications for your investments. I don't currently use it.

It will be a lot more useful when FS launch an IF ISA.

On the subject of due diligence, it really depends on the nature of the loan. Jewellery and other trinkets need very little, perhaps just a check online that the valuation price is sensible. Cars and other vehicles likewise, considering things like depreciation. It's the loans secured on business assets (including intangible assets), property and in particular property developments that need more thorough checking.

AnubisHorus

bigadaj wrote: »

The big question mark is over the value part of the ltv figure.

If you take the recent very large London loan then many thought the ltv was close to 100%, and you don't get full value on a forced sale as any trader knows.

I don't take any pleasure in the issues around the platform, their due diligence and valuation seemed to leave something to be desired but they were very effective at pushing deals through and the liquidity On the platform has generally been good.

The only large default I'm aware of was the garden centre, and that was repaid in full though whether that as all from equity in the loan I'm not clear on.

It's somewhat ironic that they have also been forced to change their business model to stop servicing debt on non performing loans by the fsa, though I understand the reason behind this.

That should have read £300000 invested in total not just lendy loss was measured as proportion of p2p total lending. Funding Circle has some loans at 21.9% minimum £20 investment you can easily sell these at up to 3% premium immediately before the first payment is even due. 0.25 % Fee . Do that once a month and you get massive Welll over 25% APR but it is hard work

AnubisHorus

With loans on cars etc. Check get out strategy quite often the company has dealers etc already to by asset if defaulted

AnubisHorus

use these tools everyone should use these tools The calculator site (google it)
rtegards