@kaeley-wn said in [Poll] How much of your liquid net investments (excluding pension) is in P2P?:
@allen Hey Allen! Welcome to the community 🎉
Thank you for raising these clarification questions! It's pertaining to your total amount of investments. Also, agree that P2P is relatively illiquid, especially so for investments in the loans with longer tenures. The aim of the question is to find out the extent to which you're allocating your accessible funds to P2P! Hope this clarifies :)
Agree that P2P is illiquid, even for the shorter tenures. Unless we can trade our loan parts within a secondary market.
@pot-folio it’s my target investment hurdle rate. If less than that, I can just put money in REIT. Singapore REIT yields are now 6-7% actually.
@jomni 6-7% after factoring in the risk of no payment? or before?
@jomni For low value PDs, it is a very good approximation. However Quickash also published PDs that are 23.8% or higher! So I use the inverse PD, eff rate should be greater than 1/(1-PD) plus your hurdle rate(not necessarily true as explained later below). For e.g. if PD is 50% (i.e 1 in two loans will fail) and my hurdle rate is 10%, the loans better have an effective rate of 110% p.a!!!. E.g. I invest in 2 loans (PD=50%) with $1000 each and expect 1 to fail, I will expected to get back for expected 1 non-default of $2100(with the other one defaulted) which is only 5% return on the $2000 invested. To cut the story short, hurdle rate is also depending on PD and the above example is only on balloon payments. With amortisation payments and/or longer tenure, it really gets more complicated. My caveat emptor is to learn first how PD works(especially on long tenure loans like Fundaztic) and add some buffer (due to long tenure uncertainty and platform “potential underestimation of PD”), recalculate and invest based on your own results and also “gut feel” of the industry/company/platform due diligence/etc.
@kaeley-wn Only minor change as I have added Crowdestor from Estonia. A new platform with few loans. It was suggested as a complement to Envestio by a financial blogger. Envestio like many others have reduced interest rates, but still are competitive.
I am definitely decided to reduce my Sterling exposure as far as possible because of Brexit, but this is difficult as there are many bad property loans with Lendy and Moneything, not to speak of the defunct Collateral platform!
Hey @novex, methods and practices in handling defaults, tend to differ across the platforms, and they communicate to stakeholders throughout the process, legal actions in similar yet unique ways. You may check out these threads:
[SG] Discussion on legal actions by P2P platforms started by @DC :
[SG] Discussion on recovery process by MoolahSense started by @DC: https://crowdfundtalks.com/topic/261/p2p-moolahsense-moolahsense-recovery-process-part-2
[MY & SG] How fellow investors assess the situation and act in the event of a default https://crowdfundtalks.com/topic/459/what-do-you-do-when-you-encounter-a-default-note
[SG] @Bendahara explains defaults and elaborates on how he interprets a single default loan:
[MY] Financial blogger @bursagoinglong explains more on what a default is, and the events which could follow:
@ktinvest said in P2P Goal-Setting: Yield > x %?:
I am looking at minimum net 10% yield p.a (eh hem, my personal wish) after fees,after tax and after default risks for the relatively higher risk that we are taking in giving out unsecured loans to the borrowers.
For 7% or 8% yield, we can consider REIT which has significant lower risk than P2P.
Yes REITs are my benchmark. I have a lot of funds on these instruments.
The 5% I mentioned may be outdated. As equity prices has decreased a lot, pushing REIT yields to 7-8%. It was 5-6% a few years ago.
@ktinvest I believe a few people have looked into P2P in vietnam before. But it's kinda tricky, as its hard to move money out of the country. if you figure out a way, lets us know as many of us are interested to know more about it! :)
@jomni said in What do you do when you encounter a default note?:
@vamsi7 yes. Just to reiterate. In P2P, you make a bet on a certain sector of SME borrowers. Like a market following stock index, You ride the ups and downs of the economic cycle. Of course you only get this effect when fully diversified.
This mindset is less stressful than individually watching each loan’s performance. That said, there are people who want to beat the market. But are non-Bankers with very little info capable of doing it?
Solid explanation, very much agreed.
@kelvinteo said in [AMA] I'm Kelvin Teo, Co-Founder & CEO of Funding Societies | Modalku, Ask Me Anything!:
We also made the conscious decision that we rather have false negatives (loans we should have approved but didn't) than false positives (loans that we shouldn't have approved but we did i.e., defaults), because trust and reputation are more important than growth.
Thank you for that philosophy. I ported everything to FS from another platform.
@gaudente said in Mintos referral campaign:
Mintos referral campaign is reopening until 22 October.
Bonus will be 0.75% My referral link is still the same www.mintos.com/en/ref/GVPH71
campaign reopened until 3rd December , same bonus and referral code.
Hey everyone! For the people who still have some leftover questions, @kelvinteo is doing another AMA soon. Please tune in.
Thought I'd share @Faris-Jamal's perspective here! :
I've been hearing about crowdfunding for the past two years but had only taken the initiative to put my money in in August 2018. Now I'm shifting my personal portfolio of investments so that debt crowdfunding constitutes about 20% of it, and it might grow to a larger percentage.
The main reason for the shift is that, based on my observation for more than a year, most debt crowdfunding platforms in Malaysia provide risk-adjusted returns (after adjustment for credit default risk) well above the other asset classes. Being a Bumiputra here in Malaysia and a risk-averse investor, my risk tolerance is relatively low considering my relatively high opportunity cost. Capital-guaranteed (by the government) investment opportunities that are present for the Bumiputras here provide return profiles well above the quintessential risk-free investments fixed deposits and government bonds are normally associated with. So technically, my definition of risk-free rate of return is well above the FD rate and even the MGS yield here in Malaysia. But I notice that, despite this high opportunity cost, debt crowdfunding offers me an opportunity to grow my investment portfolio at a faster rate, while still keeping the downside risk in check. On top of that, with the absence of market risk, I do not have to worry about the short-term volatility of my investment portfolio in this particular asset class. It is something that I think can run on autopilot given that I properly set my risk tolerance and investment return target on such platforms.
Have my fair share of investments in other P2P platforms as well other than FS MY as my second layer of diversification strategy. But in all honesty, I still would not put P2P financing as my core investment given its nature of risk, and its assurance. Furthermore, given the local regulator's recent initiative to facilitate fixed income investments (listed bonds & sukuk) among retail investors, it will add direct investment into these securities as another investable asset class for us here, which is positive for diversification purposes. :)