Tuesday, 22 August 2017

P2P - month 3

Total in FC Invested Cash Paid in (new capital) Fees Losses Total no of loans
 £     2,042  £  2,029.00  £     13  £                       -    £      2  £        -   82

This month's update from last week, 14th Aug.

Funding circle are changing the way you lend and taking away the option to manually decide what businesses you want to lend to. The first time I put money into FC I quite enjoyed having the ability to review the accounts (limited though they were) and consider the business, what the money was for and the likelihood of getting it back. I was playing around a bit, not putting any serious amounts of money in, it was more of an intellectual exercise. Not that I don't care who I lend to now, but the game has changed. The benefit of diversification has taken over and having a small amount of money in each business does mean there's less pressure to analyse each debt... and I confess with the automated function, I don't review any of the loans I've taken out, but at £20 a loan and over 80 in total, would you / have you?

Presumably a country wide, or larger, recession would cause a general downgrade and increased failure rate across the board, but that's why I haven't put a lot more money into the platform.

The changes mean that FC are now just doing two options, balanced or conservative, targeting returns at 7.5% and 4.8% respectively. Apparently selling debts will be easier too - which takes away one of the reasons I invested so lightly in this platform in the first place - as soon as a company defaults no 'man on the street' lender will take that off you. So on the one hand you're losing a little return, but the in theory, the risk of recovering your cash, is lessened and that's a fair trade, even if you don't necessarily want to move down that way down the risk : return see saw.

It will depend on the new user experience, but on balance if the changes make it more of an index experience, so easy to buy, easy to sell, loads of companies to spread risk then I would be more likely to put more money to work here.

It also renders this little experiment slightly redundant! I doubt I'll get information summarising how many loans I have any more. It will just be an overall summary - £2000 invested at 7.5% earning £150pa gross... but we'll see how it goes!

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