Squirrel Money P2P

[AppleCrumble]

I have an investment order 500$ sitting there at 9%.it seems I have to lower this to 8% to get it invested? When squirrel say 500$ min investment what do they mean exactly? Can I only provide 100% of the loan for 1 borrower,then the min investment will be whatever the min loan a browser wants?

Have I got that right?

Interesting re p2p socialism. If there is no defaults squirrel will do very well. If there is a lot of defaults,or it gets to a certain point,squirrel will start reducing the investors rate of return.don't think i'm a fan, but each to their own.

[JB@Squirrel]

Hi AppleCrumble.

Yes you may need to change your order to be within the market rates. At 5 year you can go up to 9% but 2 year is currently max 8%. There is currently a $30k loan awaiting funding at 5 years that you could bid 9.00% against.

In terms of the Reserve Fund and P2P Socialism:

First point is Squirrel does not financially benefit from the reserve fund. The Reserves never go back to Squirrel (other than the funds we have tipped in to seed the initial reserves.) The Reserves are held in Trust for investors.

Second point is that if the Reserves were fully depleted then we replenish the Reserves by temporarily reducing the interest paid to investors. In essence this means that any excessive losses are socialised/borne across all lenders. This means investors don't need to be concerned with specific loan selection or even security and that investors are getting the full diversification benefit across the entire lending book. This is a protection mechanism for investors and purely for the benefit of investors. It is a very efficient way of reducing risk.

Cheers, JB

[AppleCrumble]

Tks JB,

I will look at cancelling my order and see if I can get in on the 5 year loan.

What happens the money going towards the reserve fund when the reserve fund reaches 4% of the loan book? I was of the thinking it went to squirrel.

[JB@Squirrel]

Tks JB,

I will look at cancelling my order and see if I can get in on the 5 year loan.

What happens the money going towards the reserve fund when the reserve fund reaches 4% of the loan book? I was of the thinking it went to squirrel.

So, we've seeded the Reserve Fund with some initial money to get it started and we'll continue to top up the reserves to maintain it at 4.00% for the first year. We think we'll need to tip in around $400k. In the meanwhile obviously part of the borrower interest will be getting diverted to the reserve fund and continuing to build it up.

After the first year, and only if reserves allow it, we can pull our seed money back out. (But only our seed money and only to the extent that reserves are over 4.00%.) Personally I don't think we'll be getting it out for a while as the growth rate in the book will mean we'll struggle to get over 4.00% after the first year.

If, at some point in the future, we get to over 4.00% reserves then we'll just keep building it up. The more reserves for investor protection, the better! I don't imagine us ever getting to a point where we say that we have too much reserves.

If we find that we are reserving too much then we'll tweak down the credit premium charged to borrowers and slightly lower the rate we reserve at.

At no time does Squirrel ever have any rights over the Reserve Fund. If Squirrel Money was wound down then any residual reserves after all investors have been paid will be paid to charity which is currently Starship.

[Lewylewylewy]

I'm starting to like the idea of Squirrel over Harmoney.

I've had some big returns from Harmoney (over 10% after tax), but I've got a number of issues with it... The interface is a bit rubbish - I have no idea whats going on with my investments. They don't talk to you. Loans get paid back into their holding account and it's not worth my while to check this every day to see if there's anything to withdraw or reinvest - and I don't get interest on this amount. Finally, I have no way to automatically reinvest.

If Squirrel could make it so that I could have an allocated percentage of money repaid to me, to be automatically reinvested in vetted loans and a percentage automatically paid back into my bank account, this would mean I could use Squirrel to get an income. With the income protection, it would mean that I could tip money into it for a self perpetuating retirement fund giving a return that is above inflation (after tax) with low risk. Automatic reinvestment would also be a good feature to encourage investors and allow Squirrel management to pull reports that could be used to do business forecasting, etc.

You are part of the way there by planning to pay interest on unallocated money. Do the rest and I'll throw a quick $100k into the system as a quick starter with more to come if it plays out nicely.

[JB@Squirrel]

Thanks Lewy,

Like your thinking above and will incorporate it in our next change window for early next year. It fits with our plan to create great retirement/income products.

[JB@Squirrel]

Thanks Lewy,

Really like your ideas and we'll incorporate them into our next change window in March. Fits nicely with our goal of creating world-class retirement/income products.

[Lewylewylewy]

Thanks Lewy,

Really like your ideas and we'll incorporate them into our next change window in March. Fits nicely with our goal of creating world-class retirement/income products.

Cool, do you have a subscription to email me when changes are implemented?

also, how's the secondary market work in Squirrel? I imagine that if you are investing in loans and there's a loan that's been reliably paid off for months, that would be more attractive... But if you have repayment protection, it wouldn't matter so much. Is the advantage for investors that the loan periods are shorter on the secondary market or have I misunderstood what that's about?

[JB@Squirrel]

Cool, do you have a subscription to email me when changes are implemented?

also, how's the secondary market work in Squirrel? I imagine that if you are investing in loans and there's a loan that's been reliably paid off for months, that would be more attractive... But if you have repayment protection, it wouldn't matter so much. Is the advantage for investors that the loan periods are shorter on the secondary market or have I misunderstood what that's about?

WE've already built the Secondary Market. Its just a matter of getting it licensed next year. The purpose of the Secondary Market is to allow investors to invest in longer-term loans (5 YEARS) knowing there is ability to liquidate their investments if they need to.

Essentially an investor can click "Sell my Loan" and we then automatically put the loan back into the market clearing mechanism to be resold. Providing the loan can be matched (rate, amount, term) then it will be cleared out and funds returned to the investor. We intend to go a step further and put some of our capital into a liquidity mechanism that can be used to immediately payout investors in certain emergency circumstances.

Its all designed to help give Investors more flexibility and to address the natural term mis-match that will occur in our business.

[Colgar]

I'm starting to like the idea of Squirrel over Harmoney.

I've had some big returns from Harmoney (over 10% after tax), but I've got a number of issues with it... The interface is a bit rubbish - I have no idea whats going on with my investments.

Bit late to the discussion but I tried joining and couldn't get the verification process to work. Tried about 4 different times with the license and webcam but no dice.

Haven't tried again since.