Yes - both full repayments and repayments of large %
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Same here early this year. Full repayment just slightly less than a month on the term. Got reinvested right away then.
But it seems very few are borrowing these days as my last one took almost 3 weeks to be taken.
Watching and waiting the 5 Year term @ SM - Funding has Not moved all day today....
Just moved all my 'funds waiting for new loans' out of SM.... Nothing happening on 5 Year loans these days.
Did get in to a 5 Year loan on Fri @ 16:00 which went in to the 24 hour countdown waiting for Borrower to accept.
24 Hours passed and my $$'s were left in SM over the weekend with NO activity!
Heads up to any fellow sharetrader users and squirrel money investors - Not 100% confirmed yet but it is likely in the next 24-72 hours I will be testing out the 2nd hand markets for selling squirrel loans (around 30 of them).
I will post feedback re how I get on, These are all good loans and all within 0.2% of the maximum interest rate for the term that they are.
If you don't have $ waiting in squirrel and you want a chance at getting these loans you might want to put some in ASAP
I just tested with a single loan to see how fast the process was The Answer - less then 1 minute
I too had orders in @ SM and by 10:30 this morning orders had all been funded @ 9% ( and right now just 1K awaiting for Lending! )
Another 5 year investment (4 yrs, 3 mths remaining) of mine got fully repaid today.
Yep - I just released them
So this is how it seems to work - when you release heaps it seems to cycle through them - with only 1 sold every 5 minutes or so even if there are orders waiting they seem to match 1 at a time ~ every 5 mins
Loans that remain on the market (and nothing new has sold in last 25 mins or so)
5 Years - with balances over $500 - But most under $600
3 Years - with balances over $500 - But most under $600
2-year loans
I have a small number Im not releasing today - but will release over the next week
Thanks for letting us know about this. Its nice to know how easy it goes. I imagine that lots of smallish loans would sell easier than a couple of bigger ones but there would be more fees involved. If these sell well it might be the answer to my concern about being able to get money out if needed.
Yes smaller loans are easier to sell infact anything over $501 sells noticeably slower. All my loans started out as loans between $500-$900, That said since I posted here about it someone has taken all the 5 year loans between $500-$600
Still on the market
3 Year loans with balances less then $500
2 Year loans with balances less then $500
No more 2 & 5 years left now at all - only 3 years
Only 2 x 3year @ 8.5% everything else is gone now - and there will be no more
Expecting interest rate to come up soon so a lot more loans will come your way. Just leave the worrying to those who will need your dough sometime soon :)
The last 10 days I have had all my new loans filled @ 9% / 5 Years on the same day orders were placed.
Happy :)
More investors wanting Loans, waiting for Borrowers funds......
Attachment 8492
Gaps getting even wider... Like 7K of investor funds available for now 142K borrowers wanting loans!
Attachment 8493
I feel that the minimum investment amount should be dropped down to like $50 or at most $100. I have $400 sitting in my Squirrel account sitting idle which I can't invest yet. A lot of us would be in the same boat. Dropping down the investment amount would enable us to invest more frequently and would result in the loans getting filled faster. It would be a win win situation for investors, borrowers and Squirrel.
[QUOTED=Saamee;647069]Gaps getting even wider... Like 7K of investor funds available for now 142K borrowers wanting loans!
Attachment 8493[/QUOTE]
Just been pondering the following:> How usuefull is the Secondary Market going to be \ work to an Investor in a rising interest rate environment?
I am trying to work out in my head, how in a Rising Interest environment ( coming mid next year? ) as P2P lenders raise their rates, how say selling a secondary loan at 9% would go, if you could get 10% for a virgin fresh loan.....
Who would \ could Sell in those circumstances?
Continuing to obtain 9% \ 5 Year Funding everyday this week... Still more Borrowers around than Funders right now.
100% guaranteed? They have a reserve fund, but that doesn't make it 100% guaranteed. I also hadn't realised that the minimum bid was $500.
Does anyone know how much of the borrowers' payments goes into the reserve fund? I couldn't find anything specific. I'm assuming for a good borrower they add, say, 1% to the interest rate you bid, and for a bad borrower they add, say 5% to the interest rate you bid.
Yes... It's here >>> https://www.squirrelmoney.co.nz/look...er-your-money/
Currently @ 1.99%
Guaranteed as long as there are current reserves in the Fund!
So definitely not 100% guaranteed, no guarantee at all.
No, I haven't invested in Squirrel, I'm not a fan of reserve funds. If they take too much off you to put in the reserve then you are getting a lesser return than you should. If they don't take enough off you to put in the reserve fund then you lose. If they take the right amount then you're ok, but if you're properly diversified you would've achieved the same result without a reserve fund.
Other recent contributors got me looking a little deeper into how the SM Reserve fund works....
Attachment 8529
I didn't get a chance to come back and post how I got on with selling the loans (been to busy) In the end it took 9 day to liquidate ~$12,000.
5 year loans under $500 went fast
There were some delays on 2 & 3 year loans
There were more delays on the loans with balances between $501-$999
So while the process worked OK for me - not great - but OK I think the market (and ability to sell) would break should interest rates rise from when the loans were written, I also think anyone lending below the max interest rate is going to have trouble if they need to sell
I sold a couple of loans the other week as a test and they were snapped up the same day (at the same as the top market interest rate). However, I do agree that this service will not work very well if (when) interest rates rise. I would hope that Squirrel are aware of this and are working on the ability for the loans to be sold at a price other than face value, in a similar fashion to the bond market.
Anyone else notice it looks like Squirrel have just taken some serious 'End of Year' Write Off's.
The Reserve Fund has fallen from approx 220K to 200K and the Fund Coverage is now just 3.55% ( it was around 4% )
Squirrel have also now chosen to stop showing the amount of $$ Loans Write Off's on the website.
Attachment 8549
Technically the fund could vary in % depending on the economic cycle. 1.9% might be fine at this point but what about during a recession where returns half and defaults double.
http://www.lendingmemo.com/p2p-lendi...n-performance/
Anyone using the Squirrel app? How do you find it?
Search on the App Store/Google Play Store.
It had a few bugs when I first use it, I'm currently just sticking to the mobile website as it's sufficient for me.
Investing with LC and Harmoney has become so time consuming that I am considering withdrawing all my money and investing it all with Squirrel Money.
Harmoney's Auto-Lend lacks some important filters and its priority rules are broken. LC gets very few loans and unless you are watching your phone all day or login countless times throughout the day then it's difficult to invest.
For these reasons I quite like investing with Squirrel Money; deposit some money, create a loan order and then go to the beach. My money is automatically invested when a new loan becomes available. The interest rates are slightly lower but far less time consuming and time is money. And I am also a fan of their Loan Shield.
Hi Saamee, apologies haven't been on here for a while.
We wrote off a $20k loan over Christmas. We expect to collect on this one, but we have a policy of writing off at 90 days arrears and then recovering to the reserve fund. It is sitting with debt collectors and we have security. We also cover arrears through the reserve fund. A combination of this can make it appear a bit more volatile whilst the book isn't that large. What we have been showing is the cash balance in the fund as opposed to the cash balance plus receivables. It has since started to build up again and does so fairly quickly now.
We initially committed to keeping the reserve fund at 4.00% for the first 12 months so that the reserve fund would have a reasonable starting position. We are now through 12 months so it will build up under its own steam. The book has started to grow faster and recently passed $6m 100% retail funded. That growth will drop the reserve fund as a % of loans outstanding.
We launched a new web site in December so the reporting has changed a bit, mostly for the better.
The focus with the new web site has been on getting the borrower proposition simpler. You'll see we now have explicit borrower rates targeting high quality borrowers and we sped up the loan acceptance process to reduce latency for investors.
You'll see we put up the Squirrel Investor App for Android and iOS. Its version 1 and we have plans for v2.0 already. We'll hit you up for feedback on what you want when we're ready for the next App sprint.
We intend to put up a lot more reporting up on the reserve fund soon.
Hey JB
Thanks for the confirmation \ update. I recently got the App installed too.
Would be good to hear from you where you think P2P will be going in NZ over 2017 and also for sure how you think P2P may play out with Domestic & International Borrowing Interest rates moving now upwards slowly. ( either on here or via a Newsletter to Investors.
Rgds Saamee
Hey guys,
Quick update.
We currently have $200,000 of loans available on the platform. $52k in the secondary market (loans we've settled on our account and now for sale), $97k in documentation and $50k documented and awaiting funding.
5 year at 9.00%
3 year at 8.50%
The stuff we have on the secondary market is a mix of $2k and $5k loans. Historically we used to do these at $5k but are dropped to $2k last week and now to $500 going forward to match the minimum investment amount.
Few key points to reminder you all:
- Even 5 year loans prepay at about 30% per year (nature of market.) . Average duration is around 18 months.
- Secondary market if you need to liquidate. (Saame - I don't see rates going up any time soon.)
- Can auto-invest and can also set up a regular withdrawal for income.
- Mobile App (iOS and Android)
I like the change made to buying into the secondary market at 500 amounts. Gives confidence that it will be easy to sell out of my investments if needed.
Continuing happy investor.
Squirrel shareholder update says they are looking to reach a $30m loan book for the platform to break even.
A long way to go from the current $6m loans and with investors not keeping up with borrower activity recently
I have been very happy with my little sojourn into Squirrel Money so far but because I don't know how to estimate the risk I have limited the funds I have invested to date. I am thinking of increasing it tho and wondered if anyone else could venture an opinion on how you personally view the risk profile? I know Icyfire has indicated above that SM is a much safer investment than other P2P lenders but just how safe over 3 to 5 years do you think the investments are? Especially given the 4% reserve was only for year 1. I'm doing the indecision dance at present. Thanks in advance for any thoughts and apologies for the uninformed question I'm a novice investor.
Have a look at "What happens if the Reserve Fund runs out?"
Hey Icyfire
Squirrel Money is primarily a banking technology play. We have built a platform that can do secured and unsecured lending, term deposits and call accounts. We put in a secondary market, an App, auto-invest etc. I think we are innovating faster than the rest of the market. The entire platform has a value under $500k on the books so we haven't even over capitalised. (We've slowed development a bit as we are currently build an epic mortgage platform for our broker business.)
We only need 3 people to run the entire platform and even that has spare capacity. If we were to simply look at marginal operating costs (excluding marketing) we are profitable already at $7m of FUM. $30m is the level that it truly washes its face including marketing and share of company overheads. Contrast that with Harmoney that has lost over $22m and has high operating expenses.
We are pursuing very different strategies.
My view is that the economics of P2P are rightfully tight. We need to build a sustainable and economically viable long-term proposition and we need to be lean.
In terms of income we earn a 2% margin and some fee income. Personal loans repay quickly with a run-off rate of close to 30% per year. So the margin income is about $700 over the life of a loan plus an upfront fee of $250 for us. So lifetime value of $950 maybe more if they borrow again and again. That's not a lot to play with in our space and we'll always find ourselves outbid in traditional media. Compare this with a finance company that earns 10% margins and has a lifetime value of $3,500. We cannot afford to spend big $$ of advertising especially with loans that run-off at 30%.
The challenge with having a $300m personal loan book is that you need to write about $90m a year just to stand still. That creates a bit of a noose - if we spend lots on marketing we have to keep spending lots on marketing to maintain momentum.
As it stands we charge borrowers an establishment fee of $250 for unsecured loans versus Harmoney at $500. Our borrower rates on average are about 4% lower which will be partially a reflection of lower risk borrowers and partly that we want to offer consistently better pricing. We think borrowers with good credit are better-off on our platform and its sustainable. We don't have lots of budget to push that message but we figure word will gradually get out and we're happy to wait, learn and build momentum.
Cheers, JB
Hey Lawson,
Whilst the market is small our Reserve Fund will be a bit volatile that's why we seeded it with $200k to start with (of our own money.)
At a marginal level we still provision at 1.5 times expected losses so it should gradually increase albeit as a % it will drop.
The key thing is that if the reserve fund runs out we can socialise the loss across all investors by shaving their interest rate to replenish the fund. So if the fund has 3% actual cash in it (plus we put in 2% per year) then we have 5% reserves available over a year. If losses ran up to 10% then we would shave investor returns by 5%. In this scenario capital is still protected but returns would drop from 8%-9% to 3%-4%. Socialisation provides the maximum diversification benefit as it's sort of like an insurance policy shared across the investors.
We could debate whether 10% is realistic. My view is it is an extremely high loss rate for good quality credit borrowers. Read the investor booklet for details on all of this.
We essentially run the same reserve fund model as RateSetter and Zopa in the UK. Neither of these guys have lost 1 penny under this model even post GFC. To date (and accept its still early) we have not missed one repayment to investors, not even by a day.
Cheers, JB
Thanks for the info JB@Squirrel and icyfyre.
It's been a dry 2 week on the lending front. My funds still sitting waiting for borrowers (on 2,3 or 5 year loans). What about the others on the other P2P platforms? Haven't you noticed a slowdown of intake on your funds?
It appears that currently all NZ based P2P platforms are facing the same problem where there are too many investors and not enough borrowers.
And Squirrel looking to attract more investors, being part of this Wealth Innovation Tour https://gallery.mailchimp.com/764481...poster_web.pdf
Hope they invest just as much effort on the borrower side
I opened a SquirrelMoney account a couple of weeks ago to test the waters (as Harmoney is a dry well right now), and nothing has gone through. I see that it seems to be having the same issue as Harmoney. What's the general strategy as far as choosing an interest rate for your bid? I've been bidding on on the lower end of the distribution. If a loan is approved that's larger than the available funds at any given interest rate, do they simply combine the funds so the investor gets the rate they bid at and the borrower pays a weighted average rate?
Swung back today > Borrowers this afternoon now waiting for Investors Funds!!
Attachment 8767
Just noticed the Reserve Fund has fallen under 3% now at 2.92% - 1st time i have sighted it below that level.
Although their Loan book is now over $7.1M they must have Written off quite a few Loans at the end of the Month \ Financial Year....
Attachment 8782
I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?
I think that it's been hovering around the 208-209k mark for a few months.
On their website it says: "What happens if the Reserve Fund runs out?
Our expected loss rate on the existing loan book is 1.3%, however we are currently reserving at 1.9% which provides 1.5x coverage over the expected loss rate each year."
Squirrel decides what percentage of loan income is allocated into the fund, currently 1.9%. Correct, they have no obligation in terms of the fund's balance. They chose to start it off with $200k of their own funds and now periodically decide what % of loan income to allocate to it based on predicted losses.
Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?
The site suggests a 2016 bad debt rate of 0.6% (0% for 2017, I think it's the bad debt on loans issued in that year). If I understand it correctly, the loan book will grow quicker than the reserve fund (when a loan is made it immediately adds to the book but only dribbles into the reserve fund as payments are made), so it's not surprising to see the coverage ratio dropping as the loan book grows, now that Squirrel don't have to keep it topped up.
https://www.squirrelmoney.co.nz/platform-statistics/
Yes it does. As the loan book grows the Reserve Fund Levy will decrease accordingly. Plus it will get depleted quicker as and when Loans are Written Off.
I get uncomfortable seeing the Reserve Fund getting lower and lower - felt happier when it was sitting @ 4% over the 1st year of their trading...
Anyone else viewing a portion of their SM investment like Term Deposit?
With the SM Secondary market you now have choices....
1) $$'s in a main street bank on a TD @ maybe 2.05% / Year for a month
or
2) $$'s in SM @ 9% / Year per month.... with a $50 break fee if required??
Just thinking.....
I don't think of them as substitutes but SM is the only cash hold that I am increasing.
That's exactly what I've been doing. As my bank term deposits have matured I then invested the money in SM. The ROI is much better than what the banks are currently offering.
Yep have been doing the same regarding term deposits and SM. Into 6 figures now, not sure how wise it is though considering such a large % of loans are unsecured. My preference is for LC but the number of loans coming through is low.
I invest in both LC and SM. LC has loans secured against a vehicle and sometimes property while SM has the Loan Shield. Hopefully all borrowers on LC using their vehicle as security have insurance on that vehicle. I'm hoping also that LC take into account the fast depreciating value of a vehicle when calculating a borrower's risk grade.
Only time will tell how wise of a decision it was. Loosing $25 or $50 in a loan is not the same feeling as loosing $500, however, I have full confidence in the SM team and their system.
Btw, the Reserve Fund balance is back up to almost $211k
Attachment 8790
Hahaha, Enquiries for 5 year loans are at over $1m. Still takes a few days for this to translate into loans being funded though.
Anyone else go to the wealth seminars such as the one last night at the old Albany Town hall? Was interesting to hear directly from Squirrel and Simplicity kiwi saver.. can't remember much about the 3rd presenter. Might be worth checking out Simplicity due to lowest fees of about a third of a normal kiwisaver provider. They have only been running for 7 months with 5k members and $110million invested (through Vanguard).
Already invested in the non-Kiwisaver Simplicity Investment Funds
I have about $50K to initially invest in the P2P lending space. From reading the threads here many people agree that LC is more secure than Harmoney (all loans have either vehicle or house as security) so I am starting off with LC. I also know about the SquirrelMoney LoanShield and most people seem to say that is "most secure"? I will probably try both LC and SM and avoid Harmoney.
My biggest question is how much out of the $50K would you recommend I invest into each loan? Obviously diversification is better, but I also don't want money sitting there doing nothing while I wait for loans to come in. From what I gather it could take a while for all the $50K to be invested. In the Harmoney thread people are investing from $100 to $400 into each loan but it looks like that would take months to be fully invested on the other 2 platforms.
Also many here seem to say that they ignore the A loans on LC (eg the current loan L00-13-072 at 8.95% which I see has been available for a day or so now (seemingly much more time that other loans) and for that interest rate, would prefer SM) - is that correct? It sounds like Bs are the sweet spot on LC?
Thanks everyone
Hi Entrep, with the SM platform you can just invest it in a lump sum as the reserve fund (loan shield) provides the full diversification benefit. No need to spread it over loans and you can't choose loans anyway. We currently have $50k available right now, so you'd be able to invest it in a day. Or you could put it in progressively in amounts of $10k and kust see how it goes.
There is about $1m going through the platform per month now and we have no institutional investors or banks, just retail investors so you wont get crowded out.
Thanks, when you say "the reserve fund (loan shield) provides the full diversification benefit" you mean by way of socialising losses from any loans right? But strictly speaking, my lump sum would not be diversified as it would be all lumped into one big loan, and I would have to rely 100% on loan shield versus a more thorough loan diversification strategy of investing in several loans (plus have Loan Shield on all of them obviously).
What do you mean you can't choose loans? That I can't see specifics of loans? I believe I could still choose/diversify by creating 5 x $10K orders for example?
I have uploaded all the docs and am waiting for verification BTW.