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  1. #1121
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    Good idea, I think I will follow you.

  2. #1122
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    I'm just scaling back my investments and being more selective.

    Defaults will rise. However these are much higher quality loans compared to HM. Finance Direct are also investing in these loans, they have navigated through the GFC, the security will mitigate part of the loses arising from higher default.

    A year ago, I did a presentation on US P2P, and how they performed vs Shares and Real Estate during the GFC. It showed that overall during those 2 years performance was roughly break even, the higher grades made money and the poorer grades lost. Good to have liquidity, but everything not lost in P2P.

  3. #1123
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    Quote Originally Posted by leesal View Post
    ...
    A year ago, I did a presentation on US P2P, and how they performed vs Shares and Real Estate during the GFC. It showed that overall during those 2 years performance was roughly break even, the higher grades made money and the poorer grades lost. Good to have liquidity, but everything not lost in P2P.
    For retail investors in NZ P2P though, capital write-offs of loans are not deductible for tax. It is in times like these, that becomes very relevant.
    As always DYOR.
    Last edited by Bjauck; 30-03-2020 at 08:25 AM.

  4. #1124
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    Quote Originally Posted by Bjauck View Post
    For retail investors in NZ P2P though, capital write-offs of loans are not deductible for tax. It is in times like these, that becomes very relevant.
    As always DYOR.
    As you say, DYOR, as my accountants advice is that it is tax deductible if you are investing through a LTD company (rather than as an individual). In my personal circumstances, which may suit others, it is better to invest through a ltd.

  5. #1125
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    Quote Originally Posted by Toukshare View Post
    As you say, DYOR, as my accountants advice is that it is tax deductible if you are investing through a LTD company (rather than as an individual). In my personal circumstances, which may suit others, it is better to invest through a ltd.
    Definitely subject to DYOR. I thought "retail investors" was another way of saying individual non-professional investors. I was not referring companies doing the investing.

    Unlike in some other jurisdictions, In relation to "retail investors", The NZ P2P sector never bothered to get an IRD ruling on tax consequences.

  6. #1126
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    Quote Originally Posted by Bjauck View Post
    Definitely subject to DYOR. I thought "retail investors" was another way of saying individual non-professional investors. I was not referring companies doing the investing.

    Unlike in some other jurisdictions, In relation to "retail investors", The NZ P2P sector never bothered to get an IRD ruling on tax consequences.
    Very good point. If defaults are 8%, thats 2.5%+ at the top bracket that isn't tax deductible. I'm able to take the tax deduction, those who can't it makes a big difference.

  7. #1127
    Member Tony Two Gloves's Avatar
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    I wonder what would happen with this if Finance Direct folds, just had a look at their accounts for the year and they arenít making any money. Who checks them on the quality of loans they put up and if desperate would they push harder when itís the investors that lose? I have no money with them now but think I will avoid

  8. #1128
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    Quote Originally Posted by Tony Two Gloves View Post
    I wonder what would happen with this if Finance Direct folds, just had a look at their accounts for the year and they aren’t making any money. Who checks them on the quality of loans they put up and if desperate would they push harder when it’s the investors that lose? I have no money with them now but think I will avoid
    I looked at this a year ago, and interesting to see there FY20 results are breakeven.

    Theres a few things to look at in the financials. Financial Direct holds approx 1 million in cash, its able to sustain a certain amount of loss. Operating cash flows are positive, and they made a profit in FY19. So there could be some accounting adjustments in there, maybe the adoption of IFRS16 or an increased bad debt provision.

    The loans (P2P product) are ring fenced, via the FMA. And there is the requirement that Lending Crowd arrange an alternative provider in the event of receivership. It does bring the question, if that were to occur, who would pick up the book in this market. But at least the regulations are in place, to afford levels of protection.

    Finally you could consider past performance, Finance Direct made it through the GFC, if I understand correctly their lending is typically secured.

  9. #1129
    Member Tony Two Gloves's Avatar
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    Yes it is all secured loans, but second mortgages and Caveats which I suppose is better than nothing. They also have quite a few vehicle secured loans which tend to perform well. Just worries me if they have been around 20 years or so and they still cannot make money. They are the worst performer of all the NBDT's albeit there is only five or six of them now but just leads me to wonder why they are doing so badly in a market that to 31/3 was really good for most participants. I don't think I would sleep well if I was involved with this so will look for other options. Cheers

  10. #1130
    Senior Member Toasty's Avatar
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    I am thinking of pulling my investment in Lending Crowd. It is just too hard to secure a loan. I don't have time to refresh repeatedly in case one appears. I receive the email notification too late in most cases. Is anyone else in the same boat or am I just doing it wrong? I am averaging around 12.5% return according to my dashboard but it doesn't seem worth it for the hassle for less than $10k invested.

    Edit: Or do I scale up?
    Last edited by Toasty; 12-10-2020 at 01:25 PM. Reason: Added a sentence.

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