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  1. #11
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    Quote Originally Posted by AppleCrumble View Post
    every investment there is always a bit of a gamble... loto, hoseracing, stocks , property

    p2p - I do think it is an investment. It is providing money in return for a risk weighted return.

    Like other investments it also has the other factors like it is not very liquid, in that your money is pretty much tied up for the term.
    your initial investment/principal wont grow which is analogous to no capital gain
    you do get monthly, or periodic, repayments which is your cash flow.


    Overall I do like the idea of p2p as in principal it puts peeople with money together with people who want money and are willing to pay a charge on top.
    This in a way cuts out the middleman(the banks) which I like but unfortunately you still need a middleman(harmoney,squirrel...etc) to take their cut.

    From a borrowers point of view, I would only use the p2p if it was cheaper and more accessible than going to the banks. But then there will always be people(with the higher risk profile, people who can't go to banks) who would normally go to the 2nd or 3rd tier finance companies for their loans. I guess p2p is competing with these also.

    From a borrowees point of view they can put there money in for a certain return. And this return is clipped by the middle man. But it can be diversified enough to sprea the risk.

    It will be interesting to see the longterm of these p2p companies, but if the us and uk is anything to go by it seems like they might be here for a long time.

    Also interesting is the different operators all have different models.
    Lending Crowd
    Harmoney
    LendMe
    Squirrel Money.
    Don't you mean lenders point of view?

    Also, how would you describe each operators model in a sentence?

  2. #12
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    Quote Originally Posted by BIRMANBOY View Post
    Why muddy the waters by bringing in religion or morals...this is, as all investments should be primarily regarded, simply a question of how good is the return blended with how high is the risk.
    I agree. All investments carry a greater or lesser risk, which the investor will wear according to the investor's tolerance and awareness of the risks involved.

    I was responding to a previous post which brought up the term "bordering on usury" in relation to Harmoney. "Usury" is not a "neutral" word and its meaning involves judgment or conscience as to what is reasonable according to the ethical or moral standpoint of the person who uses it.

    Usury is, today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Wikipaedia https://en.wikipedia.org/wiki/Usury

    an unconscionable or exorbitant rate or amount of interest Merriam-Webster

    The action or practice of lending money at unreasonably high rates of interest: ‘the medieval prohibition on usury Oxford Dictionary

  3. #13
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    Hah...and LOL etc...every investment...loto???. horseracing???? That may be stretching the definition of investment just a tad.
    Quote Originally Posted by AppleCrumble View Post
    every investment there is always a bit of a gamble... loto, hoseracing, stocks , property

    p2p - I do think it is an investment. It is providing money in return for a risk weighted return.

    Like other investments it also has the other factors like it is not very liquid, in that your money is pretty much tied up for the term.
    your initial investment/principal wont grow which is analogous to no capital gain
    you do get monthly, or periodic, repayments which is your cash flow.


    Overall I do like the idea of p2p as in principal it puts peeople with money together with people who want money and are willing to pay a charge on top.
    This in a way cuts out the middleman(the banks) which I like but unfortunately you still need a middleman(harmoney,squirrel...etc) to take their cut.

    From a borrowers point of view, I would only use the p2p if it was cheaper and more accessible than going to the banks. But then there will always be people(with the higher risk profile, people who can't go to banks) who would normally go to the 2nd or 3rd tier finance companies for their loans. I guess p2p is competing with these also.

    From a borrowees point of view they can put there money in for a certain return. And this return is clipped by the middle man. But it can be diversified enough to sprea the risk.

    It will be interesting to see the longterm of these p2p companies, but if the us and uk is anything to go by it seems like they might be here for a long time.

    Also interesting is the different operators all have different models.
    Lending Crowd
    Harmoney
    LendMe
    Squirrel Money.
    www.dividendyield.co.nz
    Conservative Investing and dividend producers...get rich slowly!
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  4. #14
    Advanced Member BIRMANBOY's Avatar
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    Yes I know what you mean. The posters use of the word usury was probably not meant as such but certainly does carry an emotive connotation and Shakespeare's depiction of Shylock as the (unfortunately) Jewish moneylender in The Merchant of Venice certainly put back the perception of Jews somewhat.... Realistically however credit card companies, finance co's, etc.etc.etc. will always be with us. There is always someone willing to exploit someone else's circumstances, whether it be for money, influence or power. That whole issue is so far reaching and fraught with so many potential opinions and emotions that is detracts from the main issue. Its hard enough judging investments worth on facts and figures. Problem here is as I said not a lot of facts and figures to really go on.
    Quote Originally Posted by Bjauck View Post
    I agree. All investments carry a greater or lesser risk, which the investor will wear according to the investor's tolerance and awareness of the risks involved.

    I was responding to a previous post which brought up the term "bordering on usury" in relation to Harmoney. "Usury" is not a "neutral" word and its meaning involves judgment or conscience as to what is reasonable according to the ethical or moral standpoint of the person who uses it.

    Usury is, today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender. Wikipaedia https://en.wikipedia.org/wiki/Usury

    an unconscionable or exorbitant rate or amount of interest Merriam-Webster

    The action or practice of lending money at unreasonably high rates of interest: ‘the medieval prohibition on usury Oxford Dictionary
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  5. #15
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    Quote Originally Posted by BIRMANBOY View Post
    Yes I know what you mean. The posters use of the word usury was probably not meant as such but certainly does carry an emotive connotation ...
    I think that "usury" is nearly always used in circumstances in which the writer is expressing ethical repugnance. The word has a negative connotation. If the writer intends a more benign connotation then "at a high interest rate" or similar would be used.

    Quote Originally Posted by BIRMANBOY View Post
    ... There is always someone willing to exploit someone else's circumstances, whether it be for money, influence or power....
    "Exploit" with its negative meaning requires a moral or ethical judgment. Such activity if proscribed by a nation's law is an illegal activity. Using the neutral connotation of "exploit" then that statement could apply to every investment. And if you add "or whether it be for self-satisfaction" it could be applied to every endeavour including organised charities and research institutions.

  6. #16
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    Major concern is this is brand new territory....who knows what may happen or could happen. I'm sure that there have been safeguards written in but nothing has been tested or put under pressure so outcomes are completely unpredictable the fact that the FMA has some oversight wouldn't allow any peace of mind in my opinion.
    P2P lending may be new to NZ but it has been operating in other countries (UK, USA) for some years. Looking at some of the overseas P2P sites you can see similarities with the NZ companies in the way that their sites look and the language that they use. For example, here is Mr Money Moustache's experience of Lending Club after one year

    I'd suggest that the NZ sites are merely following (hopefully) best practice of the companies who have been doing this for a while. Time will tell.

  7. #17
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    While I do like the concept of P2P lending immensely and wish it every Success, now that there is a thread on whether it is an investment , it has clarified my thinking on the matter.

    Certainly neither buying shares in a P2P vehicle or lending money to borrowers via a many to many platform could currently be considered of investment grade. None of the vehicles operating have been around long enough - the models aren't proven.

    But are they investments? Of course they are though I would place them very firmly in the high risk category, essentially junk.
    The reason for this in my opinion is that the theoretical benefits obtained from loan diversification will be negated by high failure rates, and especially high failure rates during periods of stress.
    its exactly the same principle as the securitisation of low,quality mortgages a la the cause of the GFC. Having lots of them all bundled together doesn't magically turn them into AAA.
    For clarity, nothing I say is advice....

  8. #18
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    Quote Originally Posted by peat View Post
    Havking lots of them all bundled together doesn't magically turn them into AAA.
    Which is why interest rates are above 5%! Average return is about 15% which corresponds to your statements.

  9. #19
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    So where is the "strategy" in P2P "investment"? Most investors have some sort of strategy when they invest...and in fact the thread where this sitting is called "Investment Strategies". How can you align lending money to individuals with a strategy? There is no strategy, no intellectual involvement, no examination of company performance and prospects....just an examination? of likelihood that joe borrower will pay back his loan.
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  10. #20
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    Agree...it is not a AAA loan if the borrower is 21 year old borrowing money without security for an overseas holiday. The interest rate will be high to reflect the risk. Would it be justified to call that usurious?

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