Poll

What TERM loan do you invest in?

36-month only
17 (30.4%)
A mixture, but prefer 36-month
22 (39.3%)
A mixture, but prefer 60-month
6 (10.7%)
60-month only
0 (0%)
It doesn't matter
11 (19.6%)

Total Members Voted: 56

Author Topic: What TERM loan do you invest in?  (Read 11695 times)

JoeB

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Re: Re: What TERM loan do you invest in?
« Reply #15 on: August 10, 2014, 02:26:37 PM »

I'm about 70% 36 and 30% 60.  P2P Picks is all 36 months and then I do some filters on 60 months.


I am about the same ratio as Rawraw. I prefer 36-month but we need to keep in mind that the first 60-month loans won't reach maturity until early next year. So, it will be a while before we will be able to compare apples with apples.

Question: in all of your writings and filterings, you do not sort for term. 60 month notes are probably 2/3 of the platform and therefore around the same for your filters. How can it be that you are at 70% 36 month notes? Did I miss something?
P2P picks only selects 36 months. So my automated investments through that service ignores the 60.  It's a built in filter. Then I randomly turn on my filter for sixty month only

I'm sorry, my question was directed towards Peter who agreed with your statement.
Best to all,

JB

rawraw

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Re: Re: Re: What TERM loan do you invest in?
« Reply #16 on: August 10, 2014, 02:28:55 PM »

I'm about 70% 36 and 30% 60.  P2P Picks is all 36 months and then I do some filters on 60 months.


I am about the same ratio as Rawraw. I prefer 36-month but we need to keep in mind that the first 60-month loans won't reach maturity until early next year. So, it will be a while before we will be able to compare apples with apples.

Question: in all of your writings and filterings, you do not sort for term. 60 month notes are probably 2/3 of the platform and therefore around the same for your filters. How can it be that you are at 70% 36 month notes? Did I miss something?
P2P picks only selects 36 months. So my automated investments through that service ignores the 60.  It's a built in filter. Then I randomly turn on my filter for sixty month only

I'm sorry, my question was directed towards Peter who agreed with your statement.
He uses the same service

JoeB

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Re: Re: Re: What TERM loan do you invest in?
« Reply #17 on: August 10, 2014, 02:37:48 PM »

I'm about 70% 36 and 30% 60.  P2P Picks is all 36 months and then I do some filters on 60 months.


I am about the same ratio as Rawraw. I prefer 36-month but we need to keep in mind that the first 60-month loans won't reach maturity until early next year. So, it will be a while before we will be able to compare apples with apples.

Question: in all of your writings and filterings, you do not sort for term. 60 month notes are probably 2/3 of the platform and therefore around the same for your filters. How can it be that you are at 70% 36 month notes? Did I miss something?
P2P picks only selects 36 months. So my automated investments through that service ignores the 60.  It's a built in filter. Then I randomly turn on my filter for sixty month only

I'm sorry, my question was directed towards Peter who agreed with your statement.
He uses the same service

This is his strategy with no mention of further filtering. To the contrary, he emphasizes the use of his filters as shown:
http://www.lendacademy.com/investing-in-lending-club-and-prosper-in-2013/
  http://www.lendacademy.com/investing-lending-club-prosper-2014/
Best to all,

JB

lascott

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Re: What TERM loan do you invest in?
« Reply #18 on: November 09, 2015, 09:41:28 AM »
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

pourts

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Re: What TERM loan do you invest in?
« Reply #19 on: February 05, 2016, 06:48:00 PM »
I have a hypothesis that as more investors become comfortable with this asset class, the expected returns will decrease.  This has happened over the last few years, and I think it will continue.  Based on this hypothesis, I am increasing my allocation towards 5 year notes in order to "lock in" more favorable notes and limit reinvestment risk.

However, I am a relative novice in this game.  Any thoughts on this strategy?

michael49

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Re: What TERM loan do you invest in?
« Reply #20 on: February 06, 2016, 01:38:16 PM »
Most of the replies to this topic are almost 2 years old now, I would be curious to know if people's strategy on this has changed at all.
I have traditionally invested mostly in 36 month notes but I recently started a portfolio using bluevestments bluepicks aggressive filter and about 75% of the notes it has selected are 60 month notes. 

RaymondG

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Re: What TERM loan do you invest in?
« Reply #21 on: February 06, 2016, 01:44:20 PM »
To me, whatever notes passed my complex filter will be purchased automatically. I focus on D,E,F, so the ratio of 36 vs 60-month in my portfolio is about 20:80 naturally. The charts of Net cumulative Lifetime Charge-off Rates have bias since 36-month loans are mostly A,B,and C loans which should have lower default rate.

PhilGD

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Re: What TERM loan do you invest in?
« Reply #22 on: February 06, 2016, 03:05:31 PM »
I was term-agnostic up until recently. Beginning this year I've decided to invest in 36-month term loans only, as a means to protect against interest rate risk. Another factor is that in back testing, the model I use for 60 month loans is weaker than my 36 month model, so I think I can have more success in the 36m arena.

Fred93

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Re: What TERM loan do you invest in?
« Reply #23 on: February 06, 2016, 03:09:25 PM »
My filters would naturally select more 60 than 36.  To bias this back toward 36, I apply slightly tighter filter criteria to 60 month loans, so the 60 month loans theoretically have a little higher credit quality, to compensate for the risks of holding them longer (such as the risk that the borrower's credit situation will change over time).  Portfolio has about 60% of 60 month loans.

heikkie

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Re: What TERM loan do you invest in?
« Reply #24 on: February 11, 2016, 10:07:36 PM »
The filter I used show much more 60 month than 36 month
Later I change it to 36 month only, if i search it once a week (random time in a week), about 1-8 loan will show up.

Rob L

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Re: What TERM loan do you invest in?
« Reply #25 on: February 12, 2016, 10:48:23 AM »
I am about the same ratio as Rawraw. I prefer 36-month but we need to keep in mind that the first 60-month loans won't reach maturity until early next year. So, it will be a while before we will be able to compare apples with apples.

FWIW, we now have a year of fully completed 60 month loans to study and compare with 36 month loans of the same vintage (apples to apples).
Using NSR to back test loans issued 01/01/2010 through 12/31/2010 the ROI was 6.41% for ALL 60 month loans and 5.88% for ALL 36 month loans.

lascott

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Re: What TERM loan do you invest in?
« Reply #26 on: February 12, 2016, 01:55:01 PM »
I am about the same ratio as Rawraw. I prefer 36-month but we need to keep in mind that the first 60-month loans won't reach maturity until early next year. So, it will be a while before we will be able to compare apples with apples.

FWIW, we now have a year of fully completed 60 month loans to study and compare with 36 month loans of the same vintage (apples to apples).
Using NSR to back test loans issued 01/01/2010 through 12/31/2010 the ROI was 6.41% for ALL 60 month loans and 5.88% for ALL 36 month loans.
Stands to reason.

Title: Earn More Interest: 60-Month Loans
https://www.lendingclub.com/public/60-month-notes.action
Quote
Earn 3.82% more interest on average
By investing in 60-month loans, you can earn more interest while diversifying your investment portfolio beyond 36-month loans. To enjoy the longer repayment term of 60 months, borrowers with the same credit profile and loan amount are modified by 4 to 8 grades. They pay a higher interest rate, so most people can earn from 2.62% to 5.03%2 more interest.
See how we set interest rates
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

fliphusker

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Re: What TERM loan do you invest in?
« Reply #27 on: February 27, 2016, 09:05:05 AM »
First off let me say, I have not invested a penny in LC, yet.  Wanted to get all down with my nerdy self before making any kind of investment.  So am reading about anything I can get my eyeballs on about it.
What I seem to be missing in this thread is if people are using the same filter for the 2 terms they are purchasing.  Have to use different filters for the 2 different terms.  Unless your OK with not maximizing potential earnings.  Guess do not want a program to invest my money in things such as the following. 
With playing with a filter today it spat out a quite nice D1 note.  The person was pretty buried in CC debt, but his 15k/month salary would help out quite a bit.  But the odd thing was, he was a stagehand.  Top stagehands, according to Google, make around 50k.
Another one where the person was a vault custodian and was making oddles.

Rob L

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Re: What TERM loan do you invest in?
« Reply #28 on: February 27, 2016, 12:54:49 PM »
What I seem to be missing in this thread is if people are using the same filter for the 2 terms they are purchasing.

My guess is that they are using the same selection criteria. However ...

Think I've read most of the stuff here on the forum over the past couple of years and can't remember seeing this question discussed. That's zero, zip, nada. I've always limited myself to 36 month loans and haven't given it much thought. It would be interesting to hear from others that do invest in both 36 and 60 loans and whether or not they use a different selection criteria for each. If different criteria are used what are they? If not has anyone actually done the work and determined there's little or no difference? Of course asking these questions is asking folks to disclose a lot of information (secret sauce) that came through their own hard work. If I had done all the work to find these answers I probably wouldn't share them.

PhilGD

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Re: What TERM loan do you invest in?
« Reply #29 on: February 27, 2016, 01:44:41 PM »
What I seem to be missing in this thread is if people are using the same filter for the 2 terms they are purchasing.

My guess is that they are using the same selection criteria. However ...

Think I've read most of the stuff here on the forum over the past couple of years and can't remember seeing this question discussed. That's zero, zip, nada. I've always limited myself to 36 month loans and haven't given it much thought. It would be interesting to hear from others that do invest in both 36 and 60 loans and whether or not they use a different selection criteria for each. If different criteria are used what are they? If not has anyone actually done the work and determined there's little or no difference? Of course asking these questions is asking folks to disclose a lot of information (secret sauce) that came through their own hard work. If I had done all the work to find these answers I probably wouldn't share them.


60 month loans consist of lower credit-quality borrowers, which is a good reason to use different criteria in selecting 60 month loans vs 36 month loans. A borrower who selects a 60 month loan is probably going after the lower payment associated with that longer term. This means that the borrower's disposable income might be very tight. And we know that income is one of the best predictors of default.

For those reasons, I use a different regression model to grade 60 month loans than I do for 36 month loans. And in backtesting, I get better results this way (compared to building just one model for both 36 and 60 month loans).