Author Topic: Do you invest in cashback listings?  (Read 6816 times)

Bilgefisher

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Do you invest in cashback listings?
« on: October 06, 2011, 11:41:04 AM »
Do the cashback listings sway your investing in one way or another?

chasingbread

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Re: Do you invest in cashback listings?
« Reply #1 on: October 06, 2011, 12:46:56 PM »
Nope. I believe it's designed to help sway those away from their self-established criteria. I think it works for Prosper, and especially for the newer investors.

I don't even look at them, and at times I find myself investing in one without even knowing it.

Peter

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Re: Do you invest in cashback listings?
« Reply #2 on: October 06, 2011, 06:39:58 PM »
Do the cashback listings sway your investing in one way or another?

I agree with ChasingBread. I have never invested in a cash-back listing because they never meet my criteria. But I have heard from many investors who do and I think it is particularly attractive to new investors.

You know it is funny, earlier this week I had a reader email me asking me to cover this very topic in a blog post. So, I might put it out there for everybody and see what people think.
Publisher of the Lend Academy blog

See my returns here: http://www.lendacademy.com/returns

DiligentiaLLC

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Re: Do you invest in cashback listings?
« Reply #3 on: October 06, 2011, 09:54:12 PM »
I have used it and enjoyed the nice bonus it provides, however I only recommend buying a position in the loan if the rest of the information meets your existing criteria/filters.  Don't reduce your standards in order to get the 3 - 4% bump because it is only a one time payout whereas you are "marrying" that borrower for 1 - 5 years.  Overall, if the loan does meet your criteria, the cash back bonus can be a nice hedge against future defaults reducing a little bit of portfolio risk.  I wish LC would do the same.

Bilgefisher

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Re: Do you invest in cashback listings?
« Reply #4 on: October 10, 2011, 01:24:38 PM »
I stick to my investing criteria, but I look to see if those loans fit in first.  1 loan so far.

The 3% cashback has me thinking though.
Lets look at the numbers.

My investment criteria sees about a 3.5% default rate.
Assume 3% cashback.

If I invest in 3% cashback loan that has a default rate of 6.5%, shouldn't my return be exactly the same?  And actually it might be  a bit better since I get the 3% immediately if the loan closes.