Author Topic: What would make you switch P2P investing service?  (Read 3099 times)

caseChange

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What would make you switch P2P investing service?
« on: July 23, 2014, 06:30:46 PM »
Aside from LC doing something horrible, a comparable service with good automation obviating a 3rd party, and access to a greater field of loans, why might you try a new service or leave altogether?

Rob L

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Re: What would make you switch P2P investing service?
« Reply #1 on: July 23, 2014, 09:21:33 PM »
Maybe 10 year US Treasuries back to 5%. would do it.

cfb

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Re: What would make you switch P2P investing service?
« Reply #2 on: July 23, 2014, 10:33:15 PM »
That pretty well nails it.  If treasuries were around 5% then high yield corporate debt would be in the 10% range for pretty good quality stuff and 12-14% for debt I'd feel was close to equal risk to p2p.

My reason for going to p2p was "I have a lot of cash, I already own a @#$%load of equities, I'd like the cash to be semi liquid and provide an income stream."  Not a whole lot of options right now that exceed real inflation other than leave it in a checking account or buy more equities.

Fred

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Re: What would make you switch P2P investing service?
« Reply #3 on: July 24, 2014, 12:51:09 AM »
Lending Club rates are simply: "LC Base Rates" + "Adjustment for Risk & Volatility" -- https://www.lendingclub.com/public/how-we-set-interest-rates.action

LC Base Rate is currently 5.05%, which is approximately Fed Funds Rate + 5%.  The 10-yr treasury is now at about 2.5%.  LC A1 rate is 6.03%.

If 10-yr treasury increases to 5% -- an increase of 2.5%, it is natural for all other rates to also increase at least by 2.5%.  In this scenario, LC A1 rate would be about 8.5% (or more).

I think 8.5% would be an attractive rate for the lowest-risk loan in LC.

Back to the original question --  What would make you switch P2P investing service? -- I only see LC and Prosper in the US P2P landscape for the foreseeable future.  It would be nice to see new players in the game; however, I do not see other viable US P2P platforms to switch to.

TonySaunders

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Re: What would make you switch P2P investing service?
« Reply #4 on: July 24, 2014, 02:14:12 AM »
What would make you switch P2P investing service?

I switched to LC when Prosper.com temporarily disabled investing in new notes for my state. It was just for a couple months and that would be acceptable by itself. But they also turned off my ability to sell notes I already own, destroying all the liquidity I expected and costing me money by forcing me to hold notes I wanted to sell. No explanations, no discussion, no warning... they just turned it off. I haven't put another cent into Prosper since then and I probably never will. Once my notes are paid off it will be off my radar permanently.

TonySaunders

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Re: What would make you switch P2P investing service?
« Reply #5 on: July 24, 2014, 02:23:06 AM »
On the topic, however: I'd be attracted to a service that provided more sophisticated filtering abilities and automated investing that was explicitly "fair". LC is fairly opaque and everyone is trying to game it better than the next guy... who knows if it's effective, and who knows if you've been getting screwed the WHOLE time. It's a competition I'd prefer to avoid. It reminds me of how those computers that sit 5 inches away from the stock market computers can pre-trade you when you buy something and then sell it to you with an extra markup, for no reason.

How about a service where ALL investing is done by automation, according to your filters? No one gets left out, no one has special advantages.

Fred93

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Re: What would make you switch P2P investing service?
« Reply #6 on: July 24, 2014, 02:49:25 AM »
Back to the original question --  What would make you switch P2P investing service? -- I only see LC and Prosper in the US P2P landscape for the foreseeable future.  It would be nice to see new players in the game; however, I do not see other viable US P2P platforms to switch to.

No doubt LC is the most credible at this time.  I wouldn't jump ship unless something went wrong.

After years of staying away, I started building a Prosper portfolio a few weeks ago.  I'm not as comfortable with their financial situation, but I suspect they will be profitable this quarter, which is perhaps a turning point.  They certainly have less inventory than LC. 

I have been learning about others, with intent of diversification.  I am in the process of engaging with Dealstruck and Fundingcircle  (small business loans).   The startup consumer loan guys (peerform, etc) have no record yet, so there's no reason to believe they have the underwriting figured out.  It took Prosper and LC a few years to get it right, so I suspect it will be same with others.  I'm staying away from the student loan guys on principle.  Upstart waves their arms and talks about new credit scoring methodology, but they're just making stuff up and have no evidence yet.  I'm skeptical of people who claim some great advantage to some new idea, but have no evidence.  I'll wait a few years for their evidence to appear or the company to disappear.  The real estate guys (realtymogul) look unsophisticated to me, and have a layers of fees.  BTCjam is a joke.  I found Mosaic uninteresting.  Low interest rates and no selection.  They seem to display one deal at a time.  Also recently they won't show me the deals any more until I send them more identity verification stuff.  U-Haul Investors Club has very low rates, so doesn't seem competitive.  There are many P2P companies in other countries, but I have not found any that will accept US investors.

BruiserB

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Re: What would make you switch P2P investing service?
« Reply #7 on: July 24, 2014, 09:52:27 AM »
I had been under the impression that Prosper was roughly equivalent to LC in all but size and many have posted here that they are getting comparable or even slightly better returns at Prosper than on LC.  I also have begun viewing some of the small changes at LC as they get ready for IPO as not necessarily favorable to investors.  None of them have been bad enough that I want to head for the door, but they raised my concern enough that I was willing to begin at least looking at my options.

I actually went through the application process to open a Prosper account last Friday and by early this week I'm good to go with my bank account linked to transfer in funds.  However, I have had second thoughts and am holding off at least for now.  The number of loans released and the quality available have me holding back.  I've learned that Prosper seems to be holding a high percentage of their loans for institutional investors.  It seems like it would take a lot more work and investing would go a lot slower on Prosper than LC.

As Fred93 mentions none of the other platforms are compelling enough for me to even consider now.  I do like the idea of Upstart, but as Fred93 says there's no proof yet.  The fact that they require $100 loan fractions make it difficult to try it out and get a diversified portfolio with a relatively small investment.  Also they are only open to accredited investors, although their screening for them doesn't seem particularly rigorous.

So bottom line, I wasn't able to find something that would cause me to change direction.  The additional funds I considered putting elsewhere will be available in my Lending Club account today and tomorrow.  I have seen a cutback in number of loans passing filter, but so far it hasn't stopped me from investing.  Hopefully, it's not a permanent slowdown or decline in quality.
« Last Edit: July 24, 2014, 09:55:17 AM by BruiserB »

hippo387

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Re: What would make you switch P2P investing service?
« Reply #8 on: July 24, 2014, 01:31:12 PM »
Prosper has a lot of loans for institutions, but acc to several interviews with management, they release as many loans to individuals that they can and still have them funded before expiring. In other words, as retail investor activity grows, so does the pool of loans available to retail.

Personally, I much prefer Prosper due to better returns and ease of use. Others may disagree, but you won't know until you try both.