Author Topic: Automated Investing Issues  (Read 2006 times)

hcharris

  • Newbie
  • *
  • Posts: 7
    • View Profile
Automated Investing Issues
« on: March 06, 2017, 07:44:48 PM »
I recently suspended automated investing on my account. I was experiencing heavy losses and I changed my allocation to remove the higher risk loans. Some investments were made after that but investments in less risky loans was still below the target and investments in higher risk loans was over the target. I contacted support and was told to just invest more so it would "rebalance".

Is anyone else suspicious that automated investing is not working correctly?


mrwhizzard

  • Jr. Member
  • **
  • Posts: 55
    • View Profile
Re: Automated Investing Issues
« Reply #1 on: March 06, 2017, 08:26:45 PM »
Some investments were made after that but investments in less risky loans was still below the target and investments in higher risk loans was over the target. I contacted support and was told to just invest more so it would "rebalance".

Were the loans invested in after you changed your allocation of the "less risky" variety? That should answer the question. Changing your target allocation doesn't affect any already-purchased notes.

Is anyone else suspicious that automated investing is not working correctly?

I haven't seen any issues with it in my account.

hcharris

  • Newbie
  • *
  • Posts: 7
    • View Profile
Re: Automated Investing Issues
« Reply #2 on: March 07, 2017, 07:18:39 AM »
It was pretty far out of balance before I suspended investments. As much as 20 percentage points I believe.

RT45

  • Jr. Member
  • **
  • Posts: 93
    • View Profile
Re: Automated Investing Issues
« Reply #3 on: March 07, 2017, 05:09:35 PM »
Can you provide any more detail such as screenshots or your contact with LC so it can be verified by people on the forum? It doesn't make sense that you should have to invest more for it to balance unless the dollars are very small.

Fred93

  • Hero Member
  • *****
  • Posts: 2243
    • View Profile
Re: Automated Investing Issues
« Reply #4 on: March 07, 2017, 05:42:47 PM »
I recently suspended automated investing on my account. I was experiencing heavy losses and I changed my allocation to remove the higher risk loans. Some investments were made after that but investments in less risky loans was still below the target and investments in higher risk loans was over the target. I contacted support and was told to just invest more so it would "rebalance".

Not clear what your expectations were.  You didn't say how long you waited for things to change, etc.

The automated agent can only change the balance by BUYING notes.  He doesn't have the ability to sell.  He can only buy notes with cash balance.  ...either cash that comes from loan payments, or cash you deposit. 

So every month people pay you payments, roughly 2% of your balance every month (depending on the mix of interest rates and the amount of prepayment), so that's all the automated agent has to work with.  The notes you no longer want will slowly decay (ie their balance will go down as they are paid off), and new notes will slowly appear as the agent buys 'em.

If you want to make a substantial change, like 20%, and you made this change when you were fully invested, you need to expect that the change will take several months.

You can make it go faster by manually selling some of the notes that you don't want via folio.  Otherwise, those old loans just decay slowly, over 3 to 5 years.

hcharris

  • Newbie
  • *
  • Posts: 7
    • View Profile
Re: Automated Investing Issues
« Reply #5 on: March 16, 2017, 09:00:58 AM »
I should have taken a screen shot of the mix before I changed it. I still believe that it was out of balance toward the more risky loans.

I am now only investing in As and Bs and settling for the 3% projected returns. From the historical estimate, I was expecting 5%. I wonder if the platform is considered an easy target for people who plan to default. I have received over $300 in interest but my projected account value only includes $78 of that in my balance. Well over 10% of the loans are in late, the grace period or charged off. Very disappointing.