Monday 24 June 2019

Do you have time to invest in Peer to Peer Lending?

I’ve have been asked recently by several followers how much time I actually spend managing my peer to peer investments and at first I didn’t really have an answer.  Having thought and reflected on this, it’s a valid question as you must place a value on your time.  Thinking through what I do, I’ve broken down my thoughts on how much time I dedicate to managing my Peer to Peer Lending accounts.  As I currently invest in four different platforms, I’ve split out my thoughts on each.

TruePillars – If you are a regular follower, you will know TruePillars was my first peer to peer investment platform.  As such I spent a lot of time on the site in the beginning learning about the platform and understanding how the process worked and buying up loans on the secondary market as well as new loans when available.  Now I spend much less time on the site.  I would check the account once a week or so to take note and track any loans that are overdue (5 minutes a week).  In addition to this when new loans are listed (which I’m notified by TruePillars via text) I’ll log on and place a bid on the new loan (5 minutes to log on have a quick read through the loan on offer and place a bid).  However I’ve just activated the auto bid function to reduce my time commitments now I’m comfortable with how the platform works and keen to test this functionality out.  In addition to the above at the end of the month spend about half an hour reviewing and updating my performance tracking.

MoneySpot – This platform takes no time on my part to manage.  The platform is based on pooled fund where you are paid a return on the funds you have invested.  Apart from the time to fill in the application form, it’s checking once a month to have a read of the monthly report and taking note of the returns I’ve received which would take less than 10 minutes.  In my case I’ve opted for auto reinvestment to allow my investment to grow at a compounded rate.

RateSetter – This platform also takes little time on my part to manage.  When I add funds in I log in a few times to split up the funds I’ve commit to loans to help me feel comfortable I’ve diversified across multiple loans.  Each time it might take a few minutes.  On top of this I’ll log in once a week and reinvest any repaid funds sitting in the account (5 minutes).  I’ve not used the auto invest on this platform as I believe I can get a slightly higher rate by manually entering noting there is a time commitment on my part.  On the flip side if you are time poor and prepared to accept the auto bid prices this could be used as a time saver.  Like the other platforms at the end of the month I’ll also spend about 10 minutes or so reviewing and updating my performance tracking.

OurMoneyMarket – This platform is still relatively new for me and is currently where I’m spending more time while I work out how to get the best out of the platform and get my funds invested across multiple loans.  This would typically look like logging in every day or two to check for new loans to invest in (5 mins a go).  Again at the end of the month to track my monthly performance.

Adding up the different times spent, overall it would equate to under 45 minutes a week and an extra half an hour at the end of the month while document my performance of the different platforms.  While this is my experience investing over multiple platforms, I realise not everyone is the same and may not have similar time available.  To be honest, you can be as active or passive as you like, as each platform I invest in, offers a form of auto investing to cater for the time poor.  I’m comfortable with the time I spend as I like to be more actively involved and want to understand what I am investing in.  As I become more familiar with the platforms, I’m more comfortable with using the auto invest functions where appropriate.  Interested to hear about other people’s lending experiences and times commitments they make.

Monday 10 June 2019

Learnings and Strategy Update

Investing is all about learning, applying and adjusting the strategy you adopt as you go along.  Having taken this principle on board, I’ve been adjusting and refining my strategies as I learn more about the Peer to Peer lending market and each of the platforms I invest on.

Having invested with a TruePillars now for about nine months, there is much that I’ve learnt, which if I were to start over, I would apply straight away.  The first and most important takeaway for me is that the diversification takes time.  Don’t be tempted to over commit to any one loan just to get money invested.  I think I may have been a little overly keen at the start but soon learned the value of patience to invest lower amounts into each loan.  This has allowed me to better diversify my TruePillars portfolio, which now has just shy of 100 loans.  My biggest exposure in a single loan currently sits at 3.7% and new loan investments are going in at just over 1% of the current portfolio valve.

While I am fortunate to not have had a default yet, my journey is still young and I’m sure I will experience this as time progresses.  Default is the final outcome of a bad loan and while I’ve not experienced this, I have experienced a number of late payments on different loans.  Some only have one late payment and then continue on paying on time while others have continued on to multiple late payments.  At this stage, I’m not sure on the best approach to manage these loans to ensure maximum returns.  On TruePillars there is the option to sell out of a loan if the last payments have been on time.  I’ve done this for a number of loans that experienced late payments, however looking back at these loans, you can see some have continued to pay on time while others are still at risk.  Stay tuned as I continue to refine this part of my strategy.

What I’ve noticed is there are a number similarities between TruePillars and OurMoneyMarket in the way you can invest in individual loans (albeit business versus consumer loans respectively).  As such I’ve taken the learnings to date from TruePillars and started applying them to this new platform.  I’ve started with a smaller investment per loan and aiming to going to grow this loan book slowly.  With the focus on consumer loans (that start as low as a few thousand dollars) I am expecting that there should be more loans to invest in.

What I’ve perceived to date is that there does not appear to be the same amount of investor activity on OurMoneyMarket as I’m currently experiencing on TruePillars or RateSetter.  This I think is hampering how quickly I can grow my diversified investment portfolio.  This is evidenced by having a number of loans not get funded before the 14 day on market period ends.  Compare this against the last TruePillars loan that was fully funded within a few hours of listing (for a loan 10x the size).  I’m sure as more people become aware of OurMoneyMarket and investment on the platform this will change.

As a general observation of the consumer loan market, it seems a lot more fickle than the business loan space.  Loans appear and disappear (without being fully funded) in what look like the borrower changing their mind and withdrawing their application (and as such any committed funds to that loan are returned).  It is still early days with OurMoneyMarket and although there are similarities, there are differences which I’m still working through to get the most out of the platform. 

If anyone does use OurMoneyMarket, or any other Peer to Peer Lending platform, I would like to hear your experiences.

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