# Alternatives to Term Deposit?



## neutralbaby (7 November 2008)

today ING reduced their 90Days FD rate from 7.25% to 6.50%, and 180Days is now 5% and 1 Year is a mere 4.5%..

I was wondering about your opinions on where you'd put your spare cash? I am a conservative type saver and FD had been the best option for me for the past years .. Now half of TDs will be matured by mid Dec I can't help if the rate will go down any further....  should really have locked them into a longer term when the rate was big fat >8% 

What other low risk alternatives are good at current economy situation? ANZ has online saver acc for 6.5% but rate subject to change anytime..   

Or, how long do you think it will take, for the the good o interest rate will return? 

Thanks for all commets


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## Glen48 (7 November 2008)

If house prices, shares, cars and other goods are going down each month for years it's a matter of holding on to every $ and getting every $ in to your account.
When you are *sure* the bottom has  arrived look at buying in.
When a house today is on the market for say 300K , that's what the seller wants but there are no buyers, wait until it comes down to 180K and then decided.
Forget about inflation as everything is dropping in price so you are miles ahead.


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## xoa (7 November 2008)

High yield mortgage funds. 10%+ per annum and the gum mint will probably bail you out if something goes wrong.


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## freddy2 (7 November 2008)

Spend it. Saving is basically delayed consumption and real returns (interest rates - tax - inflation) for term deposits in the current environment are negative.


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## Happy (7 November 2008)

freddy2 said:


> Spend it.





In current environment it would probably be good idea to spend it on fuel, food, water and store it.

Problem is, storage costs money and storage containers are expensive not to mention that food can perish.

With honey being one exception that will keep indefinetly, but who would want several tonnes of honey?


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## Pommiegranite (7 November 2008)

neutralbaby said:


> today ING reduced their 90Days FD rate from 7.25% to 6.50%, and 180Days is now 5% and 1 Year is a mere 4.5%..
> 
> I was wondering about your opinions on where you'd put your spare cash? I am a conservative type saver and FD had been the best option for me for the past years .. Now half of TDs will be matured by mid Dec I can't help if the rate will go down any further.... should really have locked them into a longer term when the rate was big fat >8%
> 
> ...




Get over the 8%+ yields.

If it were me, I would lock in for as long as I can at the best rate I can. In months to come 6% locked for 3 years will look very good . Call Bankwest and speak to their term deposits team if you have over $100k. You'll be surprised at what they can offer. They offered me 8.7% over 3 years. Needless to say, I bit their arms off!


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## neutralbaby (7 November 2008)

hmm.. not much options really.. with the good rates at least i was happy even with tax..  just wondering how low could the rate possible sink..

Hopefully aussie will regain its value soon then at least I can get some profits from the exchange..  Not a resident here thus buying property/house is not the way for me to go..


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## sptrawler (27 June 2019)

Pommiegranite said:


> Get over the 8%+ yields.
> 
> If it were me, I would lock in for as long as I can at the best rate I can. In months to come 6% locked for 3 years will look very good . Call Bankwest and speak to their term deposits team if you have over $100k. You'll be surprised at what they can offer. They offered me 8.7% over 3 years. Needless to say, I bit their arms off!



Oh for the good old days, I recently rolled over a term deposit 2.3%, when will we return to long term average?


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## Value Collector (27 June 2019)

sptrawler said:


> Oh for the good old days, I recently rolled over a term deposit 2.3%, when will we return to long term average?




Check out rate setter. 

I made a loan yesterday at 8.1%


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## Value Collector (27 June 2019)

Value Collector said:


> Check out rate setter.
> 
> I made a loan yesterday at 8.1%




Also it gets paid back in convenient monthly principle and interest payments that can either be reinvested or paid out to you.


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## sptrawler (27 June 2019)

Value Collector said:


> Check out rate setter.
> 
> I made a loan yesterday at 8.1%



Are they reasonably secure, or pawn shop sort of loans?


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## Value Collector (28 June 2019)

sptrawler said:


> Are they reasonably secure, or pawn shop sort of loans?




Their default rate is about 1.7%, which is less than most of the banks, and loses are funded by the provision fund, so no investor has ever lost money.

The provision fund is designed to cover loses of 3%, and short term spikes of over 6%.

They are also loan out money on be half of the government, via their clean energy loans, which are currently paying 6.4% for 3 years.

————-

If you are loaning money out at 8.1%.

Even if loses spiked above the 3% - 6% that the provision fund could handle, the loan book would have to suffer a further 5%+ loss before your total return dropped below the 2.3% term deposit.

So you are paying a lot for the perceived safety.

————-

But yeah, rate setter are top notch, they are very good at managing their loan book.


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## Value Collector (28 June 2019)

Current rates


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## sptrawler (28 June 2019)

Sounds interesting, I will look into them, cheers VC


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## HelloU (28 June 2019)

sptrawler said:


> Sounds interesting, I will look into them, cheers VC



when this came up a month ago i put a grand in as a tester to see. just rolled over first month 3 days ago. process is fairly straight forward but website takes a day or 2 to sorta catch up with events ...... and my grand has now somehow split into the mainish block with the interest (re-done at 4.0% a couple of days ago) and a $20 bit (that was not repaid at rollover but took a few days extra to clear in my account - today - so is now waiting in the 1 month queue currently at 3.9% to be loaned out).

I have found there is limited transparency over what is going on at the time (so actual repayment/rollover is confusing when happening ) but there is total control and clarity of what is going to happen (if that makes sense) ....

i have not tried to do a withdrawal yet ......


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## SirRumpole (28 June 2019)

How can they afford to pay such high rates compared to the rest of the financial industry ?


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## Value Collector (28 June 2019)

SirRumpole said:


> How can they afford to pay such high rates compared to the rest of the financial industry ?




With a normal bank, they pay you 2% and then go and loan the money at 14% and they make a huge profit margin.

With rate setter, they Pay the investor around 8%, put around 3% into the provision fund to cover defaults, pay themselves 1% and then charge the customer 12%.

The big difference is they are paying the investor the lions share of the loan interest, however the investor also takes a bit more risk in a dooms day event.


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## Value Collector (28 June 2019)

HelloU said:


> when this came up a month ago i put a grand in as a tester to see. just rolled over first month 3 days ago. process is fairly straight forward but website takes a day or 2 to sorta catch up with events ...... and my grand has now somehow split into the mainish block with the interest (re-done at 4.0% a couple of days ago) and a $20 bit (that was not repaid at rollover but took a few days extra to clear in my account - today - so is now waiting in the 1 month queue currently at 3.9% to be loaned out).
> 
> I have found there is limited transparency over what is going on at the time (so actual repayment/rollover is confusing when happening ) but there is total control and clarity of what is going to happen (if that makes sense) ....
> 
> i have not tried to do a withdrawal yet ......




That’s totally normal mate.

Repayments take 2-3 days to clear depending on when they are paid.

Once they are cleared they become available in your holding account or are automatically reinvested if you have that set up.

————
The reason you now have two loans, and your original loan has shrunk is because repayments are principle and interest payments from various loans and may be reinvested in multiple loans.

Don’t get wrapped around the axles trying to track individual loans, day by day just monitor the big picture.

I have over 300 separate loans in my account and that number grows each month as principle and interest payments get reinvested, 

At any time I might have payments from 20 different loans in the clearing or reinvestment phase, it’s impossible to try and track each one.

But you don’t need to track each one, it all is managed, of course you can randomly check individual loans for curiosity sake, but you don’t need to.


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## PZ99 (28 June 2019)

Ratesetter: Provision Fund buffer* = *$12,856,004*

Current estimate of bad debt**  = *$8,151,156*

You'd wanna be quick to avoid the spin-co*  *


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## HelloU (28 June 2019)

Value Collector said:


> That’s totally normal mate.
> 
> Repayments take 2-3 days to clear depending on when they are paid.
> 
> ...



yep, was a look see to get the feel of it on the comfort scale.

I imagine it was u that spoke of it a month (5 weeks) ago that prompted me to look at it so cheers (maybe a wisr thread?). Certainly is a user friendly interface ......... and only leaves that single point of fear of capital loss to contend with.

In a asx world where a company director can do a CR at a 20% discount (so devalues my capital by 20%) and give themselves a truckload of free shares in the same process ..... and that is considered "normal" business, i will take some risk at places like ratesetter.


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## Value Collector (28 June 2019)

PZ99 said:


> Ratesetter: Provision Fund buffer* = *$12,856,004*
> 
> Current estimate of bad debt**  = *$8,151,156*
> 
> You'd wanna be quick to avoid the spin-co*  *




That estimated bad debt is based on their 3% assumption.

But as I stated currently it’s proving to be around 1.7%.

Also, as I said above, the provision fund would have to be wiped out, and a further 5% of loans fail before your actual rate of return dropped below current term deposit rates 

Eg. If I was earning 8% for a number of years, and then some sort of gfc happened and losses spiked to 10% up from 1.7%, my capital loss of 4% after the provision fund would be more than offset by years of earning 8% rather than 2%.


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## sptrawler (28 June 2019)

Value Collector said:


> That estimated bad debt is based on their 3% assumption.
> 
> But as I stated currently it’s proving to be around 1.7%.
> 
> ...



It sounds like a very good system, if you jump in at the correct time, in the economic cycle.


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## SirRumpole (28 June 2019)

A pretty balanced analysis of Ratesetter (UK version).

Maybe VC can tell us if the Oz version is any different.

https://www.financialthing.com/ratesetter-review/


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## Value Collector (28 June 2019)

sptrawler said:


> It sounds like a very good system, if you jump in at the correct time, in the economic cycle.




I am not sure it’s the type of thing you need to time.


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## sptrawler (28 June 2019)

Value Collector said:


> I am not sure it’s the type of thing you need to time.



I was thinking in terms of delinquencies, which are much more likely, in an economic downturn.


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## Value Collector (28 June 2019)

SirRumpole said:


> A pretty balanced analysis of Ratesetter (UK version).
> 
> Maybe VC can tell us if the Oz version is any different.
> 
> https://www.financialthing.com/ratesetter-review/




The main difference is Australian interest rates are generally higher.

He is right that interest rates can fluctuate, but that is kind of the point of rate setters model.

He seems a bit picky, I just have my funds on auto reinvest, which occasionally means I might get allocated at 8.1% instead of 8.2% if I were micro managing it, but as he said he can end up with money sitting there if he forgets to check.

I have been lending since 2017, and it’s been great, the auto reinvest feature works great.


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## Value Collector (28 June 2019)

sptrawler said:


> I was thinking in terms of delinquencies, which are much more likely, in an economic downturn.




As I said the provision fund can cover up to 6% of the loan book delinquencies for 12 months and then 3% on a rolling basis after that, 

And as I said you will end up with hundreds of loans so if a certain percentage of those become delinquent, the interest on the good ones would cover that.


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## HelloU (28 June 2019)

comment:
last night my $21.72 was in the lend queue at 3.9%
today it got lent at 3.8% (cos i let the company do the deal at whatever the going rate was)
i could have chosen to only lend at 3.9% and waited to see what happens, or chosen 4%, or 4.1% ....or i could have chosen a longer term at a higher rate.

........ a bank would give me 1.6% 1 month term deposit with greater security.

risk is more, but so is return ...... that is investing.

to clarify the point VC is making:  *"And as I said you will end up with hundreds of loans so if a certain percentage of those become delinquent, the interest on the good ones would cover that".*
this is talking about delinquent to ratesetter (not necessarily delinquent to the individual lender as that is what the cover fund is about - to top up the individuals). 

(tradeable corporate bonds are available on asx ...... they are also a thing)


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## PZ99 (28 June 2019)

My ANZ progress saver account earns 2.2% p/a provided you deposit $10 minimum a month and any month where money is withdrawn is zero interest. My ANZ divvies go into that account.
You can withdraw anytime.
https://www.finder.com.au/anz-progress-saver-savings-account

To me it's a hell of a lot safer than P2P lending.

You could also look at FD's but I haven't studied it properly yet.
https://economictimes.indiatimes.co...nvest-in-fd/articleshow/66313159.cms?from=mdr

If I want more income / interest I trade on the ASX.


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## Zaxon (28 June 2019)

PZ99 said:


> My ANZ progress saver account earns 2.2% p/a
> To me it's a hell of a lot safer than P2P lending.



Yes.  It's government guaranteed as well.  The trade off is a lower interest rate for increased safety.


PZ99 said:


> If I want more income / interest I trade on the ASX.



This brings up a universal question which PZ99 has touched on.  Ideally, you have shares (higher risk) for longer term needs.  You also have money at no risk (bank account, term deposit) for short term needs.

Do you really need a moderate risk allocation as well?  Traditionally that has been bonds: safer than shares, but still with some risk.  I put P2P lending into the "bonds" category.   Personally, I'm not persuaded either way on this yet.


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## HelloU (28 June 2019)

sorta the point,

Hypothetical, u have $5K to invest for 1 month (when u must return the capital)

choices:
1. bank 2.2%
2. p2p 4.0%
3. asx ??? double, same, lose it all?

no 20/20 hindsight available ..... any of those choices could be the " best" one with hindsight ..... but, based upon what i know, i would choose 2 for that scenario - to each his own.

the ticky part is that if i was offered 100 lots of the same decision (so 100 lots of $5K to invest concurrently for 1 month) i would not make the same choice for all 100 lots ......... that is why this is tricky.

I just rejoice that they all exist for my consideration ......

(along with those corporate bonds)
(my bank is 2.87% without withdrawal punishment - from today 2.6% following cuts..... )

ohhh, it used to be u got higher % in TD cos it was locked away ........ been quite a while since at call accounts have been less than TD's. Needs serious computing power to analyse the benefits of locking away these days ... (unless ur banking needs are special restricted ...)


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## So_Cynical (28 June 2019)

We appear to be somewhat locked into a low interest future, 8%+ is an amazing yield that includes a realistic risk premium, even with just 10 or 15% of your cash in Ratesetter you get a significant lift in your cash yield with the downside of manageable risk, the real risk with Ratesetter is Ratesetter.


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## Value Collector (28 June 2019)

HelloU said:


> comment:
> last night my $21.72 was in the lend queue at 3.9%
> today it got lent at 3.8% (cos i let the company do the deal at whatever the going rate was)
> i could have chosen to only lend at 3.9% and waited to see what happens, or chosen 4%, or 4.1% ....or i could have chosen a longer term at a higher rate.
> ...




Yeah that’s totally normal, if you have the reinvestment setting to invest “at market rate”, the rate can change if your funds aren’t being invested quickly.

But, you can change the setting to reinvest at a rate you choose, but I wouldn’t recommend it.

In regards to delinquent loans, investors won’t lose any money until after the provision fund is exhausted.

Only after provision fund is exhausted will investors start taking losses on some of their loans, however as pointed out by me earlier,  if say 5% of your loans defaulted, and left you with only 95% of your invested capital, this 5% loss would quickly be offset by the 8% return on the other loans, making of very low risk.

The government guarantee and extra safety of bank deposits is not worth the guaranteed after tax and inflation loss you are signing up to by accepting 2%


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## Value Collector (28 June 2019)

So_Cynical said:


> We appear to be somewhat locked into a low interest future, 8%+ is an amazing yield that includes a realistic risk premium, even with just 10 or 15% of your cash in Ratesetter you get a significant lift in your cash yield with the downside of manageable risk, the real risk with Ratesetter is Ratesetter.




It’s also a good place to store some of your spending money, and have t paid out to you as weekly income over 3 years.

Eg. I put some of the dividends I earn into rate setter 3 year loans, and have the principle and interest paid out over 3 years


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## basilio (30 June 2019)

I came across Rate Setter and similar PtP lenders a couple of years ago and I am also impressed with the idea, the returns, and in Rate Setters case the  loss provision fund. It does look promising in terms of an attractive interesting earning investment.

*I am uneasy however that after 9 years the UK parent and its Australian offshoot are still running at a loss.  *They are very ''successful" in terms of attracting and loaning funds and seem to run a good loan book.  So when will it become financially sustainable ? And is there a risk that the overall unprofitable nature of the operation will bite it, and investors, in the bum ?

Thoughts ?
https://www.financialthing.com/ratesetter-review/

....* Ratesetter’s Company Financials*
Ratesetter made a post-tax loss of £21.5m for the year ending March 31st, 2018. 2018 company accounts can be seen here.
https://beta.companieshouse.gov.uk/company/07075792/filing-history


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## HelloU (30 June 2019)

clean energy finance corp tipped $20M into this in 2017. No idea if they pulled it out early or if it is still there but it was a 8 year investment. ........ trade the trade


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## Value Collector (30 June 2019)

HelloU said:


> clean energy finance corp tipped $20M into this in 2017. No idea if they pulled it out early or if it is still there but it was a 8 year investment. ........ trade the trade




They are still making loans via rate setter, hence why the clean energy loans never go above 6.4% interest, Because they have government funding there making unlimited amounts of loans at that interest rate.

you can either choose to loan below 6.4% in the clean energy loans or sit in the line at 6.4%, but you can't make loans above that, because the CEFC will always be there lending at 6.4%.


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## Value Collector (2 July 2019)

Here is a blog post from rate setter about their credit risk team.

https://www.ratesetter.com.au/blog/credit-underwriting-team/


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## ducati916 (7 July 2019)

Value Collector said:


> Here is a blog post from rate setter about their credit risk team.
> 
> https://www.ratesetter.com.au/blog/credit-underwriting-team/





I would align with the sceptical posters on this thread.

Those advocating this service [investment] simply haven't done their homework or thought about it overmuch.

jog on
duc


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## Zaxon (7 July 2019)

My personal objective in life is to never have to go on A Current Affair and say I lost most of my life's savings by investing in a "wrapped" product, like those poor people who invested in Storm Financial did.  To that end, any place where my funds are co-mingled with other investors and I don't have sole ownership of them, I avoid. 

However, if you did want to go the P2P route, you could allocate to it the same amount as you would an individual stock.  Any single stock can go bust.  So your P2P allocation could be seen as just another share: hopefully will never fail, but not overweight if it did.


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## HelloU (7 July 2019)

all risk is relative and subjective. of course there is risk in P2P. There is risk in EVERY investment.

There is pretty much nowhere that peeps can invest today and be a risk-free secured creditor ........... peeps just hide behind "too big to fail" cos they are risk adverse (and this often means also return adverse)
note: on the asx you are an unsecured creditor.

.... and for those about to tell me that bank deposits are guaranteed then answer me this - if the aussie govt had to bail out bank deposits cos something has gone very wrong with aussie banks, where do peeps think that the aussie govt is going to get that money if the entire economy has tanked badley?  and if there is a bailout, could you remove the money from the bank account anyway (or is it just frozen inside the account but somehow guaranteed but untouchable? or maybe u could withdraw a maximum of $5 a week for the rest of your life) .....and if you could withdraw the guaranteed money, then where would you put that money if all the aussie banks had just collapsed?

another question, if you have invested in a asx listed coy that reports financials twice a year, then how much much do you actually know about the health of that company between those reports?  (i do not include a guidance downgrade statement at 5 months into a 6 month period as being a well informed investor)


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## Value Collector (7 July 2019)

HelloU said:


> all risk is relative and subjective. of course there is risk in P2P. There is risk in EVERY investment.
> 
> There is pretty much nowhere that peeps can invest today and be a risk-free secured creditor ........... peeps just hide behind "too big to fail" cos they are risk adverse (and this often means also return adverse)
> note: on the asx you are an unsecured creditor.
> ...




Yes, and I think the price you pay in the form of a low rate by accepting a the security of a government guaranteed deposit, it to high a price.

Where the small amount of added risk you take with rate setter style p2p is small but the benefits are large.

With rate setter, you have the protection of the provision fund, and can diversify across hundreds of loans.


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## basilio (7 July 2019)

I'm really taken with the P toP lending model.  Seems to "make sense" and offer a better deal for investors and perhaps borrowers.
But I still have nagging, unresolved  questions about how the finances work for the P-P business itself.

1) Do the businesses actually create credit or only loan actual funds that are deposited?  The current banking system (as I understand it) creates new credit. So a deposit base of 20M  can be used to underwrite $100-150m worth of loans. The banks get return from all the loaned funds. I don't believe the P-P systems have this opportunity which clearly restricts their profitability.

2) How does the P-P make a clear return ? I appreciate there is a margin spread but it looks like only a few percent and there will be establishment fees and possibly ongoing fees.  But to my eyes those sums seem unlikely to  generate  sufficient return to pay the staff, managers, credit analysts let alone  the guys who set it up to make some serious money. I know from research that Rate Setter is yet to make a profit in UK and therefore it's Oz offshoot.  

I think a point of comparison would be Credit Unions. These are tightly run financial institutions with no payouts to shareholders and, I guess, modest pay packets for management. If they can't offer the returns P-P offer what is happening ?

I want to get involved but I ask myself "Is this too good to be true ?" and "How do they make their money ?"


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## basilio (7 July 2019)

Another alternative to Term Deposits ?

* Solar power: how investing can help to change lives *
Energise Africa offers a 5% return and allows you to help support low-income families 
Fight the climate crisis and earn a return of 5% at the same time, plus enjoy a guarantee on your investment.

That’s the offer from an ethical investment scheme that allows people to put money into companies providing African families with access to clean, affordable solar energy.

It’s notable that this scheme is supported by UK aid money from the Department for International Development (DfID), and offers a guarantee, although this only covers the first £100 of capital invested and applies to first-time investors.

Energise Africa enables ordinary people to invest in bonds issued by solar companies, allowing them to provide “life-changing” solar home systems to low-income families in countries such as Kenya, Rwanda, the Democratic Republic of the Congo and Tanzania.
https://www.theguardian.com/money/2...a-solar-scheme-with-the-power-to-change-lives


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## Zaxon (7 July 2019)

If you wanted exposure to lending, there's another three routes that come to mind in addition to lending via P2P.  You can buy bank shares, where the dividends are generated from lending.  You could buy shares in the P2P lender itself, and earn the spread.  And finally, you could buy bonds.


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## HelloU (7 July 2019)

basilio said:


> I'm really taken with the P toP lending model.  Seems to "make sense" and offer a better deal for investors and perhaps borrowers.
> But I still have nagging, unresolved  questions about how the finances work for the P-P business itself.
> 
> 1) Do the businesses actually create credit or only loan actual funds that are deposited?  The current banking system (as I understand it) creates new credit. So a deposit base of 20M  can be used to underwrite $100-150m worth of loans. The banks get return from all the loaned funds. I don't believe the P-P systems have this opportunity which clearly restricts their profitability.
> ...



may not help much but:
Australian Financial Services Licence 449176 and Australian Credit Licence 449176,
google will spit out some of the contractual tie-ups they have.


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## Wyatt (7 July 2019)

What are the views on LITs such as MXT & NBI, which offer nominal 5-6%/yr returns paid monthly. In my mind easy to liquidate when cash is required, but more expensive brokerage for larger positions puts a dent in returns.

There is probably a few more options in this space.

Nav for MXT seems to be very stable and I imagine will remain that way unless some loans go bad, whereas NBI's loans/bonds seem to be be listed or fluctuate in price depending on which way the wind is blowing. Been in both a few times with the intention to park some $ for a decent period, but have sold out within weeks/months as capital gains + Div seemed too good to ignore.

With dropping interest rates, it would seem to be very low risk if bought near Nav. I guess if interest rates were going up the reverse may apply


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## ducati916 (8 July 2019)

Value Collector said:


> 1. Yes, and I think the price you pay in the form of a low rate by accepting a the security of a government guaranteed deposit, it to high a price.
> 
> 2. Where the small amount of added risk you take with rate setter style p2p is small but the benefits are large.
> 
> 3. With rate setter, you have the protection of the provision fund, and can diversify across hundreds of loans.




1. When investing in 'debt', then the return on your capital is far less important than the return of your capital.

2. The difference in risk is not small, it is significant. The increase in return I doubt comes anywhere close to compensating the investor.

3. That 'provision fund' is dependent upon future payments. That [in a downturn] is no protection at all.

jog on
duc


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## Bill M (8 July 2019)

I have a small part of my portfolio (approx 2%) in Ratesetter and I am happy to take on the risk for the 8 % return. I draw all my interest payments out every Month and use it as part of my retirement income. I am happy with the product and the risk/return that I receive.


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## Garpal Gumnut (8 July 2019)

NABHA

I've bought them along the way for below $70 and below $80.

Better than a term deposit and for some reason some silly buggers keep on buying them although there are better income securities about.

They are now $91.43

gg


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## just_jay (8 July 2019)

What does the the 3 or 5 year income plan mean?

e.g. Does it mean you are committed to that length of time for the investment and you cannot withdraw the original investment until such time expires?


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## Garpal Gumnut (8 July 2019)

Garpal Gumnut said:


> NABHA
> 
> I've bought them along the way for below $70 and below $80.
> 
> ...




NABHA closed at $91.799

gg


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## sptrawler (8 July 2019)

Value Collector said:


> Yes, and I think the price you pay in the form of a low rate by accepting a the security of a government guaranteed deposit, it to high a price.
> 
> Where the small amount of added risk you take with rate setter style p2p is small but the benefits are large.
> 
> With rate setter, you have the protection of the provision fund, and can diversify across hundreds of loans.



Just as an aside, are you in anyway connected to the management of rate setter? It just appears you have an in depth knowledge of their model and structure. Not that it matters one way or the other, an investment is a personal risk/ return excercise and everyone should do their own  research.


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## HelloU (8 July 2019)

Garpal Gumnut said:


> NABHA closed at $91.799
> 
> gg



there was a big price rise in February ...do u recall what happened ?

(it suddenly outperforms products such as cba perls and i am tying to understand why that happened for my learning)

(19452 but whatevs)


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## Frankieplus (8 July 2019)

neutralbaby said:


> I was wondering about your opinions on where you'd put your spare cash? I am a conservative type saver and FD had been the best option for me for the past years




My advisor recently recommended a fund for me. The Vanguard Conservative Index Fund. (wholesale). I'm in the same situation as yourself as I'm looking for better than the bank but am also conservative for this particular packet of cash.

-Frank


----------



## Garpal Gumnut (8 July 2019)

HelloU said:


> there was a big price rise in February ...do u recall what happened ?
> 
> (it suddenly outperforms products such as cba perls and i am tying to understand why that happened for my learning)
> 
> (19452 but whatevs)



I believe there was a rumour they were to be redeemed for $100.

I bought them at $83-84.

btw When NAB goes bust NABHA are ahead of all others in the wind-up queue.

gg


----------



## Garpal Gumnut (8 July 2019)

Frankieplus said:


> My advisor recently recommended a fund for me. The Vanguard Conservative Index Fund. (wholesale). I'm in the same situation as yourself as I'm looking for better than the bank but am also conservative for this particular packet of cash.
> 
> -Frank



First thing is @Frankieplus is to avoid advisors. If someone sells you bananas are they interested in your health or selling bananas.

Second is read the Storm Financial thread on this forum. 

Stay happy and well.

gg


----------



## Value Collector (8 July 2019)

sptrawler said:


> Just as an aside, are you in anyway connected to the management of rate setter? It just appears you have an in depth knowledge of their model and structure. Not that it matters one way or the other, an investment is a personal risk/ return excercise and everyone should do their own  research.




I am not connected to Rate setter in anyway except for being a lender on their platform.

Everything I know about Rate Setter is either explained on their website, or was explained to me on investor webinars or the Investor Drinks nights last Xmas.

But I have over $600k invested on Rate Setter, so it’s been in my interest to sus it out.


----------



## Value Collector (8 July 2019)

just_jay said:


> What does the the 3 or 5 year income plan mean?
> 
> e.g. Does it mean you are committed to that length of time for the investment and you cannot withdraw the original investment until such time expires?



Are you talking about Rate Setter?

If so,

You can choose either 3 or 5 year loans.

Principle and interest payments are paid out to you each month for the duration of the loan, so each month he loan is reducing in size.

You can withdraw your funds early , they will sell your loan to another investor, and you pay a 1.5% penalty, plus what ever difference there is in market rate of interest.

Also sometimes the borrower pays the loan off early, or makes extra payments so they money is returned faster.


----------



## Frankieplus (8 July 2019)

Value Collector said:


> Everything I know about Rate Setter is either explained on their website, or was explained to me on investor webinars or the Investor Drinks nights last Xmas.




I have some money to invest. Are you happy with Rate Setter? Is it possible to lose your money?


-Frank


----------



## basilio (8 July 2019)

Value Collector said:


> I am not connected to Rate setter in anyway except for being a lender on their platform.
> 
> Everything I know about Rate Setter is either explained on their website, or was explained to me on investor webinars or the Investor Drinks nights last Xmas.
> 
> But I have over $600k invested on Rate Setter, so it’s been in my interest to sus it out.




That is a serious commitment ! I can see that given the high returns you have achieved with seemingly no downsides you are well invested in the company.

Good luck to you..


----------



## Value Collector (8 July 2019)

Frankieplus said:


> I have some money to invest. Are you happy with Rate Setter? Is it possible to lose your money?
> 
> 
> -Frank




Yeah, I am really happy with Rate Setter.

As will most investments, it is technically possible to lose money, however it is very unlikely.

They have a provision fund the borrowers pay into as part of the repayments, that is designed to cover a longterm default rate of 3% and a short term spike of 6%, the currently actual default rate is 1.4%, and provision fund Contributions can be adjusted higher if needed.

On top of that, you have he higher return that protects you from capital loss. 

This is the way I think through risk, Compare it to a Term Deposit that earns 2%.

If you are earning 8% in Rate Setter Loans, you would have to lose about 6% of your capital before you began to underperform the 2% Term deposit, because even if 6% of your loans default and you lost them completely, the remaining loans would continue to earn a high rate and would make up the shortfall.


——————

You can also make loans on solar panels, these should prove to be super safe loans, because they are loans for productive equipment that increase people’s disposable income.

Eg, people have to pay for electricity, but when they take on a loan for solar panels, they are freeing up cash they used to have to spend on their power bills, they are also home owners, used to making loan payments etc, so a good risks.


----------



## Value Collector (8 July 2019)

Another great alternative to Term Deposits is the offset account.

If you have outstanding debt on your home, investment property or other investments storing your money in an offset account is a great way to save interest on those loans and pay the loan off quicker.

————————

Even if you don’t currently have any investment debt, taking on some debt to create your own synthetic high interest, inflation hedged on demand cash account can be a good thing.

—————

For example,

As you build up your investments overtime and your portfolio grows in size and sophistication, you will probably find you have to hold onto more short and medium term cash.

Naturally, you will be looking for a place to store this cash where you can earn a decent interest rate, but still access portions of it as the need arises

Eg, you have the following cash lying around.

$100,000 in living expense account
$ 50,000 future tax payments saved
$ 50,000 in options premiums
$ 30,000 emergency fund
$25,000 new car savings
Etc etc etc.

What you can do, to put these funds to work at a high rate, while protecting them from inflation and still having them at call is 

1, take on an investment loan for a affordable little rental property, say for around $300,000.

2, open an offset account on that loan, and load all the short and medium cash holdings into it.

At this point you own a property paying weekly rent of 4% - 5% and will have next to no interest payments.

So the end result is your funds are at call, but are saving/earning you interest of 4% or so, while you also now control an asset that should at least grow in value with inflation overtime.

So you have created a synthetic cash account, with high interest and built in inflation hedge.

If you want to avoid property you could use the loan to buy a portfolio of dividend shares, or even just borrow at 4% to loan into rate setter at 8%


----------



## So_Cynical (9 July 2019)

All very interesting.


----------



## ducati916 (9 July 2019)

Value Collector said:


> 1. As will most investments, it is technically possible to lose money, however it is very unlikely.
> 
> 2. They have a provision fund the borrowers pay into as part of the repayments, that is designed to cover a longterm default rate of 3% and a short term spike of 6%, the currently actual default rate is 1.4%, and provision fund Contributions can be adjusted higher if needed.
> 
> ...




1. Credit loss must be one of the leading losses of capital in the history of man.

2. The provision fund, is a fund contributed into by the debtors via their repayments.




If defaults rise due to an economic downturn, what is the correlation of the loans. You have no idea. Therefore, those contributions may keep capital losses low, or they may not.

Incidentally, that was the exact same reasoning with MBS in the recent past. The quality of the loans are the end-all and be-all of this type of investment.

3. Surely you jest. Fixed income investing is a negative art. You turn down 90% of the opportunities to accept only the highest quality credits. Lien is no protection. Contractual guarantees are no protection. The only protection worth a damn, is the ability to pay. Hence the total emphasis on the strength of the debtor. Ideally, you lend only to those who do not need to borrow.

So here are your coverage ratios:



That is LOW.

They also disclose who/what constitutes their underwriting team. That is a major risk.

4. So essentially you are saying this is a good investment because: you would have to lose 6% of your capital before underperforming the 2% bank return.

Losing 6% of your capital could occur in a heartbeat in poor conditions. That is a sliver of capital. Therefore, the risk of underperformance is actually very high. This simply underlines the fact that fixed income investing is a far trickier proposition than shares.

jog on
duc


----------



## Value Collector (9 July 2019)

ducati916 said:


> 1. Credit loss must be one of the leading losses of capital in the history of man.
> 
> 2. The provision fund, is a fund contributed into by the debtors via their repayments.
> 
> ...




I noticed the numbers you are looking at are in British pounds, I think you have been looking at the rate setter UK website, which is a different company.

I didn’t say RS is Zero risk, I said i believe it is low risk compared to the additional return it generates.

You would have to lose 6% of your capital every year, just to equal the low rate you get in a Term Deposit.

However, before you lose anything the provision fund has to have lost all its capital, the loan book in general could double its losses and it would be business as usual, it could then double it again for 12 months and it would still be business as usual, it would have to double it again for you to just match he regular Term deposit rate, from there you would start underperforming, but that’s a massive loss.

————————-

Think about it, the banks make billions of dollars making personal loans, they aren’t regularly going to the government and tapping he government guarantee.

So they are taking your term deposit at 2%, and lending it at 14% and making a huge profit.

RS just allows smaller invests to get a piece of that action by accepting a bit of that risk, and so far over the passed 4 years, their loss rate has been lower than the big banks.

————-

Of course loans rely on a person’s ability to pay, hence my whole paragraph on the solar panel loans, where I discussed solar panels being safer because they increase people’s disposable income by eliminating or reducing a significant bill


----------



## Junior (9 July 2019)

Value Collector said:


> Of course loans rely on a person’s ability to pay, hence my whole paragraph on the solar panel loans, where I discussed solar panels being safer because they increase people’s disposable income by eliminating or reducing a significant bill




It depends how they are assessed.  We took out a Solar Panel loan from the government, through the Vic Govn't loan scheme.  They don't do a credit check or look at your financials.  They just assess whether power bill savings will cover loan payments.  This is a pretty crude measure, as you will end up with some borrowers who were already financially stressed before they took on the loan.  Saving $500 a year on your power bill won't have much impact for a family who is already underwater.


----------



## Value Collector (9 July 2019)

Junior said:


> It depends how they are assessed.  We took out a Solar Panel loan from the government, through the Vic Govn't loan scheme.  They don't do a credit check or look at your financials.  They just assess whether power bill savings will cover loan payments.  This is a pretty crude measure, as you will end up with some borrowers who were already financially stressed before they took on the loan.  Saving $500 a year on your power bill won't have much impact for a family who is already underwater.




They still have to go through all the rate setter credit checks, as I pointed out before rate setters historical loss ratio is lower than the banks personal loans losses.


----------



## Value Collector (9 July 2019)

You can get a bonus $75 at the moment if you join Rate Setter using this link and invest $2000 in the 3 year or 5 year market.

https://mbsy.co/ratesetter/49795346

( I just got this in the email this morning, so thought I would share it)

I will also get a bonus $75 of some one uses this link, but I can assure you this is not the reason for my positive comments, I didn’t get this email until about 15 mins ago.

But yeah about once a year they do this referral promotion.


----------



## Garpal Gumnut (9 July 2019)

Value Collector said:


> You can get a bonus $75 at the moment if you join Rate Setter using this link and invest $2000 in the 3 year or 5 year market.
> 
> https://mbsy.co/ratesetter/49795346
> 
> ...




I very much enjoy and value reading your posts on ASF @Value Collector. 

However in relation to Ratesetter I feel a little bit uneasy. 

If something sounds too good to be true, should not one be wary.

And this has nothing to  do with you gaining $75 for referrals, it is very common practice.

Just saying. 

gg


----------



## Junior (9 July 2019)

Agree with gg.  Really enjoy and appreciate the research you have done here.  However, I feel that cash and term deposits are the only truly defensive investments, due to the Government Guarantee.

With RateSetter, I can feel that in a GFC-like environment or some kind of serious credit crunch, you could see the Provision Fund evaporate very quickly.


----------



## Garpal Gumnut (9 July 2019)

Junior said:


> Agree with gg.  Really enjoy and appreciate the research you have done here.  However, I feel that cash and term deposits are the only truly defensive investments, due to the Government Guarantee.
> 
> With RateSetter, I can feel that in a GFC-like environment or some kind of serious credit crunch, you could see the Provision Fund evaporate very quickly.





Garpal Gumnut said:


> I very much enjoy and value reading your posts on ASF @Value Collector.
> 
> However in relation to Ratesetter I feel a little bit uneasy.
> 
> ...





I'd suggest we all read the Storm Financial thread again. 

gg


----------



## Knobby22 (9 July 2019)

I agree with Value Collector.
It's like Uber. It's a disruption to banking.

I am with gg in that you are at the mercy of the people running the operation but it's not Storm Financial who were basically clueless. 

I don't believe the risk is that high however banks have gone broke in the past and this is essentially another form of bank or building society. A major recession would test it.


----------



## Value Collector (9 July 2019)

Garpal Gumnut said:


> I very much enjoy and value reading your posts on ASF @Value Collector.
> 
> However in relation to Ratesetter I feel a little bit uneasy.
> 
> ...




As I said, it is just random chance that this morning the referral thing popped up in my emails, I have been talking about Rate Setter for weeks.

I went through all the questions, queries and doubts people have here, but have realized its a great platform, and you can start with $10, so it’s not a big risk.

I don’t think it is “to good to be true” at all, there is additional risk involved, but as I said profiting from this additional risk is how the banks generate most of their profits, Rate Setter just allows you to take a step up in he capital structure and be paid for it.

—————
At the end of the day the more people I convince to join Rate Setter as lenders, the lower the interest rates for me will be, so It’s actually against my own interests to convince people to join.

I was just trying to spread some good strategy, what you do is up to you.


----------



## Value Collector (9 July 2019)

Here is a screen shot of my account summary that shows how much I have in each loan category, as you can see I eat my own cooking.

And $75 will not move the needle for me,  I am earning nearly $50k a year in interest so a $75 referral is not the reason I have been talking about it, though I will never knock back free money.


----------



## Value Collector (9 July 2019)

Junior said:


> Agree with gg.  Really enjoy and appreciate the research you have done here.  However, I feel that cash and term deposits are the only truly defensive investments, due to the Government Guarantee.
> 
> With RateSetter, I can feel that in a GFC-like environment or some kind of serious credit crunch, you could see the Provision Fund evaporate very quickly.




As I said, the provision fund would have to be wiped out, and you would then have to sustain further losses of over 6% of you capital in the first year just to equal a Term Deposit.

I have been loaning money through rate setter for 2 years now, so I am way ahead of where I would be with a Term desposit.

—————

If you want absolute security, and don’t mind getting 0% real return, then use term deposits,

But if don’t mind taking a slightly higher risk, but in return greatly increase your return, then there are options out there which include rate setter.

———-

as investors taking on risks to earn a return is what we do.

Don’t be gun shy just because it’s a new type of concept.


----------



## HelloU (9 July 2019)

Garpal Gumnut said:


> I believe there was a rumour they were to be redeemed for $100.
> 
> I bought them at $83-84.
> 
> ...



*" btw When NAB goes bust NABHA are ahead of all others in the wind-up queue."  *

pretty sure that this just means that u r close enough to see the big padlock on that closed NAB door ..... but still not getting inside i reckon. 
cheers


----------



## sptrawler (9 July 2019)

If NAB goes broke we are all in deep manure.


----------



## Humid (9 July 2019)

Value Collector said:


> As I said, the provision fund would have to be wiped out, and you would then have to sustain further losses of over 6% of you capital in the first year just to equal a Term Deposit.
> 
> I have been loaning money through rate setter for 2 years now, so I am way ahead of where I would be with a Term desposit.
> 
> ...




After the Great Franking credit debate you think something like this will get any legs here
Jesus spare me


----------



## Value Collector (9 July 2019)

Humid said:


> After the Great Franking credit debate you think something like this will get any legs here
> Jesus spare me




Not sure what you mean, did I offend you some how? Most of my investments are dividend paying shares.

P2P lending doesn’t haven’t to be a replacement for investing in shares or earning dividends, it’s just another tool to have in your investor tool belt to use how you see fit.

As I said previously, I use Rate Setter to store the portion of my dividends I set aside for living expenses, so the money earns a high rate and is paid out to me weekly.


----------



## Humid (9 July 2019)

Not at all
Just can’t see many smsf types on here taking that sort of risk
They would prefer to take the divides and credits and watch the share prices go south


----------



## sptrawler (10 July 2019)

Value Collector said:


> Not sure what you mean, did I offend you some how? Most of my investments are dividend paying shares.
> 
> P2P lending doesn’t haven’t to be a replacement for investing in shares or earning dividends, it’s just another tool to have in your investor tool belt to use how you see fit.
> .



From what I have read and your input, it seems like a very good investment, for those with a bit of risk tolerance.
If Labor had attained Government and stopped the franking credits, I would certainly be putting a percentage in rate setters, luckily Labor lost their support base.
So all is well that ends well, but that can change anytime, so being aware of P2P lending as you say is another tool.
Thanks for the heads up.


----------



## So_Cynical (10 July 2019)

Ratesetter is worth maybe 4% (conservative) or 8% of a portfolio if you're ok with the risk, i would treat it as a position and size for risk.


----------



## ducati916 (10 July 2019)

Value Collector said:


> 1. I noticed the numbers you are looking at are in British pounds, I think you have been looking at the rate setter UK website, which is a different company.
> 
> 2. I didn’t say RS is Zero risk, I said i believe it is low risk compared to the additional return it generates.
> 
> ...




1. Yes I was. That is not the point. The point is that it is an affiliated company and the policies are the same/similar. The point is, the coverage is very low.

2. The risk is too high for the low return. With fixed income, you do not measure the risk by the return. You measure it by the ability to pay. That is the error you are making.

3. Again, you do not measure your risk against a return, in this case a bank deposit. You measure it against an ability to pay.

4. The ability to pay must be measured against an adverse environment. Since 2009, there have been no financial shocks worthy of the name. There will be at some point. That is when this investment will be tested. It will either pass or fail.

5. But they are. That's exactly the point.

6. As has already been pointed out, savings made is not a measure of an ability to pay.


Here is the credit team:




Really?

But they rely on this




Now I have nothing against technology per se, but it needs to be employed correctly.

With a credit team of 11 some of whom are still wet behind the ears, you are seriously trying to tell me, in one of the most complicated areas of finance, that your risk is well managed, I am surprised.

Remember, in fixed income a lien is no protection at all. Ratesetter seem to make a big deal out of the dollar value of loans that have liens. This is a false form of risk management in fixed income. Even a mortgage, which legally is quite different, relies to a large extent on significant deposits to cushion the losses in forced sales.

I would agree with people who essentially say that they would treat it as a 'position' and nothing more. The current environment is a mess for those looking to earn/live off of investments. Who got us here, oh yes, the banks.

In the low interest environment, risk is higher across the board. It does make people reach for yield. That is generally an error when the proverbial hits the fan.

jog on
duc


----------



## Value Collector (10 July 2019)

Humid said:


> Not at all
> Just can’t see many smsf types on here taking that sort of risk
> They would prefer to take the divides and credits and watch the share prices go south




I don’t think the Rate Setter platform is higher risk than shares, I think it’s a different sort of risk, and can be used as diversification.


----------



## Value Collector (10 July 2019)

So_Cynical said:


> Ratesetter is worth maybe 4% (conservative) or 8% of a portfolio if you're ok with the risk, i would treat it as a position and size for risk.




I have it at about 12%


----------



## just_jay (10 July 2019)

Value Collector said:


> Are you talking about Rate Setter?
> 
> If so,
> 
> ...




Assuming a 5 year loan rate setter at 8%, the 8% return ($$ value) you get diminishes each month as the principle gets smaller with each re-payment from the borrower. I assume that if you wish to reinvest the principle and interest that is repaid each month, it is a new 5 year term?


----------



## Value Collector (10 July 2019)

just_jay said:


> Assuming a 5 year loan rate setter at 8%, the 8% return ($$ value) you get diminishes each month as the principle gets smaller with each re-payment from the borrower. I assume that if you wish to reinvest the principle and interest that is repaid each month, it is a new 5 year term?




Hi Jay Jay, 

Yes as the loan gets paid off he interest payments are smaller (even though the monthly payment is about the same).

You have several reinvestment options. You can choose to reinvest into new 5 year loans, 3 year loans or monthly loans, or one of the clean energy loans.

You can also choose to reinvest both principle and interest or just the capital.


----------



## Value Collector (10 July 2019)

ducati916 said:


> 1. Yes I was. That is not the point. The point is that it is an affiliated company and the policies are the same/similar. The point is, the coverage is very low.
> 
> 2. The risk is too high for the low return. With fixed income, you do not measure the risk by the return. You measure it by the ability to pay. That is the error you are making.
> 
> ...




Hahaha, so we will add this to the list of investments I make you don’t agree with.

Do you at least understand that rate setters loan book is out performing all the major banks?

Again, as with the other one that lead to me making over 10times my initial investment, I will chalk it up to you not seeing the wood for the trees, I can’t be bothered entering into another discussion with you.

Best of luck to you though.


----------



## just_jay (11 July 2019)

I did a simple calculation in Excel and came up with the following below. 

I am comparing the return of an investment at the end of 5 years using rate setters 5 year 8% loan vs a online savings account of 3% return with a bank/ADI.


*Initial investment: $100,000*

Assumption for rate setter 5 year loan @ 8%
Rate setter monthly re-payment from borrower: $1666
The principle and interest received each month is then reinvested in rate setters 1 month rolling loan at 3% (or you can withdraw the funds to place in an ADI if you so wish, given interest rates are the same). The calculations are based on a diminishing principle as the loan is paid out. If the loan and principle is reinvested each month in a new 5 year loan, the returns would be much higher, but it technically becomes a never ending fixed deposit. It is 1.5% max penalty if you withdraw your funds before the term expires. 

*Rate setter total interest earned: $30313 (30.3%)*


Assumption for online saving account @ 3%
Principle and interest is reinvested monthly for 5 years. 

*Online savings account interest earning: $16452 (16.4%)*

Hope this helps anyone who is curious about the numbers. It didnt click for me until much later that the 8% return with rate setters is not quite the same as 8% interest in a savings type account.


----------



## Value Collector (11 July 2019)

just_jay said:


> I did a simple calculation in Excel and came up with the following below.
> 
> I am comparing the return of an investment at the end of 5 years using rate setters 5 year 8% loan vs a online savings account of 3% return with a bank/ADI.
> 
> ...




You can optimize rate setter better than that.

————
If you wanted to limit your investment to 5years,

For the first 2 years have it reinvesting into 3 year loans, at the 3 year mark switch all loans to reinvest in monthly loans.

Then by the 5 year mark all capital will be in a monthly rolling loan.

————-

But you would be better off rolling it into 5 year loans for the full 5 years, then take the 1.5% hit on exit.

Or,

Just roll it into 5year loans, and eventually one day in he future use it as an annuity to live off over 5 years having it paying into your every spending amount each week.


----------



## ducati916 (12 July 2019)

Value Collector said:


> 1. Hahaha, so we will add this to the list of investments I make you don’t agree with.
> 
> 2. Do you at least understand that rate setters loan book is out performing all the major banks?
> 
> ...




1. That is the issue. You are not 'investing' per se, you are speculating. The tragedy is, you don't even recognise that fact.

2. For the moment I will accept that as fact.

3. Appealing to the logical fallacy of the 'White Coat', of course you are because when it actually falls to real analysis, you are not that well educated theoretically, thus make significant errors in application. That would be all well and good, save for the fact you have a penchant of giving investment advice predicated on the fact of 'look I made 10X' or 'I have $600K' in it. That is not analysis, that is simply bragging.

4. Thank you.

jog on
duc


----------



## basilio (12 July 2019)

just_jay said:


> I did a simple calculation in Excel and came up with the following below.
> 
> I am comparing the return of an investment at the end of 5 years using rate setters 5 year 8% loan vs a online savings account of 3% return with a bank/ADI.
> 
> ...




Good set of figures.  However are there any online insured  savings accounts returning 3% at the moment ?


----------



## Zaxon (12 July 2019)

I don't find anything that @Value Collector has ever said as bragging.  More so, refreshingly honest.  Over the years, he's given a lot of insight into his thought processes, his philosophies on investing, and his track record.  I wish more people would open up a bit, since it gives context to their posts.  For instance, there are people on this forum who are very dogmatic about their view point, and for all we know, are up to their eyeballs in debt, and have never made a successful investment or trade in their life.  By given context about ourselves, both good and bad, we are more authentic and useful to the ASF community.


----------



## Value Collector (12 July 2019)

ducati916 said:


> 1. That is the issue. You are not 'investing' per se, you are speculating. The tragedy is, you don't even recognise that fact.
> 
> 2. For the moment I will accept that as fact.
> 
> ...




Ok mate, as I said good luck to you, you just seem to focus on things that are often irrelevant.

These “significant errors in application” haven’t been showing up in my results for the past 20 years of investing, so I guess I must be the luckiest guy in the world.

You call it bragging, but I have been speaking about RS for weeks, and only showed the level of my account to show I that I wasn’t talking about it for the $75 bonus.

And I only spoke about making 10x because it was relevant to our conversation where you were saying active trading would out perform inactive investing.

But, yeah as I said, I don’t get any value from talking to you, I actually have you on ignore, so I only see your post rarely if I am not logged in, or some one else quotes it referencing me, or if I am silly enough to click the “show ignored post button”

So good luck, and good bye.


----------



## SirRumpole (12 July 2019)

Zaxon said:


> I don't find anything that @Value Collector has ever said as bragging.  More so, refreshingly honest.  Over the years, he's given a lot of insight into his thought processes, his philosophies on investing, and his track record.  I wish more people would open up a bit, since it gives context to their posts.  For instance, there are people on this forum who are very dogmatic about their view point, and for all we know, are up to their eyeballs in debt, and have never made a successful investment or trade in their life.  By given context about ourselves, both good and bad, we are more authentic and useful to the ASF community.




Value Collector's 10x return on Capilano was a great result and I don't regard telling the truth as bragging in this case.

The question is whether it was a lucky one off or revealed a system that could be exploited in other cases.

As takeovers of this kind don't occur all that often one may conclude that VC had a bit of luck that the takeover actually happened but he was clever enough to spot that it was a potential takeover target.

As  a matter of interest VC, what do you think would have happened to the Capilano SP if the takeover didn't occur ?


----------



## Value Collector (12 July 2019)

SirRumpole said:


> Value Collector's 10x return on Capilano was a great result and I don't regard telling the truth as bragging in this case.
> 
> The question is whether it was a lucky one off or revealed a system that could be exploited in other cases.
> 
> ...




Capilano had already traded above take over price before, it’s highest price was about $23 about 18 months before the take over ended up going through at $21.

If the take over didn’t come, Like most stocks I think the share price would have fluctuated, and the company would have grown over time, and I would still have been a happy shareholder accepting a growing dividend.

I was proven right in my thinking long before the take over happened, dividends grew from 15cents per share to close to 50cents, and profits grew by a similar ratio.


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## ducati916 (13 July 2019)

SirRumpole said:


> Value Collector's 10x return on Capilano was a great result and I don't regard telling the truth as bragging in this case.
> 
> The question is whether it was a lucky one off or revealed a system that could be exploited in other cases.
> 
> ...




If you actually read the thread, which I think you did at the time, you may remember that CZZ's accounting was marginal at best and to the more jaded, simply misleading and manipulated. 

An independent 'calculator' also confirmed that CZZ's accounting was being 'manipulated'.

On that basis, the [hidden] risk was far higher than was commonly perceived.

Anyway, the purpose was not to rehash the CZZ thread. The purpose was again to demonstrate that VC does not understand or more generously, care about the risk that he is running in Ratesetter.

The point highlighted was the Ratesetter 'Risk Management Team', who include in their team, fresh University grads. When theoretical finance meets reality, reality always wins.

Debt investing requires as part of your due diligence that the debt service has been tested in times of adversity. If it survives, that is a plus. Of course, next time may be different, but at least you have additional information on which to inform your decision.

Anyone placing funds in Ratesetter are 100% reliant on this 'Team'. You have no idea about the loan quality as you can never have access to that information. You have no idea about correlation, etc.

So until someone can answer those questions sensibly, the risk is very likely to be far higher than commonly perceived.

VC's analysis relies upon the 'White Coat' logical fallacy.

jog on
duc


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## ducati916 (13 July 2019)

Value Collector said:


> But, yeah as I said, I don’t get any value from talking to you, I actually have you on ignore, so I only see your post rarely if I am not logged in, or some one else quotes it referencing me, or if I am silly enough to click the “show ignored post button”




Of course you do.

jog on
duc


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## just_jay (15 July 2019)

basilio said:


> Good set of figures.  However are there any online insured  savings accounts returning 3% at the moment ?




My bad. I had a quick look on Canstar and the ADI returning 3% was a 4mth promotion. Best rate I can find now is 2.6% with uBank with a $200 monthly deposit to earn the bonus interest. 

This takes the return for a savings account ($100k investment) to $14113 vs $30313 for the rate setter 5 year loan term. As @Value Collector said, this amount will increase if you split the 5 year term into a 2+3yr term.


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## Value Collector (15 July 2019)

just_jay said:


> My bad. I had a quick look on Canstar and the ADI returning 3% was a 4mth promotion. Best rate I can find now is 2.6% with uBank with a $200 monthly deposit to earn the bonus interest.
> 
> This takes the return for a savings account ($100k investment) to $14113 vs $30313 for the rate setter 5 year loan term. As @Value Collector said, this amount will increase if you split the 5 year term into a 2+3yr term.




Did you check out what the return would be if you just took the 1.5% hit at the end of year 5?


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## just_jay (15 July 2019)

Value Collector said:


> Did you check out what the return would be if you just took the 1.5% hit at the end of year 5?




Not really. I can calculate a simple rolling 8% return on $100k, which in this case will net you $49977 after 5 years but calculating the 1.5% exit fee requires someone with better skills than I in excel because if you are going to invest the interest + principle in a new 5 year loan each month, at the end of 5 years, you are going to end up with 50 loans with varying expiration dates. So that means 1.5% hit on each loan x 50 (based on my understanding).....


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## Value Collector (15 July 2019)

just_jay said:


> Not really. I can calculate a simple rolling 8% return on $100k, which in this case will net you $49977 after 5 years but calculating the 1.5% exit fee requires someone with better skills than I in excel because if you are going to invest the interest + principle in a new 5 year loan each month, at the end of 5 years, you are going to end up with 50 loans with varying expiration dates. So that means 1.5% hit on each loan x 50 (based on my understanding).....




It would just be 1.5% of the total balance. 

You don’t have to work it out loan by loan.


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## sptrawler (15 July 2019)

Value Collector said:


> You can optimize rate setter better than that.
> .




Well it looks as though future super, has confidence in rate setters.

https://www.smh.com.au/business/sma...lending-for-clean-energy-20190714-p5270i.html

From the article:
_Fossil-free superannuation fund Future Super will loan money to Australian borrowers so they can buy clean energy products through an investment deal with peer-to-peer lender RateSetter.

The fund will start with an initial $200,000 investment through RateSetter's clean energy market to facilitate loans to creditworthy borrowers so they can buy renewable energy products like batteries and solar panels.
At Future Super, we have strict ethical investment criteria that we follow when adding to our portfolio, and we choose options that we believe will produce superior returns for our members, while also positively impacting the environment," he said.

Future Super's total assets under management sit at around $900 million, including the group's main super fund, which holds $500 million_.


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## Value Collector (8 November 2019)

If anyone is interested in joining me as a Rate Setter investor, they are currently doing another $50 bonus for you (and me), when you lend $1000 into the 1 month or 5 year market.

Use this link to get your bonus $50.

https://mbsy.co/ratesetter/49795347

Or If you don’t want to use my link, I know @Bill M is also I member of ratesetter, he probably also has a referral code to share.


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## Bill M (8 November 2019)

Value Collector said:


> Or If you don’t want to use my link, I know @Bill M is also I member of ratesetter, he probably also has a referral code to share.



Yes I have but I prefer you get as it was you who got me into it. I thank you for that. It is a great product, currently 7.9% on the 5 year and 3.5% on the Monthly, cheers.


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## qldfrog (8 November 2019)

Thanks to these discussions, I did put a bit of money in ratesetter 2 weeks ago, shame I missed that offer at the time


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## Wyatt (20 March 2020)

What are the current views on MXT



ducati916 said:


> 1. When investing in 'debt', then the return on your capital is far less important than the return of your capital.
> 
> 2. The difference in risk is not small, it is significant. The increase in return I doubt comes anywhere close to compensating the investor.
> 
> 3. That 'provision fund' is dependent upon future payments. That [in a downturn] is no protection at all.




Wise words from @ducati916 in hindsight. 

Given recent credit spreads increasing and RBA announcement on credit supply yesterday, I don't really understand what the implications are apart from potential defaults effecting NAV and suspension of distribution could come at any time. 
Does anyone have a view on this asset class apart from it going down rapidly like everything else?
Only around 3-4% of float traded since the rout began, so a vast majority of holders deep underwater. 

I DNH, fortunately.


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