Alternatives to Term Deposit?

[Value Collector]

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?

 

[just_jay]

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).....

 

[Value Collector]

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.

 

[sptrawler]

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.

 

[Value Collector]

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.

 

[Bill M]

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.

 

[qldfrog]

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

 

[Wyatt]

What are the current views on MXT

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.