P2P platform performance Oct,2018

I will be covering the top P2P platform month on month performance in terms of returns and defaults.It will be helpful for people to identify  improvement or decline in platform performance and thus make decision based on it.The data has been collected from their website.

4 Platform which I am covering as of now are:

  • LendenClub
  • I2I
  • Faircent
  • RupeeCircle

Matrix to judge the platform is Risk adjusted Return i.e how much return will an investor get after factoring in the current historical default rate.

LendenClub

Ultra high and unidentified have been introduced lately .They dint have data past 180 days to calculate default rate.I have assumed 5 and 10% default rate to calculate Risk adjusted Return.

Faircent

The numbers look good but the problem is where other sites have posted default as  90 Days past due EMI,Faircent has used 180 days.This gives a much brighter picture.Considering 90 DPD  the risk adjusted return for most categories will fall close to 15%!

I2IFunding

As it is evident I2I has been very good for medium and low risk category but High risk category has not provided good returns.Investor should focus on D category,Government employees or very stable job private employees only.

RupeeCircle

Here again E and F category have been the best.C category shows higher NPA because of lower disbursement.

 

In my next article I will show how I manage P2P investment like a NBFC. I monitor trends,allocation across platform and EMI timeline to maximise my returns.

 

 

 

Real Estate Vs Mutual Fund( includes tax and rent benefit)

Most of the answers support either buying a house or investing in mutual funds.The case is not that one sided . It depends on many factors such as:

cost of interest
House appreciation
Mutual Funds Return
Rental yield.
Leverage ratio to buy house
I will show you how slight change in any factor can make one look more profitable than other:

Assume cost of house is 50 lakh

Case 1: House appreciation is 10% per annum, Rental yield is 2.5%, Mutual fund gives 15% return in 20 years,tax saving is included ( we reinvest rental income and tax saved in mutual funds monthly)


So my property in 20 years grew to 3.66 Cr

Rental money and saved tax grew to 4.46

Mutual fund gave 7.14( includes 10 lakh upfront too invested at 15%)

property beats mutual fund by 1 cr

Case 2:House appreciation is 8% per annum, Rental yield is 3 .5%, Mutual fund gives 15% return in 20 years,tax saving is included ( we reinvest rental income and tax saved in mutual funds monthly)

What happened now???

because how appreciation dipped to 8% I am making net loss if mutual funds gave 15% return.

I can try numerous permutation and compare my profit and loss.There fore factors I need to consider while making any decision are :

  • What is my cost of funds.Lower the better
  • Rental yield of property.How to check?Check price of house and rent people are paying in that area for similar property.
    How much appreciation.Its hard to predict.I will still prefer Tier 2 cities where appreciation can be higher than big cities(they are like mid and small caps). Best thing about them is they paying dividend( rental yield) like big city(large caps) and they appreciating like small caps!
  • How much leverage to take.High leverage in a growing market can give great returns!

 

RealEstatevsMutualFund.xls