emptiehead

hi expats,
has any one used or know of the risks involved for investing with provident capital. regards peter.

Steve2009

Sub-prime mortgage lending? what could ever go wrong?

asprilla

Peter, have you read through the prospectus? do you understand the product? how long has this "Provident Capital" been around for?

emptiehead

hi guys, think they have been going around the 20 year mark, not read through there products and history fully as yet,i am aware there business is higher risk mortgage loans that the four major banks don't tend to touch, just putting the feelers out,i am looking for higher liquid returns though, your comments are very welcome. regards peter.

asprilla

As you say Peter, it's a case of risk v reward.

Right now, I can open a term deposit paying 6.75% with Rabobank. This is an extremely safe investment.

Or with Provident capital, I can earn "up to 9.55%" on a 5yr fixed product. I had a quick look through the prospectus and it appears that the product has a $170m loan book, with $100m of those loans more than 30days overdue.

You will have to decide for yourself, is it worth taking that extra risk, just to earn an extra 2.8% vs a safe term deposit?

If I was considering this product for myself, vs the Rabobank term deposit, I would select the lower risk option.

Steve2009

Was looking for this thread this morning to make exactly the same point, the reward offered versus demand deposit for the risk undertaken is insufficient.

freebo

Certainly it doesn't sound like adequate compensation for the risk.

emptiehead

thankyou guys,
went deeper into there profile this morning and yes asprilla the risks out weights the reward, just a thought. rates have been dormant for some time now and was getting itchy feet,will look at rabobank though, thanks for your advice guys, kind regards peter.

Steve2009

In fairness the demand deposit returns are great and nothing to turn your nose up at. Hence why the Aussie dollar is so attractive and the 5th(?) most traded currency in the world. The risk/reward profile is certainly much better than many popular investments in Australia.

emptiehead

Hi Steve, comparing to the rest of the world $au rates are fantastic, you are right, but i cannot forget the 8.5% that was had a few years back, greedy i know, but i am always on the look out for early retirement and a good rate would seal that dream, Asprilla, rabo term deposit is ok and thought that rate of 6.75% could of been a monthly rate but no, there are other high street banks that are offering 7.00% same sort of product to rabo, st george springs to mind. regards peter.

Steve2009

I personally would advise tempering the noble goal of early retirement with the equally noble goal of avoiding working into old age. Think of all those poor ageing crooners back on the road touring after the GFC. I personally think UBank have the best terms, remember that term deposits should offer a premium over demand deposit due to the fact that your funds are inaccessible.

Andrew Williams

Hey Peter

Do you mind me asking how close to retirement you are?

There are other strategies available for people pretty close to retirement that do not rely on investment returns to boost their retirement fund.

Regards

Andy

emptiehead

hi andrew,
i am a long way off a retirement fund, and have worked hard and prospered in my younger years, sent you a pm, kind regards peter.