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Author Topic: Reinvesting repayments  (Read 3387 times)

iLIE

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Reinvesting repayments
« on: May 04, 2008, 09:12:47 pm »
I see a lot of lenders who post about reinvesting their payments thus compounding their interest.

With 30% chance of default,have you ever considered that by reinvesting your repayments instead of returning them to your home bank account that you may also be compounding the chance of default by an additional 30%?
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Urbi_et_Orbi

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Re: Reinvesting repayments
« Reply #1 on: May 04, 2008, 09:16:26 pm »
Some argue that re-investing exposes the same money to additional risk.  Others believe that, as long as the money is re-invested in a similar loan, the net outcome should not be significantly affected.

I tend to believe the former.
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iLIE

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Re: Reinvesting repayments
« Reply #2 on: May 04, 2008, 09:19:04 pm »
Well,in a criminal probe they could never get PMI on RICO

The O stands for organization.  ;D
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JoeyTurks

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Re: Reinvesting repayments
« Reply #3 on: May 04, 2008, 09:20:57 pm »
Quote from: iLIE on May 04, 2008, 09:12:47 pm
With 30% chance of default

A 30% chance of default is quite a risk, true, but that still leaves a 70% chance of success. It's all in how you look at it.
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cowdog

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Re: Reinvesting repayments
« Reply #4 on: May 04, 2008, 09:31:16 pm »
The payout is only so high, right now it is 80% given a 20% default, same as a slot machine.

Continuing to reinvest the money is the same as continuing to play the slot, even after a payout.
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