Introducing NAR: A Useful Tool for Successful Investors

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What is Net Annualized Return?

NAR (Net Annualized Return) is the measurement of the performance of your total investment on BTCJam. It reflects the funds actually received each month.

You can now view your NAR of all your investments on BTCJam in your Investments page.

What makes NAR useful as an investor?

As an investor, you need to eat, sleep, and breathe NAR. (Also, expected APR – see more here).

If you were a painter, the paint would be your invested bitcoins, the brush would be BTCJam, and the NAR would be the painting. NAR is the most accurate measurement to monitor how you have grown your bitcoins on BTCJam.

How does BTCJam calculate NAR?

To calculate NAR, the numerator is composed of interest received, plus late fees received, minus the amount in default. The result is divided by the total mature principal. The mature principal is the investment that has already a related payment or default.

For notes, your notes sold also affect your returns both positively and negatively. If you sold a note for 1, but invested 1.2, you will have a -0.2 loss. If you bought a note for 0.1 and received 0.4 in payments you will have 0.3 in gains

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This is a live calculation so every event that can change it is automatically performed.

BTCJam started using this calculation from April 1st, 2014, so this only reflects your return starting with funds invested on or after April 1st, 2014.

Get g’nar’ly,  and start investing today.

10 Tips to Get Out of Debt

Spend less, save more. It’s the third most-common New Year’s resolution for a reason — millions of people around the world struggle with debt, but few know how to chip away at the credit card bills, car loans and other expenses that can leave you feeling overwhelmed. It is possible to dig yourself out from under what can seem like a mountain of debt using a few easy-to-incorporate strategies.

Get organized

#1 Make a list

Trying to deal with a lot of miscellaneous bills can make paying down debt a nightmare. The first step toward repayment is to get organized so you have a clear picture of where you stand. Make a list of exactly what you owe and to whom. By facing the facts and laying everything on the table, you are more likely to have a realistic idea of your situation and a better chance of making progress.

#2 Make a budget

Make a budget and stick to it! This is difficult for a lot of people — hence those broken New Year’s resolutions. Try a web service like Mint.com or BudgetTracker.com to help you organize your budget, and be honest about what you put down. Try to stick to it and see how good it feels to stay within your means each month.

#3: Refinance your debt

Try refinancing your credit card or other debt. You can apply for a personal loan that may have a much lower APR than many high-interest cards, and using this money to pay off credit debt can save you money on interest payments in the long run.

#4 Organize your spending

Categorize your spending. Organize things into must-have, should-have, and like-to-have. If you can do without something, you can put it on the “like to have” list and avoid spending money on it until you’re in clearer financial waters. Things like the gym membership you rarely use, new shoes, and movies are in this category. Make your main expense priority the payment of your debt — it becomes a “must have.”

 

Shrink your waistline — and your wallet

#5: Eliminate extras

Want to slash extra spending from your budget — and maybe shed a few pounds as well? Take a look at what “extras” you can eliminate from your budget. Things like dining out, fast food, and trips to the coffee shop can add up to not only a lot of extra spending but quite a few extra calories as well. Slash excess treats from your diet and you may end up cutting costs, too.

#6 Write down your expenses

Write down what you spend. Your debt is built up over time of many small purchases, and if you can track these items and manage to get them under control, you can have better and faster success of keeping your debt from increasing and an easier time paying it off.

#7 Stop spending

Stop spending! Cut your cards in half. Experts agree that you should have no more than one active credit card at a time. Get rid of department store cards and gas cards, and use your one card only for emergencies.

Tackle the worst first

#8 Pay off high interest debt first

Pay the most each month on the cards with the highest interest and the lowest amount on the cards with the lowest interest. Doing this will ensure you pay off the high-interest cards more quickly and save in the long run.

#9 Pay off debts with smallest balances first

Pay the debts with the smallest balance first and the minimum on other debts — this likely eliminates the smallest debt first, and gives you a much-needed boost of confidence.

#10 Don’t close the account

Once you’ve paid off a credit card, avoid the temptation to re-up your balance with more purchases — but avoid closing the account. Closing accounts could negatively affect your credit score.

What have you guys found to be most helpful to get ouf debt?

Let us know in the comments!

Why get a loan on BTCJam.com?

There are many great reasons to get a loan from BTCJam:

  • Low interest rates
  • Fast and Easy Online Process
  • Available Globally
  • Secure and Confidential

Why do we have low interest rates?

Through our global peer-to-peer lending platform, we have capital from investors in developed nations who are happy with lower returns than most local banks who have high interest rates set by the national banks in most of the developing world

Most developing countries need to attract capital from foreign investors to develop their infrastructure. To be competitive and since there is quite bit of risk involved, they have to offer quite high interest rates to those investors. Since the treasuries they are selling can also be bought by their local national banks, the interest rate banks are giving to consumers are higher as well, since they need to have a similar or higher internal rate of return on consumer lending in order to justify the investment of time and capital.

But with our peer to peer lending platform, as long as we can create a better return/risk ratio for lenders than other alternatives they have access to, we will be able to offer loans to borrowers in those countries at rates that in many cases are much lower than what they can get at their existing banks.

Additionally we screen our borrowers very thoroughly through our innovative, global credit scoring algorithms. Since we are able to predict the likelihood of default pretty well, lenders have confidence and are happy with lower interest rates, since they know the risk they are getting when investing.

Why do we have little bureaucracy?

We do everything online and our innovative credit scoring algorithm can assess your credit score within seconds of your application.

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Traditional banks have to ask you a whole bunch of questions about you before someone in an office decides whether you are ‘credit-worthy’ or not. We also ask some questions, but since we are doing everything online and including information about you from your various profiles on the web, such as Facebook, Linkedin, Paypal, Ebay etc, we can automate a lot of that process and do instant credit scoring based on the information you give us.

Can I get a loan if I am in (INSERT MY COUNTRY HERE) ?

The answer is a resounding YES! By using bitcoin, the community can fund people from literally any country, including Antarctica!

How is my information protected?

We don’t share any personal information about you with lenders or anyone else. We reserve the right to do so in cases required by law or if you specifically give us permission to do that.

Ready to get a loan on BTCJam? Start here

Or read: Is BTCJam right for me?

What is the process of getting a loan on BTCJam?

Getting a loan on BTCJam is a very straight forward process.

Here is how it works:

1. Verify your identity

Verifying your identity is the initial step in applying for a loan at BTCJam. We will ask for your photo ID, address verification, income verification, banking conformation, social network ids, personal references, your Paypal account, and your Ebay account.  The more complete your profile is, the more trust you gain in BTCJam and, thus, the more likely your loan will be funded.

Make sure to use high quality photos/scans, so that our verification team can easily read all the important information from your passport, your income stubs etc.

Do I need to have all of these social networking accounts?

You don’t need all of the items listed above. HOWEVER, our credit score algorithm will likely give you a low rating if you have only a few items verified. The minimum verification we require is your identity and address, but beware, your interest and APR will be extremely high. The more legitimate and trustworthy you appear, the more likely you will get funded on good terms.

How long does the verification process take?

1-2 business days after you have submitted your documents.

2. Describe your loan and decide the terms

Go through our easy loan creation process. Here you can describe why you need the loan and how you will repay it. You can also set the terms: length of the loan, interest rate you want to pay, and frequency of payments.

After that, all you have to do is to hit Publish and you’re all set!

3. Watch investors fund your loan and get the money!

This is the fun part. Watch as investors come in to fund your loan. Of course it helps to tell friends and family about this, as they can increase the speed at which your loan gets funded and it increases social verification for investors.

As soon as the listing has been funded by at least 70%, you can activate the listing! This binds you to the terms you defined in the loan listing in step two.

The best part: The bitcoins are instantly available in your account.

So are you ready to get a loan? Click here to get started!

I need a loan. Is BTCJam right for me?

At BTCJam, we want to make sure that borrowers and lenders are having a good experience with using our service. Lenders are trusting borrowers with their bitcoins and if they are not paid back, the whole P2P lending system does not work properly. We came up with a few helping questions that borrowers should ask themselves before taking out a loan.

 

Before you post a loan, you should ask yourselves the following questions:

How will I pay back this loan?

Do you have regular income to pay back this loan? Do you have any assets such as: stocks, a vehicle, or something else that you could sell in case you are able to pay back?

Make a detailed repayment plan, on paper or in Excel, where you calculate exactly when you will get your salary, when you have to pay rent, food, etc and also when your BTCJam installments are due.

How much interest can I afford to pay?

Make sure you plan ahead. You will have to pay back the principal plus interest. Don’t go with too high of an interest just to get funded quickly. Use an interest rate that you can realistically pay back with your resources. Also don’t go too low or otherwise investors will consider you an unattractive investment.

Do I have an easy way to convert bitcoin into my local currency and back?

Once your loan is funded, you will receive your bitcoin on BTCJam. Now you need to convert the bitcoin into your local currency so you can purchase whatever you need the loan for. Check if there is an exchange in your country so you are able to withdraw the loan for your own use.

Here is a list of all Bitcoin exchanges around

https://en.bitcoin.it/wiki/Trade#Currency_exchanges

Once you have honestly about those questions and you have decided that BTCJam is right for you, create your loan listing and get funded!

The 3 Rules of Peer to Peer Lending for Investors

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In our previous articles, we explained why lending through BTCJam is such a great idea and how this enables a really great return/risk ratio.

Now let’s look at how you actually apply those principles when making a loan on BTCJam.com.

Rule #1 Diversification: Make at least 50 to 100 investments.

Why is diversification so important?

Here’s a blog post showing the benefits from diversifying on Lending Club:

Try to look at it from a risk perspective. You want to invest in a way so that you minimise Systemic Risk. To make an extreme example: Giving all your money to one single person has a huge ‘systemic’ risk. Fate is unpredictable: From unemployment to an extreme case of death, everything is possible, and your money will be gone.
It would also suboptiomal to invest exclusively in people who want to buy homes in a single country. House prices are linked together by market forces. So if for example if the interest rates raise dramatically (which can happen by a single decision taken by the country’s central bank), then suddenly it becomes much harder for everyone but the wealthy people to buy houses, and prices are likely to suffer, reducing the ability of homeowners to refinance their mortgage and thus the ability to repay outstanding debts etc. Remember what happened with the subprime mortgage crisis in 2007-2008.

The big advantage we have here at BTCJam is that we operate on a global level. So we can offer much better protection against systemic risks than for example a Lending Club, who only offers to invest in the USA. Of course international markets are also linked together, but for example the correlation between Indonesia’s GDP Growth and the US GDP Growth is R=-0.09 for the time period of 1961-2008. (Source: http://ro.uow.edu.au/cgi/viewcontent.cgi?article=2575&context=commpapers)

So if a big crisis hits the USA and many people with loans lose their jobs, your loans in Indonesia likely won’t be affected.

If you invest in many small loans with good borrowers across different verticals and geographies, it is statistically unlikely that more than just a small percentage default. As long as less loans default than the average interest rate you are getting, you will come out ahead in your investing.

Assuming you invest the same amount in every listing, your return can be calculated as follows:

Actual Return = (1-Default_Rate)*AVG(Interest_Rate)

So let’s say you invest $10,000 with 100 loans that all run for 1 year and with an average interest rate of 30% per year. That means that by the end of the year would get the invested $10,000 and $3,000 of interest back. Now let’s say that 10 of those 100 default and don’t pay back anything. Then you’ve lost $1000 of your investments (plus $300 of interest you didn’t collect). But at the end of the year you still have $12,000 to your name, which is a healthy 20% rate of return.

Rule #2 Be aware of risk and high interest rates

If someone offers an interest rate that is way higher than what everybody else is offering, maybe they are looking to get a lot of money quickly and disappear, or they are bad financial planners and won’t actually be able to repay you with this high interest rate. We try to filter out as many bad apples as we can, but at the end you are still taking a risk on every loan you invest in.

Does that mean you should never invest in loans with high interest rates? No of course not. It simply means you should not put all your money into ultra high interest, high risk loans. Put some money into low interest, more safe loans, and some in riskier, more high return loans. Again, the key word is Diversification.

Rule #3 Understand the borrower

We try to make as much information available about each borrower. So that you as an investor can accurately assess what kind of person you are lending to and how likely they are to repay. So spend the few minutes to go through all the data on the profile and make an educated guess. Is this person trustworthy? Do they have a way to repay me, even if their business plan does not work out?

We hope this guide gave you some understanding of the benefits of peer to peer lending and what you can do to increase your returns and lower your risk.

We are always open to questions or feedback. Please let us know at support@btcjam.com.

You should probably check out the newest listings here!