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Thread: Harmoney

  1. #2351
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    Just my thoughts:

    Quote Originally Posted by icyfire View Post
    If that's the case then I wonder if one would be better off just investing in Smartshares ETFs like MDZ which has had a return of 19.77% over the last 5 years which would be pretty difficult to get on Harmoney.
    There is a little * there that needs to be read and understood. 19.77% with reinvestment (i.e. compounding), very easily achievable over 5 years with Harmoney. I expect to exceed that by a significant amount.

    Quote Originally Posted by icyfire View Post
    Even if the value of the Smartshares fund went down during a downturn you would still have the shares and the value would recover over time. On the other hand, when your Harmoney loans default during a downturn you lose that money forever.
    There is no guarantee that shares will recover. Until you sell them they have no guaranteed value. With Harmoney you will loose some of your capital in a down-turn, unlikely to be all of it - review the interest rates of the higher risk loans that are the ones that are likely to default, you have to balance that risk vs the reward to achieve an overall 'good' result. Choose wisely, you make a good return, choose poorly you don't. (Very similar to shares - past returns are no guarantee of future ruturns.)

    Quote Originally Posted by icyfire View Post
    Also, investing in a passive investment like Smarthares takes ver little time while Harmoney is very time-consuming. Yes, investing in Harmoney can be fun and exciting but I do wonder sometimes if the time and risk are worth it in the long run when there are better investment options.
    Now that I'm not adding funds, I'm not finding it time consuming at all - but compared to the managed funds (that someone is paid to manage), yes there is some time investment to consider.

  2. #2352
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    Smartshares ETFs are passive funds so there is no fund manager actively managing your portfolio and there is no choosing shares involved.
    On the other hand, one would need to consistently invest in some very risky loans (Ds and Es) to beat 19.7%. And those risky loans will probably drop like flies when people start losing their jobs during an economic downturn.
    Last edited by icyfire; 04-07-2017 at 09:44 PM.

  3. #2353
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    Quote Originally Posted by icyfire View Post
    Smartshares ETFs are passive investments so there is no fund manager actively managing your portfolio and there is no choosing shares involved.
    0.75% Fund Charges (included in the % figure, but still a component)

    Quote Originally Posted by icyfire View Post
    On the other hand, one would need to consistently invest in some very risky loans (Ds and Es) to beat 19.7%
    No, not with compounding/reinvestment which is how they get 19.7%. Easiest to compare the 1 yr return i.e. 15.39% from the shares which is equivalent to a B3-B4 loan. Not very high risk at all... [To be fair you'd need to move up to C loans to cover Harmoney fees and taxes].

  4. #2354
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    You forget that Harmoney's fees are 15% (if invested over 10k) otherwise is 20% which is far higher than 0.75%.
    The fees are what makes a huge difference because like I said before you would need to invest in some highly risky loans to achieve 19.7% net return (after tax and fees).
    Not even C loans will get you there if you take into account defaults. You would need to invest in Ds and Es which is a pretty risky spot to be during a downturn.
    Last edited by icyfire; 04-07-2017 at 10:08 PM.

  5. #2355
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    No I didn't - see the [] brackets. I was comparing the 0.75% fee to the cost of the time to manage Harmoney investment.

  6. #2356
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    Quote Originally Posted by permutation View Post
    . I still have only 3 Defaults in the A_D grade range out of 1220+ loans over 26 months.
    That is a very impressive result. Well done.

  7. #2357
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    [QUOTE= I still have only 3 Defaults in the A_D grade range out of 1220+ loans over 26 months.[/QUOTE]
    Good work. My charge-offs total 10.2% of Gross interest or 11.8% of net interest. About 1 per 100 go bad on an even spread of A to D. Total loans would be about 6000 now.

  8. #2358
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    A couple of additional thoughts on this, this morning. 13.8% per year is equivalent to 19.7 compounding interest over 5 years. You will pay capital gains tax on the sale of the shares in NZ? So I think the comparison would be back into the high B or C1 grade loans?

    You wouldn't want to put all of your money into one Smartshare (even though it is a mixed portfolio) - so you would want to diversify into others that would not have such a good return. [Some of the mix would be hit hard in a down turn].

    In a downturn shares will likely run at a significant lose, a good mix of P2P loans may not. Historically P2P performed better in the last down turn.

    My thoughts only, others will likely see it differently. [N.B. I watch 200K disappear in shares in and around 2008, but gained it all back, but not by simply holding the same shares...]

  9. #2359
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    Quote Originally Posted by RMJH View Post
    Good work. My charge-offs total 10.2% of Gross interest or 11.8% of net interest. About 1 per 100 go bad on an even spread of A to D. Total loans would be about 6000 now.
    I have about the same number of loans as you but my charge off is about 20% of gross interest - about 2 in a 100 loans goes bad so far. You are in the safer A to D loans, which carries lower risk if the world economy turn to custard. Mine is quite well spread out over the 6 grades. I presume my current RAR should be higher than yours as I am carrying much much higher risk if the economy goes down. My current RAR is just over 14%. What is yours? (the pertinent question is whether the extra percentage or two is worth the risk?)

  10. #2360
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    Quote Originally Posted by myles View Post
    A couple of additional thoughts on this, this morning. 13.8% per year is equivalent to 19.7 compounding interest over 5 years. You will pay capital gains tax on the sale of the shares in NZ? So I think the comparison would be back into the high B or C1 grade loans?]
    Are you excluding the compounding interest you earn on Harmoney? There is no capital gains tax on selling shares in NZ.

    Quote Originally Posted by myles View Post
    You wouldn't want to put all of your money into one Smartshare (even though it is a mixed portfolio) - so you would want to diversify into others that would not have such a good return. [Some of the mix would be hit hard in a down turn].
    When you invest in a Smartshares ETF your money is split across all the underlying companies that make up that ETF. If one company in the fund goes down another company takes its place in the fund. For example, this list shows all the companies that make up the NZ Mid Cap (MDZ) fund which means that your investment is highly diversified.

    Quote Originally Posted by myles View Post
    In a downturn shares will likely run at a significant lose, a good mix of P2P loans may not. Historically P2P performed better in the last down turn.
    If the shares go down in a downturn then people start losing their jobs too. P2P in NZ has never been through a downturn so it's unknown how it will perform.

    Quote Originally Posted by myles View Post
    My thoughts only, others will likely see it differently. [N.B. I watch 200K disappear in shares in and around 2008, but gained it all back, but not by simply holding the same shares...]
    Picking individual shares is risky. Investing in ETFs is a much safer bet.

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