Harmoney

[IntheRearWithTheGear]

Attached calculation. Maybe its wrong though. You may wish to go for your managed fund at 8% as you will get more. Does not take into account you would be reinvesting the returned amounts.

[myles]

What interest rate have you used?

[IntheRearWithTheGear]

25% on 8200 as per www.bankrate.com amortization calculator type tool.


%15 harm fee.
17.5 Tax.

Roughly a new loan can be undertaken every 10 days. So you lose some interest on those days while you wait.

I should have used 20% for harmony fees structure which would bring it down to 5.37% after tax.

So a critcial part of your spreadsheet is the calculations of reinvestment amounts as they come in - without it it wont be very good.

Somewhere in the forum is a modeling tool which tries to do it more correctly.

[myles]

Yeah, nah...

The discussion was about E and F loans so you should have used at least 35%...

You've assumed the defaults are from day one which is not reality - perhaps 1/2 on day one and 1/2 at the start of year 2 - Harmoney state avg default time is 18mths...

What about taking tax of the 8%...got to compare apples with apples...

You've assumed loans end at 2 years, again, not reality. Plug in 35% and even without the other details you'll see that 8% won't come near it...

[IntheRearWithTheGear]

I was just using your numbers and assumptions from your previous post.

Harmony has a graph which you can use to predict defaults - most defaults acording to them happen near the 3 month point and then tail downward

its at the bottom of this page

https://www.harmoney.co.nz/investors/investment-risks

called the hazard curve down the bottom.

Which maps to the below array values - which you can use in your spreadsheet.

2.00, 2.30, 4.00, 5.00, 5.80, 5.70, 5.60, 6.00, 5.70, 5.20, 5.80, 5.00, 4.70, 4.00, 3.60, 3.15, 3.00, 2.70, 2.10, 2.15, 2.00, 1.90, 1.60, 1.40, 1.60, 1.00, 1.20, 1.00, 0.90, 0.80, 0.60, 0.55, 0.50, 0.50, 0.60, 0.15, 0.05, 0.05, 0.05, 0.05, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00



Cheers

[myles]

I was just using your numbers and assumptions from your previous post.

That example was for a completely different and specific purpose and if you read the followup you'll see why...

Harmony has a graph which you can use to predict defaults - most defaults acording to them happen near the 3 month point and then tail downward

You are misreading the graph - you need to consider the area under the graph (only around 10% at 3rd month)?, and that would no doubt be very bias toward the F5 loans which have a default rate of 15.38%.

You are really confusing the discussion - try the given values for say an E3 loan at 35.33% annual interest and an annual default rate of 4.11% per year...and subtract the tax from 8%...then compare (still not a fair comparison as you have principal and interest to re-invest which is significant)...

[alistar_mid]

I was just using your numbers and assumptions from your previous post.

Harmony has a graph which you can use to predict defaults - most defaults acording to them happen near the 3 month point and then tail downward

its at the bottom of this page

https://www.harmoney.co.nz/investors/investment-risks

called the hazard curve down the bottom.

Which maps to the below array values - which you can use in your spreadsheet.

2.00, 2.30, 4.00, 5.00, 5.80, 5.70, 5.60, 6.00, 5.70, 5.20, 5.80, 5.00, 4.70, 4.00, 3.60, 3.15, 3.00, 2.70, 2.10, 2.15, 2.00, 1.90, 1.60, 1.40, 1.60, 1.00, 1.20, 1.00, 0.90, 0.80, 0.60, 0.55, 0.50, 0.50, 0.60, 0.15, 0.05, 0.05, 0.05, 0.05, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00, 0.00



Cheers

I'll do a version 2

The US article that has been linked around here on how p2p lending goes during a recession is reassuring that we should be ok too, reasonably ok.

Ultimately over time, the ultimate measurement is actualls.. a simple XIRR on a timeline of all your deposits vs all your withdrawals..

I'm pretty sure that XIRR is after tax too, as what I have sitting in my account and have had (withdrawals) already has the tax on it.

(i know, I know, I can't get the whole 80k out right now)

Attachment 8825

[IntheRearWithTheGear]

Yes, i agree the “outstanding principal” has tax paid. And the other good news is you could perhaps add back the harmony fees – as they should be tax deductable.

Good luck claiming any defaults though – other people have ideas on that.

One word of caution is you yet to have defaults as they are roughly 180+ days outstanding and you have only been in the game
for 260 days – so they will take a chink on your 14% - once they start to come through – however you can predict that
with your arrears balance somewhat.

Cheers