Harmoney

**Snow12** · 20-06-2017, 11:47 PM

Myles, been watching your posts since you started and I must say good luck on your Investing.

You have been investing for three months and you already have 3 write offs. Doesn't that ring alarm bells?

I have been investing in Harmoney for a few years now but since they changed the limits the quality of the loans have fallen drastically

Here's a prime example from tonights listing,. Why anybody would invest in this is beyond me. Only paid 4 instalments and then Harmoney allows a rewrite for more debt with a very small monthly income.Screen Shot 2017-06-20 at 11.21.05 PM.jpg

I have a set of rules for most grades that I had from the start and use to get 5 to 10 loans a day a year ago. Now with the same rules now I would be lucky to get 5 a week. That says to me there is something inherently wrong with Harmoneys objectives now. Remember the only one loosing money on Defaults are the investors. They rant on about how good there "risk management" is but it certainly not good since the increase in lending limits.

**myles** · 21-06-2017, 09:56 AM

Originally Posted by Snow12

You have been investing for three months and you already have 3 write offs. Doesn't that ring alarm bells?

It's 2 loans in 30-60 arrears, but I write them off at 60 days so my numbers are a more realistic present value. (Harmoney list it as $1.88 in arrears if that helps). At this stage this doesn't set off any alarm bells for me. I consider $2,000 to be charged-off each year to be expected for the loan spread that I have. Ask me again in 7-8 months, my opinion might change when arrears really kick in

**alistar_mid** · 27-06-2017, 01:28 PM

Originally Posted by myles

It's 2 loans in 30-60 arrears, but I write them off at 60 days so my numbers are a more realistic present value. (Harmoney list it as $1.88 in arrears if that helps). At this stage this doesn't set off any alarm bells for me. I consider $2,000 to be charged-off each year to be expected for the loan spread that I have. Ask me again in 7-8 months, my opinion might change when arrears really kick in

I'm at the 9-10 month point with $100k invested in now - although this was $50k about 6 months in and then another input of $50k of the last 3 months.
I don't have auto invest going and plan to just let the money come out weekly until i am down to $50k

I think Myles and I have roughly similar loan distributions, my average loan size is around $90 too, although I am 80% 5 year loans and myles is ~80% 3 year loans (I think)

So this is me as of now, i started in Aug last year

hamrony 2706.JPG

**myles** · 27-06-2017, 03:24 PM

Originally Posted by alistar_mid

So this is me as of now, i started in Aug last year

Those A's are holding you back

I'm waiting for my RAR to come in to compare to your's - I think I'll beat you because of your A's. Should have some money on it.

Grades.png

**alistar_mid** · 27-06-2017, 07:45 PM

Originally Posted by myles

Those A's are holding you back

I'm waiting for my RAR to come in to compare to your's - I think I'll beat you because of your A's. Should have some money on it.

Grades.png

Yeah probably about the first $20k I put in I was investing in anything and everything, and since there where a lot of A's, a lot was going into them

**Cool Bear** · 27-06-2017, 04:06 PM

Originally Posted by myles

I consider $2,000 to be charged-off each year to be expected for the loan spread that I have. Ask me again in 7-8 months, my opinion might change when arrears really kick in

Miles, I used Harmoney default rate for each loan in a spreedsheet which then works out the weighted average default rate. I presume you do too. I am almost 2 years in and over 5000 loans (mostly minimal notes). My weighted average default rate/weighted average gross interest rate as per the spreadsheet is 10.22%. However, in real life it is 19.6% currently. So you probably have to up your expected charged-off to $4000.

**myles** · 27-06-2017, 04:58 PM

Originally Posted by Cool Bear

However, in real life it is 19.6% currently. So you probably have to up your expected charged-off to $4000.

Just checking, is that, 19.6% per annum or for the two years?

**Cool Bear** · 27-06-2017, 07:52 PM

Originally Posted by myles

Just checking, is that, 19.6% per annum or for the two years?

It is the percentage of your annual default rate over your annual interest rate. Say your weighted average annual default rate is 2.1% and your weighted average annual interest rate is 21%. So you would expect about 10% of your gross interest to be lost to defaults. My calculated percentage is 10.22% so if Harmony's estimates were correct, I would expect to lose 10.22% of my gross interest to charge-offs. But in reality 19.7% of my gross interest to-date was lost to defaults (charge-offs).

**myles** · 27-06-2017, 08:28 PM

Using your x2 factor from your mix of loans can't really be equally applied to my mix, but using my current values it works out at 1.59%/22.79% = 6.977%, which in theory works out at $1590 pa for $100K. Using your x2 factor, gives $3,180. Will have to wait and see how it works out.

Note this doesn't factor in lower interest achieved due to defaulted loans, nor does it factor in increased interest from reinvesting... I'm tempted to write a simulation if I ever find the time...

Based on the above and my tax rate etc., I'd still be earning 13.8% (not considering reinvestment). I'd be very happy with that