Yes, been some classics. My "favourite" of the week has to be "Thanks Harmoney, the more I borrow the lower the interest rate" I think it was a $70k A1 loan too!
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See Harmoney have updated their Log In Screen ( after you have Logged Off ) today :)
22 months and 15.07% with $80K. It was up at 16.7% until a shocker of a month 2 months ago saw my losses climb from $2000 to $4500!
I'm in the process of gradually withdrawing and putting it into Lending Crowd to balance the portfolio (and because they are guaranteed). I'm at 14.24% in LC, although it's pretty hard to get into the loans.
https://www.youtube.com/watch?v=l1dnqKGuezo
damn, I'm in for just over $100k but been in 12 months, went from $1,200 in losses to $1,700 in 2 weeks
What grade are most of your losses btw?
Wow, $4500 out of $80,000 is high but then your 15.07% RAR is high too, so your investment must be on the higher risk spectrum. And 14.24% in LC is also high.
My HM is 14.3% RAR after 27 months with 6000+loans. My LC is just 12.26% and just a fraction of my HM investments. By the way, LC loans are no doubt less risky but just secured and not guaranteed. The portfolio I managed (for the family) has some money in ANZ serious saver earning just 2+% so I do not mind having higher risk HM loans to balance it out.
$4500 from $80K in almost 2 years is only around 3% pa defaults - that's actually not bad, especially considering the RAR!
I think the most important indicator of portfolio performance is the "$ value default amount v $Gross Interest received", and the time frame that these figures have occurred.
Principal invested and withdrawn is always a variable figure and has no real relevance to the performance.
I was writing about 'portfolio performance" not "portfolio return", the idea is to invest in quality grade loans to minimize your gross interest losses.
Still don't agree. Example:
$10,000 invested
Protfolio 1:
------------
7% interest with 0.2% defaults => $700 interest - $20 defaults (35:1 ratio) => return $680
Portfolio 2:
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28% interest with 0.8% defaults => $2800 interest - $80 defaults (35:1 ratio) => return $ 2720
Both of the above have the same Gross Interest vs Default ratio, both have the same investment amount, one returns $680 the other returns $2720.
I don't think they are equivalent when considering 'portfolio performance'.
For Portfolio 2 to return a similar amount to Portfolio 1 the default rate needs to be a little over 21% (4:1 ratio).
For Portfolio 1 to return a similar amount to Portfolio 2 the amount invested needs to be $40000 (vs $10000 for portfolio 2).
yeah you all realize ultimately it comes back to IRR on money in, money out?
Yes, it is how much $$$ we made after a certain point of time or, if you like, at the end of it all. That is measured effectively by Harmoney's RAR which is the same as XIRR (or IRR). The only difference between HM's RAR and our XIRR/IRR is that HM's RAR do not take into account the cash sitting there while most of us in using IRR/XIRR will take into account all cash flows (including cash sitting there waiting for loans)
Disagree - see rest of the example... If you pick poorly in the higher risk grades, perhaps, but the right mix of higher risk/interest loans vs low risk/interest loans will ALWAYS outperform (unless something dramatic happens and there is a large run on defaults).
My RAR graph has recently take a noticeable spike downwards. This is during last update of graph by Harmoney. A approximate 1% crash instantaneously and am now sitting at 13.99%. I haven't had any charge offs for sometime so am unsure why it could drop so quick.
What about others?
Has there been new fees etc that just begun showing in latest RAR graph?
My RAR hasn't suffered the declines reported on the last two postings. Over the past month it has tracked as I expected. That said,
looking at the portfolio graph on the website I can see there is one investor with 13,353 loans at an RAR of 13.50%. Where are Heartland's and TSB's loans on this graph? Wouldn't they have more than that number? And I've said it before and will again, any formula which creates a reported loss in excess of 100% has shortcomings. There is also 1 unique loan with an RAR of 39.51% - against a max gross rate of 39.99 less fees - how does that calculate with fees at either 1.25% on total repaid or 20% on interest only. And, later, I see there is an RAR of 130% on 3 loans.
I suggest the RAR should be ignored - it is historical and no guide to personal portfolio performance going forward.