RAR and (forward) risks are all that matters
Quote:
Originally Posted by
BJ1
If you had invested everything on day one in a basket of loans averaging out at, say, C1 (about the middle of the platform exposures) you could expect to lose a lot less than 10%pa of your total interest. Perhaps your risk profile is to the high end but it seems to me more that you are experiencing a higher loss rate than Harmoney predicts.
After 27months I've lost $668 of my total interest of $18,329. My RAR is 13.41% so even with your higher losses you are making a better net return than I am. The difference being that I keep my higher return exposure under tight rein because I dislike the high rates borrowers pay.
Perhaps too many investors (and I'm not suggesting this applies to you) look at their losses instead of their net return? Also, it seems too many look at RAR instead of projecting forward.
I am quite happy with my slightly over 14% RAR. Trying to increase that to 15% without taking too many risks. I take bad loans as part of the game although it is still not nice to have them. A lot of the bad loans due to the initial investments as I went into Harmoney quite big in the first 6 months. I am still taking E and F but very minimal in terms of $value. Bulk of new loans I take are now in AtoD.
I do think that Harmoney's estimate of default rates are a bit understated (at best).
Like many on this forum, 30+% is sinfully high interest to me. But then at least with Harmoney, it is all transparent and the borrowers do not get any serious threats if they are late in paying.
2 Attachment(s)
4 Months in ($100K added, no withdrawals)
4 Months in ($100K added, no withdrawals):
Total Loans: 1,159
Overall Avg: $92.45
Paid Off: 27 (2.33%)
Arrears:
1-30 12 (1.04%)
31-60 6 (0.52%)
61-90 0
91-120 0
Total Value increase (after tax and fees): $3,769.03 (Interesting that interest less tax and fees is currently $2,256.03, the difference is the Protect Rebates - still coming to grips with the effect these have over time).
Two charts that I'm running with:
Attachment 9012
This shows the total XIRR value and an adjusted XIRR (this is after tax and fees).
Adjusted XIRR is simply the XIRR value less any arrears in the 31-60 days or above (total value of these loans owing, not amount in arrears, effectively writing them off early for a much better current value). This seems to be tracking well and will likely become more 'stable' in time. A bit of a dip at present, I suspect due to school holidays?
Attachment 9014
Just a summary chart, highlighting any significant changes.
Harmoney RAR currently 14.05%, but still rising.
Added: Meant to include that this investment is currently returning an average of $54 per day but has not yet had the full interest paid for the entire $100K - will have by next month.