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Thread: Harmoney

  1. #2931
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    Cheers Beacon, well put.

    If you isolate payment protect loans only. XIRR will show 40-50%... Massively inflating your return if using the method Alistar_Mid is using.

    Never said I was clever. However unless you have largely avoided payment protect loans - your XIRR will be overinflated.

    The rest of my tool is technicality (although correct). It enables some cross checkign against RAR. Once I've gone through a cycle of loans, I'd be happy with 7%.... Who knows whats to come
    Last edited by leesal; 17-01-2018 at 10:56 AM.

  2. #2932
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    Quote Originally Posted by leesal View Post
    Cheers Beacon, well put.

    If you isolate payment protect loans only. You will return over 50%

    Alistar_Mid, how can I put this... Your probably not even returning 7% (after tax).
    How can I put this, you are not anywhere close to as smart as you think you are.

    Once again, the only difference is how we value the outstanding principle. The rest is sourced from Harmoneys record of deposits / withdrawls.

    Because you can't seem to see this, and think its something to do with the Xirr calc itself, I can only conclude you don't know how Xirr works.

  3. #2933
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    Please guys: mind the personal stuff. It detracts from the discussion.
    Just for info: First loan 8/2/15
    Total cash in $90,169 progressively increased from initial $2,000 - total portfolio value $108,619
    RAR 13.85% on 31/12 and that's the highest it's got to
    Last financial year actual return on all money excl accruals 14.50% - this year dropped to date as suffered first write offs ($668)
    current running yield on today's balances 17.04% before any costs

  4. #2934
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    Quote Originally Posted by leesal View Post
    Cheers Beacon, well put.

    If you isolate payment protect loans only. XIRR will show 50%... Massively inflating your return using this calc.

    Never said I was clever. Alistar_Mid unless you have largely avoided payment protect loans - your XIRR will be overinflated.

    Once have gone through a cycle, I'd be happy with 7%.... Who knows whats to come
    Nice edit of your earlier post....

    Post tax bumps up your return. Harmoney automatically deducts their fees and then pays tax on your behalf. But their fees are tax deductible so they have effectively made you pay more tax than you should have. You then have to claim this back + claiming defaults as bad debts if you feel inclined (jury is out on that), so your post tax return is certainly more than your pre tax.

    Your'e already confused because of the difference of how we handle outstanding principle - you seem to think its do to with the Xirr calc itself, now you seem to have the tax round the wrong way.


  5. #2935
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    Quote Originally Posted by alistar_mid View Post
    How can I put this, you are not anywhere close to as smart as you think you are.

    Once again, the only difference is how we value the outstanding principle. The rest is sourced from Harmoneys record of deposits / withdrawls.

    Because you can't seem to see this, and think its something to do with the Xirr calc itself, I can only conclude you don't know how Xirr works.
    Every time you take a payment protect loan HARMONEY credits your account a small amount.

    HARMONEY then adds this balance to your outstanding principal. So you take out a loan for say $1000 with pp, and you will see your outstanding principal increase by say 40. Unfortunately for us this isn't really money.

    So if you are comparing your return against say lending crowd, using XIRR, you've got to at the very least strip off the payment protect part.

  6. #2936
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    Since your not prepared to explain your methods I've not looked very hard at them...

    Nothing you're saying is new. The topic of the influence of Payment Protect has been covered before. Simply removing it from calculations will result in undervaluing as it has a positive return due to interest gained. I think everyone is very aware that the Harmoney RAR value is very different from XIRR (no matter how you calculate it).

    Accrued income has very little impact on a portfolio with even a little maturity and in my view is completely pointless to consider in the big picture of the investment.

  7. #2937
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    Quote Originally Posted by myles View Post
    Since your not prepared to explain your methods I've not looked very hard at them...

    Nothing you're saying is new. The topic of the influence of Payment Protect has been covered before. Simply removing it from calculations will result in undervaluing as it has a positive return due to interest gained. I think everyone is very aware that the Harmoney RAR value is very different from XIRR (no matter how you calculate it).

    Accrued income has very little impact on a portfolio with even a little maturity and in my view is completely pointless to consider in the big picture of the investment.
    Have been trying to....

    The method I am using to value Payment protect, is earning out the "unearned principal" over the life of the loan

    accrued income is more of a technicality - but extremely important for anyone with a portfolio less then half a year old

    Removing Withholding tax enables a comparison against RAR.. And just better form in general, as everyone has different withholding tax rates.

    **** Be aware though - In the spreadsheet I've included formula for withdrawals, and defaults ... I've never had either, so don't know how harmoney output this data on the extract
    Last edited by leesal; 17-01-2018 at 11:32 AM.

  8. #2938
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    Quote Originally Posted by leesal View Post
    accrued income is ... extremely important for anyone with a portfolio less then half a year old
    Agreed. It is quite important in growing portfolios of over a year maturity too, regardless of the platform ...

    However, myles is right that in mature portfolios (ie, maybe reinvesting returns, but not investing substantial new capital) accrued capital diminishes in importance with portfolio age.

  9. #2939
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    Quote Originally Posted by beacon View Post
    accrued capital diminishes in importance with portfolio age.
    That should read accrued INCOME diminishes ...

  10. #2940
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    Quote Originally Posted by alistar_mid View Post
    Post tax bumps up your return. Harmoney automatically deducts their fees and then pays tax on your behalf. But their fees are tax deductible so they have effectively made you pay more tax than you should have. You then have to claim this back + claiming defaults as bad debts if you feel inclined (jury is out on that), so your post tax return is certainly more than your pre tax.
    Indeed. An important factor, tax is... Advantage investors on lower tax rates, at the moment... even without compounding ...

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