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Thread: Harmoney

  1. #2926
    yeah, nah
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    Quote Originally Posted by alistar_mid View Post
    Its like you are living in the upside down world from stranger things.
    Love it

  2. #2927
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    Quote Originally Posted by leesal View Post
    Rather then explain what you are doing wrong, it's easier to provide a tool to calculate your actual XIRR.
    I don't look at Harmoney NAR, as it is very limiting as Alistair says. It may help compare poster portfolio performances withing Harmoney, but it is meaningless for comparisons across P2P platforms (more so, after Payment Protect).

    XiRR is a superior measure for cross platform comparisons, but in a growing portfolio the difference between XiRR and other methods like yours, can be remarkable (back of envelope calculations, although I haven't checked your method fully yet).

    You are also right in pointing out leesal, that XiRR does not account for accrued income, but then it is a tool made to measure performance based on actual historical cash movements. So, not an exact tool for what you are trying to achieve.

  3. #2928
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    Inclusion of payment protect inflates not just Harmoney NAR but also XiRR heaps, in growing portfolios. Beware

  4. #2929
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    Quote Originally Posted by leesal View Post
    If your E's are defaulting, I'm completely screwed - 60% DEF in my portfolio.

    Thanks for that example. Unfortunately it confirms to me the knowledge on IRR (or excel XIRR) here is not good. No disrespect. Your figure of 7% is not reliable, and I am 100% certain of it.

    Rather then explain what you are doing wrong, it's easier to provide a tool to calculate your actual XIRR.

    Instructions

    1. Download your transaction statement(s). It should contain everything back to your very first deposit. Copy across your full "transaction history" into cells A to J in chronological order
    2. Drop the formula's in column K:O down (highlighted in green)
    3. In cell R1 - enter an estimate of your mid month outstanding principal - eg if you are downloading transactions to dec17 use the outstanding principal figure as at 15-Dec
    4. In cell R2 - enter your average interest rate (grossed up for PP interest if you like). A rough estimate would probably be fine here.
    5. Cell R3 - enter any additional provision you wish to make for the $ value of outstanding premiums in arrears that you believe will turn into charge-offs. If you don't know what to do here, just enter 0.

    Simple and your XIRR will be displayed in cell R4.

    What this will provide, is a XIRR that is tailored to Harmoney. ie strips out WHT, properly accounts for PP and correctly accrues period income.

    FYI, my XIRR as at 31-Dec is 12.3% (or 14.8% if provision for arrears to default is set to 0).
    lmao, you are not as smart as you seem to think you are.

    Like I said in my earlier post, the only issue is how to handle the outstanding principle. That's the only difference.
    You have some weird way of valuing this, based on the average interest it will get, expected defaults / arrears etc.

    I have just treated is an outgoing payment on the last date. I even said that.

    I would question your knowledge on IRR / XIRR when you can't see the difference is simply down to how the outstanding principle is handled, instead you think its something do to with the calculation itself.

    Also you are only 4 months in (iirc), your loan portfolio is like a new born baby, you will have a low default rate and hence a high RAR / Xirr, wait til its 16 months in like some of ours and those defaults start hitting lol.

  5. #2930
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    Quote Originally Posted by beacon View Post
    I don't look at Harmoney NAR, as it is very limiting as Alistair says. It may help compare poster portfolio performances withing Harmoney, but it is meaningless for comparisons across P2P platforms (more so, after Payment Protect).

    XiRR is a superior measure for cross platform comparisons, but in a growing portfolio the difference between XiRR and other methods like yours, can be remarkable (back of envelope calculations, although I haven't checked your method fully yet).

    You are also right in pointing out leesal, that XiRR does not account for accrued income, but then it is a tool made to measure performance based on actual historical cash movements. So, not an exact tool for what you are trying to achieve.
    Hes essentially doing a basic Xirr calc like anyone could, but trying to forecast out the "true" value of his outstanding principle, which I have found from experience messing around trying to forecast what that might be based on harmoneys reported default stats / interest rates, just doesn't work out, cause suddenly your portfolio gets a year old and defaults blow up lol.

  6. #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; Today at 10:56 AM.

  7. #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.

  8. #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

  9. #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.


  10. #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.

  11. #2936
    yeah, nah
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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.

  12. #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
    Last edited by leesal; Today at 11:27 AM.

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