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Thread: Harmoney

  1. #2111
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    Hi Brut,
    Diversify by only investing 1 note per loan. I would try and have at least 200+ notes across seperate loans. Log in regularly as many loans are repaid/rewritten early and or setup auto investment. This helps minimise the amount of money sitting idle in your account. I personally now avoid the grade A, E and F loans due to my risk/return preferences. and expect to get write offs.

  2. #2112
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    Quote Originally Posted by Brut View Post
    Hi, I have just signed up with Harmoney & just about to deposit some spare funds to invest. Just dipping my toes in at this stage but is anyone able to give advice to a newbie?

    Cheers
    Diversify within each grade you choose to invest. Don't be fooled into trying just a few of the riskier grades as it is very much a case of safety in numbers. The higher the risk the more you should diversify so say at least 100 for A's but more like 300 for E's and F's. I have found sticking to A to D gives me a return of 14% which is slightly better than the whole platform so I don't see any benefit of going with E's and F's. I also filter out business loans and any over $35k. Using auto invest is much easier and almost essential to build a portfolio now. Good luck!

  3. #2113
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    Quote Originally Posted by Brut View Post
    Hi, I have just signed up with Harmoney & just about to deposit some spare funds to invest. Just dipping my toes in at this stage but is anyone able to give advice to a newbie?

    Cheers
    not much to say other than never count your money at the table, until the dealings done.

    and yeah you have to log in a lot to pick up new loans

  4. #2114
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    Quote Originally Posted by Brut View Post
    Hi, I have just signed up with Harmoney & just about to deposit some spare funds to invest. Just dipping my toes in at this stage but is anyone able to give advice to a newbie?

    Cheers
    Look at the interest-default graph posted by Myles on 20 April. It gives a good pointer for where the optimum net returns are, if defaults in your portfolio align with Harmoney's expectations. Be prepared for defaults to align to expectations and don't be emotional about them - this is a business. Personally, $25 a loan is too small and the only way it makes sense is to just play percentages - in which case you should receive a net return in accordance with Myles' graph - if you want a net return of 16.51% then you can always invest just in C3 loans; or spread equal amounts across B2 to D4

  5. #2115
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    Thanks for taking the time to respond & for the helpful tips, much appreciated!

  6. #2116
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    Quote Originally Posted by myles View Post

    I've significantly changed my Auto-Lend criteria range now based on the below Interest less Default graph:

    Attachment 8804

    Going to try to significantly increase the D's and E's, but there are not that many to pick from, so this will take some time.

    I'm hoping to double up over the next month...
    Its not as simple as that, the chance to default is per year, and each individual loan has an average length of time before it defaults, where you would receive none or some of the interest payments until that point.

    Also when you model what would happen if default rates spiked, the value point shifts from the DEF end to the ABC end.

    I have done extensive modelling on this.. I did find that the sweet point is in the E for the current market conditions, should the economy tank and default rates spike, then you would want more ABC's.

    I do think most A's suck the interest rate is too low and they are often paid back early. Likewise a lot of the F's - 12% expected annual default rate? no thanks Jeff.

    Fwiw this is my distribution, I have 800+ loans, average loan value probably $90 (ie 4 notes most of the time, sometimes 2 or 3)

    hamroney dist april 17.JPG

  7. #2117
    yeah, nah
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    Take some of your points, but I think the graph is a good indicator based on what Harmoney expect/model. (Interest rate is yearly as is default rate, per loan or across all loans). I'd like to know what the average actual loan length is for 36 and 60mth loans.

    If there were a sudden increase in job losses then this would effect default rates across all risk grades, potentially high income earners could be effected more (e.g. IT workers in the past).

    There is a bit of data out there of what happened with Lending Club in and around 2008, p2p in general fared very well.

    My Risk Grades graph is looking more like yours already, and suspect that's about where it will end up. B5 are just to good to pass up and I really need to be across a fair set of ranges to keep up with the turnover.

    What are your thoughts on what would happen to p2p lending if the Housing market took a big hit (lots of noise in Australia at the moment that his might be close, maybe not a tank, but a significant slow drop)? Could it happen here, it would hurt an awful lot of NZ'ers?

  8. #2118
    yeah, nah
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    Two links that might be useful to consider for grade selection:

    http://www.lendingmemo.com/p2p-lendi...n-performance/

    Some of the comments don't actually match the grade block comparison numbers (D's are on top, not A's in 2009). The summary at the end holds a very important point.

    http://www.lendingmemo.com/risk-grad...-club-prosper/

    Risk tolerance isn't the same for everyone...

    [Probably mentioned in there somewhere but if it's not: Small investments are typically much more risky/volatile than larger, diverse investments.]

  9. #2119
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    Quote Originally Posted by myles View Post
    Take some of your points, but I think the graph is a good indicator based on what Harmoney expect/model. (Interest rate is yearly as is default rate, per loan or across all loans). I'd like to know what the average actual loan length is for 36 and 60mth loans.

    If there were a sudden increase in job losses then this would effect default rates across all risk grades, potentially high income earners could be effected more (e.g. IT workers in the past).

    There is a bit of data out there of what happened with Lending Club in and around 2008, p2p in general fared very well.

    My Risk Grades graph is looking more like yours already, and suspect that's about where it will end up. B5 are just to good to pass up and I really need to be across a fair set of ranges to keep up with the turnover.

    What are your thoughts on what would happen to p2p lending if the Housing market took a big hit (lots of noise in Australia at the moment that his might be close, maybe not a tank, but a significant slow drop)? Could it happen here, it would hurt an awful lot of NZ'ers?
    yeah even though i looked into quite a bit I came to the same conclusion you did - that D/E's are the sweet spot

    That lending club article is one that i reference a lot when I explain to people it (harmoney) should be reasonably safe in a recession - it shows whats kinda obvious the higher risk loans are fine when the economy is good and defaults are low, but if conditions where to change and defaults increase then in theory those will go first. Thats why I haven't gone all out on C - F's. I am cutting back on B's, but like you said B5's do represent a lot of value.

    Hmm should the housing market crash?

    I guess then that would coincide with interest rates going up, so people may not be able to afford their mortgages, and would prioritize a mortgage over a p2p debt, so I guess we would see defaults increase.
    For those without ties to the property market who have p2p lending, I guess they would suffer too, housing crash probably = less economic confidence, higher unemployment, some p2p loan holders default

    Overall housing market crash = not good, would probably have a negative effect on p2p lending

  10. #2120
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    Quote Originally Posted by alistar_mid View Post
    ....
    this is my distribution, I have 800+ loans, average loan value probably $90 (ie 4 notes most of the time, sometimes 2 or 3)

    hamroney dist april 17.JPG
    Analyzing your graph, in my experience of 1000+ loans, Your B,C,D proportions are great very similar to mine.

    But I am getting rid of all A,E,F grades over the next few months and place all the repayments into B,C,D so my spread will look B35, C40, D25. B+C=75% B+D=60% C+D=65%. Expect a RAR of about 17%.

    My current default number from 1000+ all time loans is (15) A-D 2/15; E+F 13/15 ouch!!
    Last edited by permutation; 29-04-2017 at 07:57 PM.

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