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Thread: Harmoney

  1. #2211
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    Quote Originally Posted by myles View Post
    One thing I'd add to the above is that trying to predict the ups and downs of any market is ALWAYS fraught with risk. Better to look at the long term and 'ride' through the ups and downs. Investing 101 type stuff applies here too I think
    I agree with pretty much everything you have posted - we've come to the same conclusion the sweet spot is E grade loans (you further clarified its grade E5 I believe?), so you would in theory build your portfolio around this to maximise returns.

    One things however that has always nagged me is all the stats harmoney has to determine these default rates - are they from the current and near past economic climate where everything has been good? because if so then the data set all these stats which we model off, is only reflective off good times.

    So keeping this in mind, i have swayed back and forth between having a B-C weighted portfolio, or a more B-C-D-E one like I actually have.

    One thing though you are locked in for 3 or 5 years, but you get about 3% of your capital back every month via natural repayments and loans paid off early, so you do have time to re position your portfolio as you might see the current economic climate changing and potential defaults going up.

    That being said I am happy to be weighted B / C / D / E, for now I have $100k in there, but not gonna re invest any til I am down to $50k, just gonna have it coming out to kinda just test how it goes, only have been in 8 months and don't want to get too carried away too early with it

  2. #2212
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    Quote Originally Posted by alistar_mid View Post
    One thing though you are locked in for 3 or 5 years, but you get about 3% of your capital back every month via natural repayments and loans paid off early, so you do have time to re position your portfolio as you might see the current economic climate changing and potential defaults going up.
    Agree, and from what I've seen of published P2P lending numbers from Overseas, there is a fair lag in changes to the economy and the effects flowing into P2P lending (6 months'ish best guess), giving you a reasonable amount of time to make adjustments.

  3. #2213
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    Quote Originally Posted by alistar_mid View Post
    One things however that has always nagged me is all the stats harmoney has to determine these default rates - are they from the current and near past economic climate where everything has been good? because if so then the data set all these stats which we model off, is only reflective off good times.
    Harmoney label it as a 'Forecast Default Rate' as an annual rate...

    That could mean a lot of different things, but sounds like it is what they expect the default rates to be for the current forecasted year? When/do they update these?

    Probably based off the previous year?

    Finger in the wind I reckon...
    Last edited by myles; 22-05-2017 at 02:32 PM.

  4. #2214
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    Quote Originally Posted by alistar_mid View Post
    I agree with pretty much everything you have posted - we've come to the same conclusion the sweet spot is E grade loans (you further clarified its grade E5 I believe?), so you would in theory build your portfolio around this to maximise returns.
    Maximum expected return does not necessarily mean best return unless volatility (risk) is the same.

  5. #2215
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    Anyone have some advice for some suitable auto lend filters for a newbie/average investor? The number of filters and options within them is pretty overwhelming, as is the size of this thread! (148 pages).

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    Quote Originally Posted by Entrep View Post
    Anyone have some advice for some suitable auto lend filters for a newbie/average investor? The number of filters and options within them is pretty overwhelming, as is the size of this thread! (148 pages).
    Just take a punt at what you would feel comfortable lending to if doing it manually.
    Your personal circumstances dictate how you invest so no one rule fits all. You might as an example have only a small amount you want to invest with p2p in which case spreading minimum $25 across numerous loans could work as compared to $1000 on each.

    If you read each filter option you can think of various outcomes for each.

    Also remember your % funds available balance is important ( read Harmoney website) to determine your ranking on if you successfully get allocated an auto loan. Some weeks the filter picks up lots other very few.

  7. #2217
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    Quote Originally Posted by Entrep View Post
    Anyone have some advice for some suitable auto lend filters for a newbie/average investor? The number of filters and options within them is pretty overwhelming, as is the size of this thread! (148 pages).
    Just my thoughts, others will differ:

    Payment Protect: In theory should help protect both Borrower and Lender, may cause some Tax issues for Lenders. I don't have an issue with it so include it.

    Repayment To Income Ratio: A key indicator of what a Borrower can afford. Less than say 20% I think is a fair setting, but if the income is very high, this could be increased significantly. Also consider what other loans the borrower may have e.g. Mortgage.

    Residential Status: All obvious and something you need to decide. My preference is: Fully Owned, Paying Mortgage and Renting.

    Purpose: Very much a personal choice. Though I've change these a little from what I first thought after seeing some historic numbers from another P2P Lender (Overseas). Apparently Holiday Expenses are much more likely to be repaid than Education Expenses, which goes against what I would have expected. My current Auto-Lend list (not the same as what I use for manual loans) is:
    Business Cash Flow, Clear Overdraft, Dept Consolidation, Holiday Expenses, Home Improvements, Household Items, Medical Expenses, Purchase Boat, Purchase Caravan, Purchase New Vehicle, Purchase Used Vehicle, Wedding Expenses

    Years At Residence: I look for at least some stability and set this at 2 or More, but quiet happily go against this when selecting manual loans.

    Estimated Default Rate: This is were you dial in the risk you are willing to take. It also allows you to pick the Risk Grade you want to be in. Mine are currently set at 0.1% - 4.25%.

    Interest Rate: Really just use this to fine tune your Risk Grades. Mine are currently set at 15.15% - 35.7%, which matches B3 - E3 Risk Grades. With manual loans I may look outside of this range.

    Grade: Too course really, but easy if you just want specific risk grades. For me no real need to set these, only as a fallback if the Risk Grade percentages are changed - B, C, D, E.

    Age Band: Personal preference. For Auto-Lend I prefer not too young and not too close to the grave, so 20-29, 30-39, 40-49, 50-59. But again, I'm happy to go out of these ranges on manual loans depending on other criteria.

    Years At Employer: To me a sign of stability. Mine is currently set at 2 Or More.

    Loan Amount: Each risk grade has a predefined maximum loan amount set by Harmoney, which I'm mostly happy with, however I restrict those loans over $50,500 (i.e. 70K), from my Auto-Lend, just because they sound like a lot (A Grade only anyway)?

    Max Term: I don't have this set, as I'm happy to take 36 or 60 mth term loans. There seems to be quite a few who limit this to 36 mth loans, but this reduces the number of loans that can be picked up to around 20% (i.e. 80% of loans are 60 mth loans). On paper, you should actually get a slightly better return on a larger loan, but this is debatable I guess. Note that Harmoney have suggested that around 3% of loans are paid out early per month, so quite a few loans don't go to full term - something to consider when making this choice.

    Other options, that I don't bother with, but should be obvious:
    * You've already invested in
    * Time remaining
    * Amount funded
    * Application Type

    Two other points that I've found from reading about other P2P lenders is that a borrower who has had a previous loan with some payments and/or a joint loan, is a very good indicator that the borrower will not default (no guarantee obviously).

    Some take into account the borrowers description, to the point of whether they can spell or not, to me this is a bit of a furphy as I know quite a few people who are quite capable of paying of a loan, who can't spell for *&%#!
    Last edited by myles; 23-05-2017 at 11:20 AM.

  8. #2218
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    Thanks both and especially Myles, that is very helpful! One last thing - if I wanted to get say $20K invested into the platform fairly quickly (say over the course of a month or two), and used similar auto-lending like you have above - is that realistic without being completely reckless? How many notes would you go for each loan? OR, do most people set up some sort of direct debit system so that they don't have too much sitting idle in Harmoney's system?

    I have to say that Harmoney's system seems a lot more complex. Squirrel there is zero loan flow so I have stopped even checking that. LendingCrowd I am having great success getting funds invested (about $5K per week at about $500 per loan).

  9. #2219
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    Quote Originally Posted by Entrep View Post
    Thanks both and especially Myles, that is very helpful! One last thing - if I wanted to get say $20K invested into the platform fairly quickly (say over the course of a month or two), and used similar auto-lending like you have above - is that realistic without being completely reckless? How many notes would you go for each loan? OR, do most people set up some sort of direct debit system so that they don't have too much sitting idle in Harmoney's system?

    I have to say that Harmoney's system seems a lot more complex. Squirrel there is zero loan flow so I have stopped even checking that. LendingCrowd I am having great success getting funds invested (about $5K per week at about $500 per loan).
    Depends on the grade. If only A's then 100 probably enough (as a minimum) but for F's you might want 300. IMO best to treat each grade seperately and diversify within each grade.

  10. #2220
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    Quote Originally Posted by Entrep View Post
    if I wanted to get say $20K invested into the platform fairly quickly (say over the course of a month or two), and used similar auto-lending like you have above - is that realistic without being completely reckless?
    Yes, with the way Auto-Lend is working at the moment. I've picked up 190 Auto-Lend loans in the last 2 months. Though I've made a few Auto-Lend adjustments along the way. If you have the time, I'd suggest you check in for manual loans at the following times:
    9am and 10am
    Midday - 1pm
    4pm - 5pm
    8pm - 10pm

    These times are unpredictable, but my 'feeling' is that these are when I'm seeing most loans appear in 'lumps'.

    Quote Originally Posted by Entrep View Post
    How many notes would you go for each loan?
    I'm happy with 4 notes per loan now ($100), very occasionally I'll pick up a loan with 8 notes or 2 notes if they look really good or a bit dodgy. I wouldn't suggest you pick up any more, at the current rate of loans this should give you a very good spread of loans so the effects of individual defaults are less painful. (they will still happen, expect this)

    Quote Originally Posted by Entrep View Post
    OR, do most people set up some sort of direct debit system so that they don't have too much sitting idle in Harmoney's system?
    If you are investing quickly, put it in, in large chunks. Having a larger amount available to invest (Funds Available) influences the amount of Auto-Lend loans you pick up (Auto-Lend favours a higher Funds Available to Outstanding Principal ratio). If you are only looking at 2 months, you're not going to lose much in interest (or whatever), probably best to split it in two and top-up at the end of the first month or when it runs low.

    Quote Originally Posted by Entrep View Post
    I have to say that Harmoney's system seems a lot more complex.
    I'd call it more flexible and user driven - I find it much better

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