Harmoney

[myles]

Nice even split CageyB - you should do well with that.

Just out of interest, why have you taken the approach of 36 month loans only?

[CageyB]

Nice even split CageyB - you should do well with that.

Just out of interest, why have you taken the approach of 36 month loans only?

Not a financial reason. I likely will not be in NZ in 5 years, and I'd rather not have overseas accounts lingering on if I move away. I probably would invest a bit more if 5-year loans were also an option. I also suspect that there are more early repayments with the 3-year loans, but I can't confirm that.

[myles]

A RAR update today? Changed from 11.6 to 12.64% and still climbing strongly:

RAR2.png

[alistar_mid]

A RAR update today? Changed from 11.6 to 12.64% and still climbing strongly:

RAR2.png

I think you are going to see it climb as all your loans become "live" and start generating interest, but none of your in arrears loans have progressed enough to be written off.

At least thats what happened to me.

[Cool Bear]

A RAR update today? Changed from 11.6 to 12.64% and still climbing strongly:

RAR2.png

Well done. Your RAR will continue increasing for the first 6 months.. so some way to go yet! After that your charge offs will kick in and it should stablise.
rargraph170703.JPG

[permutation]

Given that RAR is cumulative from day one on the platform, it's very difficult to move it significantly after the first two years. To move it from around 14.1% today to 17% in 12 months needs the average return over the next 12 months, after fees and defaults, to be 22.8% which can't be done without a very heavy weighting to D grade loans....

Your reply to my post: "My return is currently 232 pips above the platform RAR and I expect this to increase to 500-600 pips over the next 12 months to a RAR of 16.5 to 18%"

An update; in just one short month my RAR today is 280 pips above the platform at 14.52%. I am continuing to concentrate my lending into a very narrow grade band range with all the repayments and also new money deposited.

I expect to roar ahead in the coming months. I still have only 3 Defaults in the A_D grade range out of 1220+ loans over 26 months.

[myles]

I think you are going to see it climb as all your loans become "live" and start generating interest, but none of your in arrears loans have progressed enough to be written off.

Yep, will be the same for sure. One of the reasons I've decided to user XIRR and write off loans when the hit the 60 day overdue range - so I have a better 'current value' figure to work with.

...continue increasing for the first 6 months.. so some way to go yet! After that your charge offs will kick in and it should stablise.
rargraph170703.JPG

Thanks for that graph Cool Bear - exactly what I thought it should look like.

[alistar_mid]

Yep, will be the same for sure. One of the reasons I've decided to user XIRR and write off loans when the hit the 60 day overdue range - so I have a better 'current value' figure to work with.

Oh nice thats pretty conservative, you might actually get some of those back.

What do you recon about current economic conditions (ie good) and the returns we get now, given what might happen if the economy goes bad and we get unemployment increasing and more loans defaulting - given you can't exactly take all your money out.

- that's why I am not reinvesting and taking my money out weekly until it hits $50k or a % of my overall portfolio (haven't decided which one yet), because I think with 100k in there it leaves me more exposed than i would like to be.

[myles]

Oh nice thats pretty conservative, you might actually get some of those back.

I'm hoping that in the big picture view, those defaulting loans that do get paid back later will cover the next ones coming through that might not get paid back - once I get a handle on it I'll try to put a 'factor' on it in relation to the Harmoney suggested default rates?

What do you recon about current economic conditions (ie good) and the returns we get now, given what might happen if the economy goes bad and we get unemployment increasing and more loans defaulting - given you can't exactly take all your money out.

Employment seems to be strong at the moment and Tourism is still on the increase so I'm working on the positive side at the moment, unless a Govt. change stuffs that up?

Employment.jpg

My current investment is about 10% for me, I'm considering putting more in, but will test the waters for a bit longer before making that move. Have a small amount (reducing) in LC at the moment, not that impressed with their platform and frequency of loans, but I might go that way with a more conservative approach - not sure if diversifying in another platform is really diversifying...

I think we discussed the historic P2P outcome previously, probably not likely to loose money with P2P Lending in a 'normal' down-turn in the economy, but might drop down to near zero return for a while - I prefer to look at it over the longer term => ride the ups and downs for an overall good return. May be able to take some action to reduce the effect if we see a down-turn coming.

[icyfire]

I think we discussed the historic P2P outcome previously, probably not likely to loose money with P2P Lending in a 'normal' down-turn in the economy, but might drop down to near zero return for a while

If that's the case then I wonder if one would be better off just investing in Smartshares ETFs like MDZ which has had a return of 19.77% over the last 5 years which would be pretty difficult to get on Harmoney. Even if the value of the Smartshares fund went down during a downturn you would still have the shares and the value would recover over time. On the other hand, when your Harmoney loans default during a downturn you lose that money forever.
Also, investing in a passive investment like Smarthares takes ver little time while Harmoney is very time-consuming. Yes, investing in Harmoney can be a fun and exciting game but I do wonder sometimes if the time and risk are worth it in the long run when there are better investment options.