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Thread: Harmoney

  1. #2721
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    Quote Originally Posted by myles View Post
    The calculations of RAR and XIRR are quite different?
    Yes, the calculations are different but in theory, they should yield the same results as both are based on actual cash flows. The difference will be due to Harmoney not taking into account cash sitting in our account and also when we do our own XIRR, it is after tax. Even if we add back tax, the result will be different as timing of payments is very important in the calculations (time value of money).

    I think HM's RAR is quite reliable. As to why some of the investors here have RAR dropping, it can be explain - can be quite a few things, they have taken up a lot of loans recently and the interest have not been received yet, or their arrears have grown (again interest not received yet), or HM had a backlog of processing payments by borrowers (I notice that they do it in spurts), or the effect of the lower interest on the new loans since mid August.

    As for BJ1 post, I am not able to think how that 130% (3 unique loans) can be achieved so must be a mistake or .... The others can be due to timing. Eg. the high losses, if you lose all your money in 6 months, your RAR is -200% (annualised)

  2. #2722
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    RAR still doesn't account for Payment Protect and the timing is very problematic. My current XIRR is 17.38% (which includes tax deductions), my current supplied RAR is 16.67% (which does not include tax deductions). I know which one is the more accurate/reliable figure for me RAR is a semi useful comparative value, but for me, that is all it is.

  3. #2723
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    Default 6 Months in: $100K

    6 months in ($100K added, no withdrawals):

    Total Loans: 1292
    Overall Avg: $91.87
    Paid Off: 98 7.59%
    Arrears: $73.60
    1-30 11 0.85%
    31-60 15 1.16%
    61-90 5 0.39%
    Charged Off: 2 0.15% (C5, D4) $155.77

    The paid off value has doubled from the last month, which is most likely due to smarter borrowers rewriting loans to access better interest rates? Certainly not the landslide some thought might happen.

    The 31-60 and 61-90 arrears values have increased, so I'm no doubt going to get a few more defaults drift through, but overall not looking too bad at this stage.

    No E grade defaults is interesting since they represent around 15% of loans?

    Total value increase (after tax and fees): $6,518.73

    XIRR.png
    XIRR value is after tax and fees.
    ADXIRR = XIRR less total value of arrears 31-60 days or above.

    Investment is returning $46.38 per day.

    Gain.png
    Nice consistent 'gain' graph.

    Won't continue posting these monthly - maybe every 2 months...

  4. #2724
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    Quote Originally Posted by alistar_mid View Post
    https://www.youtube.com/watch?v=l1dnqKGuezo

    damn, I'm in for just over $100k but been in 12 months, went from $1,200 in losses to $1,700 in 2 weeks

    What grade are most of your losses btw?
    Most losses are in E and F. I stopped investing in those grades a while ago, but there were plenty of loans in those grades.
    The spread is about:
    A = 4% (only invested in A right at the beginning and don't now because I don't want to drag the average down)
    B = 20% (only invest in B5 now as I don't want to drag the average down)
    C = 40%
    D = 23% (don't invest in anything D3 or above now because those are the loans that failed most frequently)
    E = 10%
    F = 3% (haven't put anything in F grade for about 6 months; it was twice this)


    Quote Originally Posted by whitt View Post
    and 15.07% rar too
    Not sure why you would withdraw funds to move with LC when you already get good results.
    Harmoney also has auto invest options

    why npt invest in both isntead
    I've got $77k in Harmoney and $19k in LC. I'm aiming to level them out a bit to spread the risk. I only invest in B1 and B2 in LC, but it's tricky to get into the loans because they go really quickly. I put $150 in each one. No losses so far. I do have a few A-grade loans from right at the beginning dragging the average down.

    I'm actually thinking of pulling more money out in the medium term (e.g. next 12 months) because people are starting to hate property which means there will be some deals.

    Re the other post about investment split, I don't have Lego, but I do have a 1985 Skyway Streetbeat BMX in condition 9.5/10 worth about $3k Those things are rare in mint condition. I'm looking for old synthesizers, but I think I've missed the boat on that one. Plus, I have a couple of ounces of gold. I did have 80kg of silver but sold that once it had peaked and was on its way down. That paid off my mortgage.

  5. #2725
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    Just a thought on the difference between the supplied RAR and XIRR - RAR is calculated at loan level whilst XIRR is typically calculated at investment (overall) level. This difference is significant in that XIRR is an indicator of return on your initial investment, whilst RAR is an indicator of average return of all loans. The difference might not be clear and is a little difficult to explain.


    If you are reinvesting returns, then the RAR calculation doesn't see the reinvestment in the same way as the XIRR calculation does. Any reinvestment is seen as an overall gain by the XIRR calculation, i.e. the total value of the investment increases for that time period. RAR just sees reinvestment as an additional loan with a return that gets averaged with the rest of the loans.


    So RAR is an indicator of loan returns whilst XIRR is an indicator of investment return.


    I don't know if that makes sense or not?

  6. #2726
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    Quote Originally Posted by myles View Post
    Just a thought on the difference between the supplied RAR and XIRR - RAR is calculated at loan level whilst XIRR is typically calculated at investment (overall) level. This difference is significant in that XIRR is an indicator of return on your initial investment, whilst RAR is an indicator of average return of all loans. The difference might not be clear and is a little difficult to explain.


    If you are reinvesting returns, then the RAR calculation doesn't see the reinvestment in the same way as the XIRR calculation does. Any reinvestment is seen as an overall gain by the XIRR calculation, i.e. the total value of the investment increases for that time period. RAR just sees reinvestment as an additional loan with a return that gets averaged with the rest of the loans.


    So RAR is an indicator of loan returns whilst XIRR is an indicator of investment return.


    I don't know if that makes sense or not?
    Yes, makes perfect sense. I still think that if both are calculated correctly, then the end result should be similar. I wonder if Harmoney correctly takes a weighted average of the individual RAR for each loan in calculating our RAR or just a simple average which will give an incorrect result. A simple average will only yield a correct result for those investors who invest the same number of notes into all their loans.

    I suspect our RAR is a simple average.

    On second thoughts, RAR does not take into account time value of money as completely as XIRR. For example: say you lent $1000 at 20%. At the end of 1 year, you get $200 interest. Based on HM's formula, your RAR is the same at that one year point in time whether your interest was received monthly on time or just at the end of the 12 months. AND if the borrow decides to pay off half the loan early, the RAR also do not take into account the time value of the early repayment.

    So you are right!! RAR is definitely not XIRR.
    Last edited by Cool Bear; 21-09-2017 at 09:51 AM.

  7. #2727
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    Quote Originally Posted by Cool Bear View Post
    Yes, I wonder if there is any investor here who had been in for more than 24 months and with a RAR of 15+%
    I stuck a toe in in February 2015, laughably tentatively, waiting until that November before deciding their platform worked well enough to start growing it a bit. Actually the platform was a bit rough back then, with some very peculiar discrepancies in the dashboard, but they always sorted themselves out eventually and I looked at the few cents of fees they were getting from me, and didn't complain.

    Even now my pile is a fifth of what some of you chap(ette)s have on the table so perhaps I do not qualify as someone who has been in it, really, for 24 months. I had so few loans back then that my RAR graph is a seismograph, good only for laughs. With the increasing number of loans it has stabilised, and since March this year (when either I grew a brain, or the Christmas defaults slowed, or both), is has been rising steadily, now around 15.5%.

    I attribute the improvement to bonehead investing decisions that kept it low earlier on. Pretty confident about that. Less confident about attributing the decent RAR nowadays: maybe to being really picky.

    Is 15% that good, though? There are plenty of investors on the RAR by loan count chart over 15%. As far as I can see: I can't find the high-res version of that atm.

  8. #2728
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    Quote Originally Posted by AndrewD View Post
    ]or the Christmas defaults slowed
    Timely reminder, for those that believe - from October through to January would be a good time to be more 'picky' on loans to lower the likely default rate post Christmas.

    15% is good long term - average retail is running at 13.2%, so that means there are a lot doing much worse.

  9. #2729
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    Quote Originally Posted by AndrewD View Post
    I stuck a toe in in February 2015, laughably tentatively, waiting until that November before deciding their platform worked well enough to start growing it a bit. Actually the platform was a bit rough back then, with some very peculiar discrepancies in the dashboard, but they always sorted themselves out eventually and I looked at the few cents of fees they were getting from me, and didn't complain.

    Even now my pile is a fifth of what some of you chap(ette)s have on the table so perhaps I do not qualify as someone who has been in it, really, for 24 months. I had so few loans back then that my RAR graph is a seismograph, good only for laughs. With the increasing number of loans it has stabilised, and since March this year (when either I grew a brain, or the Christmas defaults slowed, or both), is has been rising steadily, now around 15.5%.

    I attribute the improvement to bonehead investing decisions that kept it low earlier on. Pretty confident about that. Less confident about attributing the decent RAR nowadays: maybe to being really picky.

    Is 15% that good, though? There are plenty of investors on the RAR by loan count chart over 15%. As far as I can see: I can't find the high-res version of that atm.
    Yes, despite all the shortcomings of the RAR, anyone with over 15% RAR after 24 months is doing very well indeed!! Will beat a lot of other investments too including many in the share and housing markets.

  10. #2730
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    Quote Originally Posted by darrenc View Post
    Most losses are in E and F. I stopped investing in those grades a while ago, but there were plenty of loans in those grades.
    The spread is about:
    A = 4% (only invested in A right at the beginning and don't now because I don't want to drag the average down)
    B = 20% (only invest in B5 now as I don't want to drag the average down)
    C = 40%
    D = 23% (don't invest in anything D3 or above now because those are the loans that failed most frequently)
    E = 10%
    F = 3% (haven't put anything in F grade for about 6 months; it was twice this)




    I've got $77k in Harmoney and $19k in LC. I'm aiming to level them out a bit to spread the risk. I only invest in B1 and B2 in LC, but it's tricky to get into the loans because they go really quickly. I put $150 in each one. No losses so far. I do have a few A-grade loans from right at the beginning dragging the average down.

    I'm actually thinking of pulling more money out in the medium term (e.g. next 12 months) because people are starting to hate property which means there will be some deals.

    Re the other post about investment split, I don't have Lego, but I do have a 1985 Skyway Streetbeat BMX in condition 9.5/10 worth about $3k Those things are rare in mint condition. I'm looking for old synthesizers, but I think I've missed the boat on that one. Plus, I have a couple of ounces of gold. I did have 80kg of silver but sold that once it had peaked and was on its way down. That paid off my mortgage.
    i regards to harmoney, yeah same, most of mine (all but 1 think) have been from grade E&F loans, they looked good with high interest rates and lowish default rates, but they just seem to default too much although in saying tat I haven't looked at detailed ROI on them.

    IN regards to the lego, well its still cool and I like it, but even still buying it as an investment, even if you get like a -30% sale at the wharehouse, by the time you trademe it a few years down the line when that set is discontinued.. and you have to do the auction, then take it to nz post bubble wrap it etc... is it all worth it lol

    Esp when the rest of your portfolio is in the 7 figures and can have pretty decent fluctuations and you are dealing in a $60 lego set you brought for $40 and waited for 2 years and sold for $80 lmao

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