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28-09-2017, 12:18 AM
#2751
Member
Originally Posted by RMJH
Yeah but, the variability of returns (ie risk) goes up as the grade increases. An expected return of 15% on a D grade is better than 15% on a E grade, you need a higher return to compensate for the higher risk.
I think this highlights one point that doesn't get much discussion. When the economy performs worse, I expect there to be more defaults. One could argue that the default rates used now are from a fairly good economic environment. What will happen to the default rates when the economy turns down? No change? Double? Triple? Does Harmoney have any experience in those circumstances? At that point I'd rather have a loan being paid anything, even an A1 getting 5%, than a loan written-off.
Last edited by kiwi_on_OE; 28-09-2017 at 12:20 AM.
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28-09-2017, 12:51 AM
#2752
yeah, nah
There has been a fair bit of discussion around this if you go back aways - details of what happened overseas is included, the suggested outcome was that P2P fared better than most other investment options in a downturn. P2P had only just begun when things went to custard, so if/when it happens again there will be more to learn I think.
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28-09-2017, 11:02 AM
#2753
Investor
Originally Posted by myles
There has been a fair bit of discussion around this if you go back aways - details of what happened overseas is included, the suggested outcome was that P2P fared better than most other investment options in a downturn. P2P had only just begun when things went to custard, so if/when it happens again there will be more to learn I think.
Here's a link to the data on it - lending club's loan performance from 2007-2009 https://cdn4.ijstatic.com/wp-content...erformance.png
Every grade still made a positive return.
As long as you are well diversified (have 200+ loans, hopefully a lot more if you have a significant amount of capital invested) you should be fine.
Last edited by Investor; 28-09-2017 at 11:03 AM.
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28-09-2017, 09:07 PM
#2754
Member
First Principal Waived for payment protect
got my first principal waived for payment protect. Lost a small amount of $1.42 to principal waived. Overall still satisfied with Payment Protect as I reckon it will increase my total returns by another 1% to 1.5%, assuming that this is not the start of a wave of "principal waived" to come.
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29-09-2017, 08:39 AM
#2755
Member
Originally Posted by Investor
Here's a link to the data on it - lending club's loan performance from 2007-2009 https://cdn4.ijstatic.com/wp-content...erformance.png
Every grade still made a positive return.
As long as you are well diversified (have 200+ loans, hopefully a lot more if you have a significant amount of capital invested) you should be fine.
Interesting though that the lowest interest rate loans gave the highest return (just)! Still think that there is a little too much focus here on chasing highest return. We are in a period of very low write-offs but that could change. I just got a warning from ZOPA to expect lower returns as writeoffs have been historically low in the last few years but are on the turn. That relates the the UK of course.
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29-09-2017, 01:10 PM
#2756
Member
Originally Posted by RMJH
Interesting though that the lowest interest rate loans gave the highest return (just)! Still think that there is a little too much focus here on chasing highest return. We are in a period of very low write-offs but that could change. I just got a warning from ZOPA to expect lower returns as writeoffs have been historically low in the last few years but are on the turn. That relates the the UK of course.
Agreed. I've stopped taking anything riskier than a D2 and I'm being more discerning about all loans. Consequently I'm struggling to get all the money out when putting only $75 in per loan and constantly have about $1000 in the kitty (out of $75k invested). My average nett return is 8.2%pa over 1.75 years, including the 3 months it took me to get all the money invested. This is after write-offs, Harmoney fees and tax. Hopefully I'll be able to maintain it, but it's already trending down from almost 17% gross as the best month to 15% now (figures reported by Harmoney).
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29-09-2017, 04:08 PM
#2757
Investor
Originally Posted by RMJH
Interesting though that the lowest interest rate loans gave the highest return (just)! Still think that there is a little too much focus here on chasing highest return. We are in a period of very low write-offs but that could change. I just got a warning from ZOPA to expect lower returns as writeoffs have been historically low in the last few years but are on the turn. That relates the the UK of course.
You may be correct. I personally stayed away from the higher interest grades as I didn't want to lend money at loan shark rates. My RAR is only 11.80%, now I'm only investing in C1-C5 and am hoping to eventually get my RAR up to over 13%
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03-10-2017, 09:16 AM
#2758
Member
Anyone else noticed that Harmoney's gone very quiet? Not many loans coming through ATM.
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03-10-2017, 01:38 PM
#2759
Member
Originally Posted by joker
Anyone else noticed that Harmoney's gone very quiet? Not many loans coming through ATM.
Plenty of advertising on tv but nothing happening on the platform for me last 3 days ?????
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03-10-2017, 01:42 PM
#2760
Member
Interest $13,352
Charged-off $2,158
Recoveries $7
I accept there are going to be lots of charged off loans, but I thought I had read somewhere (probably about 2 years ago when I started investing) that loans were charged off when there was only a 30% chance of collection. Surely that would mean that there should be a constant trickle of recoveries coming in and I could expect, over time, 30% to be recovered. Overall I have no complaints about the return on investment, but I do wonder whether there could be a little more effort in collections after loans have been charged off to enhance returns further.
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