Harmoney

[icyfire]

A couple of additional thoughts on this, this morning. 13.8% per year is equivalent to 19.7 compounding interest over 5 years. You will pay capital gains tax on the sale of the shares in NZ? So I think the comparison would be back into the high B or C1 grade loans?]

Are you excluding the compounding interest you earn on Harmoney? There is no capital gains tax on selling shares in NZ.

You wouldn't want to put all of your money into one Smartshare (even though it is a mixed portfolio) - so you would want to diversify into others that would not have such a good return. [Some of the mix would be hit hard in a down turn].

When you invest in a Smartshares ETF your money is split across all the underlying companies that make up that ETF. If one company in the fund goes down another company takes its place in the fund. For example, this list shows all the companies that make up the NZ Mid Cap (MDZ) fund which means that your investment is highly diversified.

In a downturn shares will likely run at a significant lose, a good mix of P2P loans may not. Historically P2P performed better in the last down turn.

If the shares go down in a downturn then people start losing their jobs too. P2P in NZ has never been through a downturn so it's unknown how it will perform.

My thoughts only, others will likely see it differently. [N.B. I watch 200K disappear in shares in and around 2008, but gained it all back, but not by simply holding the same shares...]

Picking individual shares is risky. Investing in ETFs is a much safer bet.

[alistar_mid]

Picking individual shares is risky. Investing in ETFs is a much safer bet.

Less variance, over a large sample size would be interesting to see which has higher ROI.

I have had awesome picks like Scales, Tower at 72c, FPH, Airwork, Summerset, Genesis @ IPO etc

But then dogs like Orion health, Warehouse, Xero (although its making a comeback)... and then my biggest monumental loss - slater and gordon, I kept buying as it was dropping...

[icyfire]

I like Warren Buffett's quote on this article "you do not want to ever get the impression that you can pick stocks" and that "can enable you to have an edge. It just doesn't work that way."
Picking loans on Harmoney is pretty much the same as picking individual shares.

I still think that investing in local and international index funds via Smartshares would produce a higher net return in the long term (5 - 10 years) than investing in Harmoney loans considering Harmoney's high fees, time-consuming process and risk.

[alistar_mid]

I like Warren Buffett's quote on this article "you do not want to ever get the impression that you can pick stocks" and that "can enable you to have an edge. It just doesn't work that way."
Picking loans on Harmoney is pretty much the same as picking individual shares.

I still think that investing in local and international index funds via Smartshares would produce a higher net return in the long term (5 - 10 years) than investing in Harmoney loans considering Harmoney's high fees, time-consuming process and risk.

I don't pick loans in harmoney, I have 1200+ loans, so I effectively buy the index lol - the index of B - E loans.

[icyfire]

I don't pick loans in harmoney, I have 1200+ loans, so I effectively buy the index lol - the index of B - E loans.

Are you investing in all B - E loans?

[alistar_mid]

Are you investing in all B - E loans?

Was investing, am on auto withdrawal now until i get back to a safer level cause I had just over $100k in at one point.

But yeah was investing in everything but the overly safest B loans, and the overly unsafe E loans - I think anything above a 5% default rate I ignored. My split is detailed in earlier posts.

[myles]

Are you excluding the compounding interest you earn on Harmoney?

No? The average yearly interest (each year) to get 19.7% compounded is 13.8% - i.e. this is what you need to get with Harmoney (after fees and tax) to match your 19.7% compounded over 5 years.

If one company in the fund goes down another company takes its place in the fund.

The point is, in a down turn it won't be just one company. The return of your shares will likely turn negative for at least a year or two - this is what happened in 2008 to many, many, many funds. Unlike P2P Lending - if you review what happened overseas - would it be any different here?

Picking individual shares is risky. Investing in ETFs is a much safer bet.

The 200K loss was over more than 100 different shares and various managed funds - significantly more diversified than the Smartshare you refer too. The Smartshares are made up of individual shares... You sound like you think it is a sure thing, even in a down turn - I can assure you it is not.

On tax - that depends on how and what you trade in - accountant required.