Whoops! Good point
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I have also increased notes per loan to finally get cash down to about 3% and seem to be treading water with autolend and a few manual purchases. I was on the verge of removing cash. If i can get decent diversification at the new level I will up it again to try and get some growth.
The problem though is that the minute you increase exposure per loan you decrease diversification. Those of you having read my previous posts will know that I started out investing up to $1,000 per loan (for A). I refuse to alter my criteria to take more risk in a climate where, despite low interest rates forecast to remain for many more months/years, the headwinds facing our and global economies are growing. Consequently my Harmoney portfolio has dropped from $121k in January to $79k today. That isn't a function of other retailers taking more exposure, but that the quality of the offering has fallen.
I've been able to stay 'afloat' with a little over $120K, investing mostly 8 notes ($200) per loan in the B3-E5 range, taking only loans that I consider 'good' (all manual). Cash available floats in the range of $0 - $2,500. Have to keep on top of it though. Still in excess of 1000 loans, so diversification is still good.
Just for interest - this is what I calculate the return of my current loans as:
Attachment 10589
Could be worthwhile taking some below D5?
My distribution:
Attachment 10590
My thinking was that my returns were higher than retail with just A-D so adding greater risk wasn't worth it. When they did the big rate cut I stopped doing the lower A's but have since crept back a little rather than have cash. I should revisit. Dreaded tax returns first though!
I'm fine with it, I'm at about $60k now, another $40k in blocks of $400 is still 100 loans.
And its the relative return to the risk free rate (ie maybe a bond fund at 4%), there maybe headwinds coming but I'm still getting 12%, this has to catastrophically drop to around 4% for me to lose out
I'm probably just going to "cycle" money in, then have it auto withdraw over time and take exposure back down to $50k from $100k, sending the weekly proceeds into index funds.
[QUOTE=alistar_mid; this has to catastrophically drop to around 4% for me to lose out.[/QUOTE]
No argument on that score Alistair. Personally, I'm processing a complete review of all my investment strategies and haven't yet got comfortable with changing the criteria for Harmoney, not helped by the size of loans I am seeing on the dashboard.
My Harmoney lending experience and withdrawal proportions to date exactly mirror yours BJ1, although I also invested in riskier grades. I refuse to relax my lending criteria or increase the number of notes/loan to compensate for the fall in loan quality and quantity, as risk rises for me without a commensurate rise in return. So, I'm gradually taking my money off the Harmoney table. Absolutely disgusted with Harmoney unashamedly continuing to flaunt the P2P spirit by filling wholesalers over retail peers, and FMA turning a blind eye to it.
Sent some funds Zagga's way, due to loans being secured there, but they lack consolidated lender-friendly reporting and their interest repayments are haphazard at best. Might give them a miss too, if things don't change soon.
Hi Myles
What is your current (Harmoney's) RAR?
The account I run for some family members with about 1800 current/active loans, has the following distribution and RAR.
However, as this newish account had just invested for 18 months, I am wary that it had not felt the effects of charge-off yet, and that is why the RAR is still high.
Can you quantify the fall in loan quality? - do you mean the distribution has moved to more riskier grades, or they don't "look" as good, or your defaults are up?
The return is actually better now too compared to the risk free rate in the market... thats why more and more institutionals are getting in on it.
Also, like I have said, I have no problems getting my capital deployed. So not sure what your'e "disgusted" about.
I have already elaborated in recent past posts Alistair, about Harmoney loan "quality" and "quantity" issues, as well as reasons for my "disgust" with Harmoney, so I won't regurgitate them again, as I have no axe to grind against them. You are welcome to refer back in the forum about various posts about them by various members.
OCR cut has made all existing debt more valuable, and that includes Harmoney loans - but OCR cut signifies rising headwinds, and merits increased caution in capital allocation. I choose to act accordingly.
I would rather not speculate on why institutionals are getting in on Harmoney, but am happy for you that you have successfully improvised to keep your capital in the play. Best of luck! :)
RAR is currently 15.87%. It bounces around a little, but has been stable for more than 10 months +/- 0.2%.
Attachment 10596
Note: the bulk of the investment was done quickly so RAR stabilised relatively quickly as well.
Anybody else getting the red "Not you but us" message all the time this morning ? (ie not the normal every so often)