Your outstanding principal for pretax XIRR should be 72,731.85 + 292.83 + 5990.63 = 79015.31
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Coolbear.
You certainly must have a solid grasp of systems and s/s, and seen the evolution. Back in those days the data must have taken up a truckload of 5.25" floppy's!
You're right, it is a brute force method. Which is fine with my data, and necessary for me to learn the transaction flow of PP :)
I've now swapped to a one pager... The closing position with heuristic adjustments. It maps out at 13.66%, close enough to 13.79% XIRR generated from working full transactional data. Which am pleased with. Have attached.
Re your friend.. Will be interested to see how he tracks on 1.5 with a portfolio that size. In using XIRR I'd adjust in accrued income (say $60,000 x 15/365 x 20% x (100% - 15%) = $420... But I gather you already know where it'll track.
One question I have you mention you hope the difference grows to 1.5%. When you strip the PP out of your actual portfolio, are you taking off the 4% odd premium pp principal, and estimating the return this provides over and above your baseline? Or something else?
Attachment 9420
Yes, those days a 20Mb (not Gb) hard disk was the state of the art for a PC.
The statement that I hope the effect of PP on my investment will hopefully grow near to 1.5% from the present 1% - is just that the effect of all my loans before the PP era will become a smaller percentage of the total as time goes by.
When I calculate my XIRR without the PP, I simply take the difference between "Borrower Principal Amount" and "Loan Investments (funded)" as the PP amount. I know that this is overestimating the PP amount as part of that difference had already been realised from fully and partially paid PP loans. I do not add any accrued income for PP. Mine is just a simple calculation to give me an idea of where I am going. I do not need it to be that accurate. After all, the difference in my calculations for XIRR with and without PP is just 1% at the moment. Refining it will just result in a slightly more accurate figure that is within that 1% range.
166 is a statistically significant sample size, so have faith in your numbers.
And don't flog yourself buddy. You've done well with E's compared to the Harmoney universe of E's, which are currently at 11.25% default rate approx (they were approx 0.5% less = 10.75% ish, a couple of months ago)
Thanks Coolbear. That does make a lot of sense. Its good to see we are on the same page, its easy to get confused about PP and what makes it up. (FYI I refer to difference between "borrower principal" and "loan investment (funded)" as "payment protect unfunded".
I find it interesting to look at PP, and break it down. If you take a typical loan say 15% over 36 months - going the full term with PP (say $1.13 on a $25 loan) you get:
1- your base return from the loan itself
2- 0.8% return from the interest element on the PP principal
3- 2.9% return from the "payment protect unfunded"
But if the average PP get 40% through (14 months), before defaulting or repaying early:
- return from payment protect unfunded (3) drops to 1.8%.
Thus ann return% on unfunded in (3), depends on policy length - presumably due to principal repayments increasing as the loan approaches maturity.
Based purely on the difference between XIRR with (3) loaded up front and (3) stripped. You should be able to achieve a 1.5% at somewhere near 30%+ PP. But the true uplift from PP (3) will be on the lower end unless you can somehow get most of your loans through to completion.
well when I stated I have 166 E's, that was when I had the max invested, ie my outstanding principle was the highest.
I have now had 207 E's over the course of my investing in harmoney. Some of those are still active, some have been paid off already, and about 10.14% have been written off (I downloaded the csv as per yesterday E writes offs increased from 8.8% - the 9% i quoted, to 10.14%).
So 10.14% of all the E's I have invested in (not current, have invested) have been written off.
Of all the loans I have that have been written off, E's make up 48.84%, despite being 11.81% of what I have invested in.