I’ve written before about why I don’t think Harmoney is a great way to invest. So it was great news this week when I received an email from Harmoney stating they’re discontinuing lending from “retail lenders”.
I had to go to the FAQ to find out exactly what they mean by “retail lenders”, but it turns out they’re referring to little fellas like you and me. So essentially, Harmoney is no longer a P2P lending platform. It’s just another way for you to borrow money financed by a bank, if they bank refused to give it to you directly.
To be clear, I’m glad this change is happening but it only benefits one party: the lenders. Investors like you and I are much better off sticking our hard-earned cash in more liquid investments like index funds. The only illiquid investment that is essential to have in your portfolio in this country is KiwiSaver.
The chumps who are the borrowers on the Harmoney platform (I don’t mean to be rude, but this is clearly how Harmoney and banks/finance institutions view these people) will continue to be screwed over. The reason these people are going to Harmoney in the first place is because their bank is turning them down for finance. So they go to Harmoney to get money for something they may or may not need, and without P2P lending where is the money coming from? That’s right. The banks. But at a higher interest rate than banks can get away with lending to people at directly, because that would be terrible PR.
We still have a very small amount of money invested in Harmoney, as you’ve probably seen in our net worth reports. We’ve been winding it down for some time and as of August next year the last two loans will be paid off. Now every other P2P investor in the platform is being forced to wind down their loans too and I view that as an extremely positive thing.
Comment Policy: For this blog, I’ve implemented a Comment with Kindness policy. You can read more about it here, but the gist of it is: Follow what I call the “Grandma Rule”. If you wouldn’t take that tone with your grandma, your comment probably won’t make it through moderation.