Time for another Lending Club update. As of today my return is 9.96% NAR, $7,383.95 invested, and over $1,220 in interest. I have over 360 active notes. Since my last update, I now have ten charged off loans, five 31-120 days late notes, and two 2-30 day late notes. The defaults have changed my return to from the previous 10.61% NAR reported in January 2012.
Since my last update, I have updated our Lending Club promotions web page. You may want to check them out, if you still are on the fence about joining Lending Club.
Next Steps
With the low interest rates and another five year CD maturing, I plan on adding another $1,000 to my Lending Club Account. I plan on getting to $10,000 total invested with Lending Club as my limit. Once I reach that point I might reinvest the profits, or just let it wind down taking the profits into other investments. Keep in mind my Lending Club account is taxable and taxed as regular income (boo!). As rates are expected to increase next year, my profits will decrease from this. So I may entertain the idea of opening an IRA account to defer taxes. Lending Club and Prosper are definitely not tax efficient.
Since the last summary, I have created a new tracking portfolio within Lending Club. I’m doing this to track changes with my loan selection process and to see if the performance turns out any better. While I’m more than happy with my current returns, I’ve made some new distinctions. From my quantitative analysis of Lending Club data, I have adjusted some filters that should increase my returns. I’m curious if the changes will lead to better returns. So far yes, but it’s way to early to tell. In the past month I’ve had a tough time finding notes that meet my filter requirements, hence why you see a decent amount of cash in my account. I suspect this will change as the previous two months I had no issue finding notes. If anything, I was able to pick the best notes at the same return rate.
Come the end of June, I’ll be with Lending Club for three years. I might end the quarterly updates, as I’ve gone through a full three year lifecycle and documenting my performance.
Readers: Would you like to see my quarterly updates to continue? Would you like to see any topic related to Lending Club discussed that I haven’t done previously?
I personally like these updates as I am prevented from opening an account due to my employment situation…so this provides me with a little bit of voyeuristic joy.
Question – why LendingClub over Prosper (I have a prosper account that is currently dwindling down to zero)?
When I first started, I did not like Prosper’s risk model. They have become more like Lending Club since then. I might consider them in the future.
I, too, have invested in Lending Club, though not to the extent that you have (I only have a few hundred dollars invested). Unfortunately, one of my “A” rated borrowers defaulted, and his loan was just charged off, so I’m looking at ~-19% returns right now. While I understand that this is just a product of the few number of notes I own, it’s definitely discouraging.
Hi Bryan,
How many notes do you have? You need at least 200 to assure a decent positive return. Also as you’ve noted, just because they are “A” rated does not mean they will default. If anything from my experience, I prefer the lower tiers. I think Lending Club’s risk model is slightly wonky.
I’ve been with Lending club for 2.5 years and it’s been doing well. I’m currently at just a tiny bit above 11% with 15k in the game. I’ll share my strategies here, which so far have served me pretty good:
1- I made sure to have enough money in the game for lots of notes (8k to start) – and never invest more than 25 per note. This helps, I feel, investors approach the averages advertised by lending club.
2- When searching for notes to invest in I make sure to filter by 0 lates in the last 2 years, 0 bankrupcies, and 3 years+ employment.
3- Lastley, I use the note trading market a lot – but almost exclusivly for dumping “Grace Period” loans. You can almost always sell a grace period note for break even when considering the interest earned. I don’t know for certain if this actually works out better in the long run – I may be losing more by selling notes at a slight loss then I save from avoiding defaults and lates. But it’s psychologically more satisfying to me to get rid of any notes before they get late.
I’d definitely like to see you continue your updates. Despite the passage of time very few, if any, who regularly update have been around as long as you have. It’s important that those of us who have been at it for a while continue to report our results especially since more & more bloggers invest in p2p now & their average experience is more often than not, a few months to a year.
Hi Dan,
After my next post, I might limit to updates semi annually. Of course would discuss any new insights about Lending Club in separate posts. One topic I could go into more is statistical analysis to improve returns.
Another vote for continuing the quarterly updates. Thanks!
continue updates!! : )