Investor Junkie
My Business and Financial Freedom Journey

Performance Update For Lending Club

Economic Forecast for 2010 and 2011

I normally don’t make outright predictions on this blog, but Sam from Financial Samurai challenged me in his latest blog post.  I’m always up for a challenge, so I’ll take a stab at it.  Please come and revisit this blog post at the end of 2011.  The purpose of the Investor Junkie blog has always been about making good investment decisions.  The goal is to help you and I become better investors.  Topics discussed in this blog I’ve thought should contain mostly timeless information, and apply regardless of market conditions.  I recommend at least 80% of your equities portfolio should be low cost, tax efficient and indexed based investments.  If you feel you can outperform the market, do so with no more than 20% of your assets. When the market zigs one way, you zag the other way. That way if you are wrong, you didn’t bet the farm.  Adjustments in your asset allocation strategy also make sense when investing this way.  This doesn’t mean 100 equities and 0% bond allocation.  This means making adjustments within say your equities and increasing your exposure to emerging markets.

By making smaller calculated bets, that can be somewhat speculative, you might be able to come out ahead.  A proper asset allocation in my opinion is the most important thing to ensure investment success. As I have mentioned in the past, any predictions about the future are like football color commentary.   While the assessments might be correct, it’s sometimes easier to make predictions when you have no skin in the game.

Lending Club – Update

When I initially reviewed Lending Club last December I promised I would give periodic updates.  That time has come.  I’ll let my screenshot speak for my results:

As you can see my performance has increased from 10.45% to now an annual return of 11.27%.  Some highlights in my investing for the past three months:

• I sold one note on FOLIOfn because their credit score lowered significantly and was concerned they were going to either become a late payer or default.
• I now have 38 notes total. One paid in full early.  No defaults or late payments.
• I just added an additional $1k this month and plan on investing in more notes

Come June, I’ll be investing in Lending Club for one year.  So far I’ve had great results and been happy with experience.

Ginnie Mae Investing

CD and money market accounts currently offer dismal returns.  What is an investor to do get higher returns, yet not drastically increase risk?  As I mentioned in my 4% Rule to Investing, Ginnie Maes are a good possible alternative.  Who is Ginnie and does she have anything to do with Fannie and Freddie?  Ginnie Mae, otherwise known as the Government National Mortgage Association, is a U.S. government-owned corporation within the Department of Housing and Urban Development (HUD).  Ginnie Mae provides guarantees on mortgage-backed securities (MBS) backed by federally insured or guaranteed loans, mainly loans issued by the Federal Housing Administration, Department of Veterans Affairs, Rural Housing Service, and Office of Public and Indian Housing. Ginnie Mae securities are the only MBS that are guaranteed by the United States government.  Ginnie Mae, which extracts fees for guaranteeing mortgage investors are repaid, is a smaller and more conservative player in the mortgage market than Fannie Mae and Freddie Mac were.

What is a Master Limited Partnership (MLP)?

MLP is NOT My Little Pony!

What is a MLP?  It is NOT My Little Pony as what came up when I was Googling for this article.  MLP in the investment world means Master Limited Partnership.  MLPs have generated some of the best returns for the past decade, and yet it’s a secret to most investors.  I myself only found out about them two years ago.

Should I Buy Gold?

I had a friend of mine the other day ask me, “Is buying gold a good idea?”  He then quickly proceeded to ask, “Should I add gold to my portfolio?”  You might be wondering the same thing.  I believe gold and other commodities should be part of any well diversified portfolio.  If you have been reading any investment news lately, gold recently has hit an all time high, though recently slightly pulled back.  I believe it’s wise to own gold, and should be part of your long term investing.  I own gold coins, but also have gold based mutual funds and ETFs in our retirement accounts.  I’m not a “gold bug”.  Unlike Glenn Beck, I’m not believer that the world is going to hell in a hand basket, and you need the three Gs (guns, gold and god).  It’s more related to macro economic trends – these trends started early 2000′s, continue today, and appear it will to continue for the distant future.  With global monetary polices, it’s not a matter if we’ll have debasing of our currencies, it’s a matter of when and how much.

The 4% Rule to Investing

As you probably already know, returns on fixed rate investments are pretty bleak.  The Federal Reserve, since last year, has effectively set rates to zero.  This made traditionally safe investments (CDs, government bonds, and money market accounts, etc.) limited with their returns.  At the time of this writing, the only previously mentioned investments you can find higher than 4% is a 30-year treasury, and I’m not sure that’s a wise bet.

Why Buying a Timeshare is a Bad Idea

What Happens When Buying a Timeshare

My wife and I went on vacation this past October to Disney World.  The family had a great time and I personally was glad to get away from business.  We stayed at my parents Orange Lake Resort timeshare, which is just outside of of Disney World.  In the over 10 years they have owned it, this is the first time I went there.  I never agreed with them on their purchase, and always thought it was a bad decision.  After all they paid $10,000 for it, and today the maintenance is $750/year.  The resort itself is very nice, has all of the amenities, and is in a great location.  My question is wouldn’t it be cheaper to just stay at a hotel, or better yet rent a unit in the resort for that week?  The answer is unfortunately yes.