Saturday, July 11, 2015
Lending Club finally arrives in Texas
One of my goals for 2015 was to open a Lending Club account and try to build up a loan portfolio of $10,000. I opened an account back in late December, transferred a few hundreds dollars over to LC to get started and to my disappointment I was informed that Texas residents could not invest in loans.
I have to admit that I was pretty bummed, but I had a feeling that eventually LC would become available to Texans. A couple of nights ago I checked my email and was pleasantly surprised to find a notice from LC informing me that Texas resident could now invest in loans. Again I made a transfer a few days ago and it should hit my LC account in the next day or so.
Fantastic!!!! After literally making hundreds of stock purchases over the last few years, it feels pretty good to add another form of passive income to my dividend machine. There certainly is nothing wrong with a stock only portfolio, but the thought of creating a new form of income that is unrelated to the stock market is awesome. Starting on a new journey can definitely rekindle the fire inside of me and who knows how this will play out.
I suppose this will be similar to investing in REITs. Higher income streams and obviously higher taxes as well at least while I still have my day job. I am ok with that. In a few years it will be nice to not only receive interest income to live off of, but I will also receive principal each month which could help with future cash flow needs if I choose not to reinvest the payments. For now, like my with my stock portfolio, I plan to reinvest everything that I receive to grow the snowball.
I started browsing through the endless number of loans and started thinking this is going to suck trying to come up with my own underwriting guidelines, check the loans throughout the day, and then attempt to accumulate many loans at $25 a piece. On top of that you then have to wait to see if the loans get fully funded which can take up to a couple of weeks to complete. Quite honestly, I am not a very patient person.
It only took me about fifteen seconds to realize that there is no fucking way that I am going to be dedicated enough to constantly check on new loans throughout each day, filter, and patiently hope to finalize a bunch of $25 loans.
For now, I have decided to take the automated approach and just let LC do the work. The Platform Mix looks pretty good to me and according to LC should return somewhere between 6-9%. The mixture includes mostly B and C type loans which is right up my alley as it is not too risky, but still has the potential to bring in solid returns.
I have to admit I am very stoked to add a new and unique component to my dividend pipeline. My first thought is that I may not be able to add $10,000 by the end of the year, but then again knowing me I can see myself getting there by the end of August. :-)