Last year Lending Club finally became available to Texas residents. Initially I started out with a small investment of $1000.
Over the last six months or so, I have been adding $200 a week and now have a balance of just under $5900.00.
I have been investing $25 at a time and now have 263 total notes and climbing. While there are many different strategies and investment criteria that can be sifted through, I chose to go automated and let the computers spread the capital across a variety different loan grades.
Right now, as you can see above, My current return is 6.77% after all defaults and pass due loans have been written down. This is about what where I thought the returns would fall. It is uncanny that LC advertises a projected return of 6.68% under the Platform Mix.
There have been times when this number has been over 9% and below 3%. It tends to stay around 7% most of the time. It will be interesting to see how the loans perform during an economic slowdown. Fortunately they have held up pretty well for me.
I will continue to invest $200 a week until I reached $10,000. At that point I will probably continue investing new capital, but may stick with higher credit borrowers.
DEFY MEDIOCRITY
It would be interesting to compare the risk/reward of the higher interest loans with the lower ones. To understand if it really does pay to go with the riskier loans or just stick with the A-C grades.
ReplyDeleteAdam,
DeleteI would have to assume that during good times the higher risk loans would perform better than the lower risk loans. When the shit hits the fan, the outcomes would no doubt reverse. I prefer to have mostly high credit score borrowers within the portfolio.
MDP
MDP,
ReplyDeleteVery cool - keep posting these if you can. I don't believe LC is available to Ohio, but I think it's a great way to add a different source of cash flow from a new source outside of wage, business and dividend income. It's a new slice that I find very, very intriguing. Great post and anything north of 6% would be very solid.
-Lanny
Lanny,
DeleteAbsolutely. I don't care where the passive income comes from. In fact, I would love to further diversify the streams, whether through small businesses or real estate income.
I will keep posting updates.....good or bad.
MDP
I didn't know LC wasn't available in all 50 states. I walk by their headquarters in SF everyday on my way to work. I just assumed it was a U.S. only thing. I opened an account a long-time ago but never funded it. I'd like to though. Thanks for the post. I'm going to look into LC again.
ReplyDeleteIH,
DeleteUntil last year, Texas was one of the states that would allow residents to invest in the LC notes. I'm glad the law was changed and I plan to continue building up my loan portfolio.
MDP