At the beginning of this year, I decided to take another look at Lending Club. They were claiming that the average person made a 9.68% and I was making 4.78%. While I don't like being below average in anything, I hate being that far below average. It was time to examine the loans I had been making.
It turns out that I was being too conservative. After the subprime issue of a couple years ago, I was only lending out the cleanest of credit reports... and when a couple defaulted, it impacted my returns greatly. You can read more about my new Lending Club strategy.
A strategy isn't very good if it doesn't work. Today I thought I'd share with you the results of the strategy. At the end of January, I had the aforementioned 4.78% return. On March 10, I gave a Lending Club Update that I had raised that 5.90%. That article had a few more tips that I've been using. Another two months have passed, so where am I now? Here you go:
Booyah, it's up to 6.42% - I've moved from the 16 percentile in January to the 23 percentile today. Perhaps that's a little too much excitement for someone that is still far away from being average. However, considering the vast amount of my account was invested using the my less-than-optimal strategy, this is a very significant move.
I think that peer-to-peer (p2p) lending through Lending Club is a good way to diversify a portfolio. It's not going to move in the same direction as stocks, real estate, or gold. However, I'm cautious about putting a lot of money in it. Since p2p lending is new, I wouldn't suggest anyone put more than 5% of their net worth into it. If you agree that this sounds interesting, I suggest you give Lending Club a try.
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