While I was writing my alternative income for August, I remembered how I used to count projected interest from my Prosper account. I had stopped that in part because it wasn’t a significant number, but also I had made the mistake of many by lending out money to anyone at 29% thinking that it would have to pay off. I have admitted my mistake there. However, I noticed that my Lending Club account was different. In fact, it was best investment in 2008. Maybe taking the more conservative approach is the way to go. So why not start to add the projected income from that investment to my alternative income… and why not open up my Lending Club account for all to see?
As you can see, I’ve had over 100 loans and only 6 of them are late or charged off. My more recent lending (in the bottom half – i.e. tradable notes), I have only 1 late in 47 loans – perhaps the result of being more conservative or a better economy.
This is a good time to do it too since Lending Club is having a couple of promotions. They are offering to start you out with $25 if you sign up through this link (full disclosure: I’m compensated as well). If you are their 25,000 lender (projected to come in September, you’ll receive $2,500. You can read more about that here. Just conjecture on my part, but I would guess that they are within 1000 of that milestone. If I’m right, then your odds aren’t all that bad at winning.
Before you open a Lending Club account, I should mention that Lending Club notes are a very new. There isn’t a long history of performance to rely on. As such, I would exercise caution with putting a large portion of your portfolio into Lending Club. I would use Lending Club as a way to diversify a portfolio. If stocks drop a lot as we saw earlier this year, the Lending Club portion could help stem the losses.
Good post. A lot of folks seem to prefer Lending Club over Prosper.
For those who want to learn more, I recently interviewed Lending Club’s CEO Renaud Laplanche to answer a bunch of questions that most people have about Lending Club – you can listen to that interview at http://www.growthink.com/content/interview-renaud-laplanche-founder-ceo-lending-club
While I’m sure people appreciate your affiliate link disclosure. I would say it’s not necessary. I wouldn’t do it in the future if I were you, because it causes hesitation and probably less profit.
But it’s your site, not mine : )
I thought about not disclosing it, but I didn’t want people to find out and thinking I was hiding something from them.
Also, I opened up my Lending Club account for all to see and digest. Either you agree with me that it’s pretty good and could be a good way to diversify your income (in which case, you don’t care if I’m getting compensated), or you don’t agree with me (in which case you won’t sign up and it doesn’t matter if I disclose that Lending Club is giving me monkey butler*).
* Lending Club is not compensating me with a monkey butler.
When I check my Lending Club account it still projects my original rate of return, although 2 accounts are well in arrears–or not so well I suppose. This really distorts the rate of return. More disappointing, these were A loans. Be careful.
I was going to sign up for Lending Club, but I came across this bit in the “Investor Agreement” I have to agree to:
“6. Your Financial Suitability Acknowledgments, Representations and Warranties. You represent and warrant that you satisfy the applicable minimum financial suitability standards and maximum investment limits, as set forth in the following sentence (or as set forth on the Site with regard to residents of the state in which you reside), and you agree to provide any additional documentation reasonably requested by us, as may be required by the securities administrators of certain states, to confirm that you meet such minimum financial suitability standards and maximum investment limits. You understand and confirm that you (a) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000. In addition, you agree that you will not purchase Notes in an amount in excess of 10% of your net worth, determined exclusive of home, home furnishings and automobile.”
I make less than $70,000 per year and my net worth is less than $250,000.
Pam,
I was going to address this in a future post. I’ve talked with Lending Club about this. For now, let’s just say that they are very regulated which has a large impact on what they put as the “rate of return.”
Discoruth,
I’ll have to look into that. When I signed up for Lending Club that was not the case.
@discoruth @LazyMan: these investor financial suitability requirements have been in place since our notes are offered by prospectus filed with the SEC
RobG,
product guy @LendingClub
lendingclub.com and prosper.com does not allow MD residents to participate as investors. Any idea why and do you know any other websites that do?
Thanks!
I think it’s state regulations in loaning money to people. Sorry.
Thanks for sharing your results, I look forward to following your progress. I just began to fund an account last month but have slowed down due to the high default rates when you look at the older loans. It’s encouraging to see your results.
And for the life of me I can’t figure out how you copy that summary page to your blog. Can you explain to a computer dummy?
My non-tradable notes are pretty old, but then again, I was pretty conservative. I’m getting even more conservative with my more recent loans.
I use a program for Windows called Snippy (http://www.bhelpuri.net/Snippy/) to take a picture of my screen and save it as an image file.
Thanks for the the “Snippy” advice!