I just noticed that it has been awhile since I’ve posted a Lending Club Update. The last one was in July. At the time, I was averaging a 7.2% according to Lending Club (whether that rate of return is trustworthy is open for discussion). I’ve been steadily able to raise that rate of return from around 5% by realizing that F grade loans return twice as much as the A and B grade loans… even after accounting for defaults.
It’s taken a lot of time to raise my return up as I had a lot of A and B grade loans. However, over the last couple of years, more and more of those A and B loans have started coming off the books and have been replaced by the F grade loans. So today my accounts like this:
The rate of 7.63% is close to what one might expect from equities… and it is a lot better than the 6.71% return that I was getting in May.
I’m starting to favor putting more of my money to work in Lending Club. I love to diversify and I think P2P Lending allows for one to do just that. While Lending Club is, in a historical sense, a new company, the returns appear to be a lot more stable than some other kinds of equities. I have 171 active loans and I don’t expect them to all go bad at once. The only thing that could cause that in my view is a bad economy… and it’s working in this bad economy thus far.
If this sounds like something you’d be interested in, sign up for Lending Club today and start earning more interest.
Honestly, I would sell all your A and B and go into C and lower. The 1% you pay to sell the notes will be small compared to your higher returns.
At 7% and lower ROI you are better off in junk bond ETFs. I personally own JNK as part of my high risk debt allocation.
Lazy Man says
Hi… good point about selling off the A and B loans. I’m pretty hands off on my Lending Club experience now, so I didn’t want to step into that world that seems more active.
I’ll look into junk bonds, I didn’t realize that they had an ETF. I guess everything does. I’m 36, so I’ve been limiting my bond exposure a bit (though I do a stake in Vanguard’s BND).
I’m hoping to get my Lending Club up to the 10% and maybe higher level. We’ll see how it goes.
Oh and as a former (maybe not so former) software engineer the P2P XML on your site just my jaw drop.
Shawn Good says
I got into Lending Club not quite a year ago after reading one of your initial postings. After making a good return I encouraged my friends to do so, none of which did.
Anyhow, my current rate is just under 11% and I had initially invested $2,500. I’m a tad under $2,700 now. Which when you apply is ~8% and since it has not quite been a year their rate seems fairly close, though some days I have my doubts.
One interesting thing to note is that in Texas, where I reside, it is against law or policy to trade the way you do on Lending Club. So when I use Lending Club I have to access it then go through a 3rd party website called FOLIOfn and trade as “Notes.”
When I buy I’ve been applying the following method. (Keep in mind the setup is different) I filter on 9 – 18% rate, now current and never late, 59 remaining payments (so I know they’ve made at least one) lowest markup, and finally a credit score going up. Granted I made a lot of mistakes up front, now I feel I’ve been doing pretty good.
I get on about once a day and when I have about $24 I buy an additional note. I never spend more than this because I took a hit (default/charged off) on a $50 note one time and that hurt. Went from about 14% to 10% in one fell swoop.
Anyway, all my returns across the board have been doing really well this last year. Lending Club has been a nice solid low-key side investment that I have not regretted. Though I have yet to convince any of my friends/peers that it isn’t a scam. When I have the money I plan on putting an additional $2,500 in.
I thank you for finding this and look forward to all future updates.