Automated Investing With Lending Club

by Michael on Jun 11, 2014 · 1 comment

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I’ve been investing with Lending Club for awhile now. While I can’t complain about the returns, I’ve always felt that the entire process has the potential to be a bit of a time suck.

Yes, I’ve been able to minimize the time commitment by using a well-refined filter, but I still have to log on regularly to run the filter and buy notes.

Sure, their “PRIME” program offered automation, but at a cost. For starters, PRIME had a $25k minimum balance requirement and they tacked on an extra 0.8% fee to convert existing balances or to add new money.

For a new account, that 0.8% fee on $25k added up to $200. And you’d get nicked for the extra 0.8% on any future contributions. No thanks.

But now? Well, as of last month, they’ve changed the name of PRIME to “Automated Investing.” And they’ve also done away with the fees and reduced the account minimum for participation to $2,500. Nice.

Exploring automation

Intrigued, I decided to investigate further. My main question was whether or not I’d still be able to filter things as carefully as I’ve done when investing manually.

The short answer is: yes. While it’s possible to just check some boxes for your desired mix of loan grades, you can also limit based on term (36 vs. 60 month) and apply an existing filter.

Even with filters, you still have to set up a target mix of loan grades, so I specific 1/3 each of grades C, D, and E. From there, I gave them “special instructions” to apply my preferred filter when making selections.

And that’s it.

And now we wait…

Since setting this up a few weeks ago, I’ve just let the system pick my loans. It’s had no trouble keeping up with reinvestments but I’m still not sure how long it will take to deploy my monthly $1k investments.

Time will tell how useful this system is for investing larger amount, but I’m hopeful that it will greatly reduce the time required for portfolio management.

If you’re interested in trying it out, you can get started here.

1 The Wallet Doctor June 17, 2014 at 7:20 pm

Well, it sounds like you have more control that I first thought. I’ve stayed away from automation for the reasons you’ve mentioned here. But, it sounds like there might be more reason to look into it.

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