I’m a bit late with this, but… It’s time for another Lending Club update. As a reminder, I started this account with an initial deposit of $1,500 last summer and have contributed $1k/month since then.
At the end of December, I had $6,291.14 in outstanding notes, another $250 (5 notes worth) committed to loan in the process of being funded, and about $130 in cash waiting to be invested.
During December, I continued to receive payments from borrowers that I had back with my earlier investments. And, as that money accrued, I re-invested it in more $50 notes, just as I do with the $1k/month in new investments.
Looking inside my portfolio, I had 133 active notes, which included mostly Grade C notes (88), with fewer Grade D (39) and E (6) notes. This reflects my overall strategy of targeting somewhat riskier notes though, to the extent possible, I’d like to tilt even further toward the lower grades.
Related: Here’s an overview of my loan selection strategy.
The average interest rate of these notes was 16.42% and my net annualized return (NAR), as estimated by Lending Club stood at a bit over 16.6%.
While I’ve seen some notes slip into the grace period in the past couple of months, which dropped my adjusted returns into the 14-15% range, all have recovered and my adjusted NAR has bounced back to match my NAR.
As for real-world returns, my own calculations have me with a 15.37% annualized return, which is a bit lower than my stated NAR. This is primarily due to the effects of idle cash, which Lending Club ignores when estimating returns.
So… All is well with my p2p portfolio. Yes, I’m sure that some (hopefully small) fraction of my loans will ultimately default. But for now, at least, I’m on track to meet (if not exceed) my goal of 10-12% annual returns.
If you’d like to play along, you can get started here.