Investing With Lending Club (Oct '13 Update)

by Michael on Nov 15, 2013 · 2 comments

Lending Club Logo

Looks like it’s time for another Lending Club update… As a reminder, I started this account with a $1,500 initial deposit back in July and have been contributing an additional $1k/month since then.

At the end of October, I had a total of $4,046.64 in outstanding notes, another $200 (4 notes worth) committed to loans that were in the process of being funded, and a few hundred dollars of cash on hand.

During October, I continued to receive payments from borrowers that I backed with my initial investments. As that money accrues, I’ll be reinvesting it into $50 notes, just as I do when investing any new money that I deposit.

Looking inside my portfolio, I had 83 active notes, which included mostly Grade C notes (60), with a handful of Grade D (22) and E (1) notes. This reflects my overall strategy, which is to target somewhat riskier notes to achieve higher returns.

Related: Check out my Lending Club review to see my loan filters…

The average interest rate of these notes was 16.07%. As I’ve noted in the past, however, this doesn’t account for the likely occurrence of defaults, so the effective rate will undoubtedly end up lower.

As for my returns, Lending Club is currently estimating my Net Annualized Return (NAR) at 16.41%. Not too shabby.

Lending Club Returns

And, because 100% of my notes are current, my adjusted NAR is exactly the same.

Lending Club Adjusted Returns

Of course, these numbers (even after adjustment) are still somewhat inflated by the fact that an unknown (hopefully small) fraction of my notes will eventually go late with some ultimately being charged off. As always, my goal is to achieve returns in the 10-12% range.

Going forward, I’ll be continuing to invest my monthly allotment as well as any principal and interest payments that I receive. And, of course, I’ll be documenting everything for you guys as it happens.

If you’re interested in playing along, you can get started here.

{ 2 comments… read them below or add one }

1 Tie the Money Knot November 19, 2013 at 6:17 pm

Even if you drop to 10-12% return on investment, that’s pretty good! Beats the long-term stock market returns and “safe” investments out there.

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2 thepotatohead November 19, 2013 at 11:59 pm

Seems like a good return to me if you can keep that up long term. That is definitely a cool concept of lending to others.

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