Investing With Lending Club (Sep '13 Update)

by Michael on Oct 10, 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 September, I had a total of $3,059.41 in outstanding notes, another $450 (9 notes worth) committed to loans that were in the process of being funded, and a small amount of accumulated cash on hand.

During September, I received my first 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 62 active notes, which included mostly Grade C notes (47), with a handful of Grade D (14) 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 15.87%. 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.

Now that I’m receiving payments, Lending Club is also estimating my Net Annualized Return (NAR), which currently stands at 16.28%. Not too shabby.

Lending Club Returns

Of course, this number is once again somewhat inflated by the fact that an unknown (hopefully small) fraction of my notes will almost certainly default in the long run. 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.

1 Money Beagle October 10, 2013 at 2:23 pm

I live in Michigan and you are prohibited from lending money through Lending Club if you live here (though you can borrow, which is funny to me), so I always enjoy reading the stories and seeing how things end up turning out for people who decide to go this route. Keep the updates coming.

2 Martin October 16, 2013 at 11:29 pm

I like your NAR. I am getting closer to it (as of this writing I am getting 16.08%) Have you happened to use XIRR in calculating the true ROI?

My XIRR is at 11.70% since many of my loans are quite new due to new money contributions.

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