Yes, I know it’s already September… But better late than never, right?
I’ve now been investing with Lending Club for 2 full years, so I’m highly confident now that my returns are stable and reproducible. This is a big deal, because I was reluctant at first to jump into Lending Club with too much money, fearing it might start out strong and then come crashing down later. I started with a $10,000 investment, and my portfolio is up to $12,609. Using the Lending Club algorithm for calculating Net Annualized Return (NAR), I’m sitting at 12.54%, which is pretty much identical to my previous Lending Club update in May, where I reported 12.59%. That’s what I mean by stability.
Here’s a snapshot from my Lending Club dashboard today:
The first thing you might notice is that I have a lot of money sitting as idle cash. This isn’t because the notes aren’t out there or that my filter is too tight. Rather, it’s because I’m lazy and forgetful. In the past, I’ve always logged in 1-2 times each week, and reinvested my cash. But until 2 days ago, I hadn’t logged in for over 3 months. Now I’m just working to catch up, so I expect this could take a few days. Fortunately, I’m seeing 5+ loans everyday so I don’t expect it to take too long.
12.5% return is great, right about where I wanted to be, and well above my bare minimum goal of 10%. And, as I mentioned above, I’m highly confident now that I’ll continue to remain well above 10%.
As I’ve done in the past, I like also check my predicted returns based on Nickel Steamroller’s Portfolio Analyzer tool to figure out my estimated future ROI. So I loaded my portfolio into the tool, and it spat out the following results:
- Average Age: 463 days (previously 374)
- Estimated ROI: 11.29% (previously 11.5%)
So Nickel Steamroller is forecasting an additional drop of 1%, based on my existing late notes. Still, 11.3% isn’t too bad.
Lending Club Reinvestments
Lending Club has been great. The returns are good, the interface is easy to use, and the notes have been abundant enough to keep my money active. If there’s one negative aspect to share, it’s that I haven’t found a way to automatically reinvest into notes based on my current filter. This is in contrast to Prosper.com, which allowed me to set that up from the very beginning and has kept my money active at all times.
As I mentioned above, I have $1500 in cash sitting idle. At 12% NAR, that’s roughly $15/month I’m not making. Or, put another way, it would be wise for me to pay anywhere from $5-$15 per month for a service to do the work for me. I’ve actually had multiple readers ask about this, and one reader even said he was prototyping a program to do this automatically. Unfortunately, that reader went incognito, so I never got to check it out (Reza, if you’re still out there, hit me up again!).
If anyone is aware of such a service, let me know in the comments and I’ll update this article.
If you’d like to invest in Lending Club yourself, click below.
A few items for full disclosure:
1. If you sign up for LendingClub.com from this site, I get $25. This isn’t why I write these updates (I would write the same article regardless of this income), but I want to be open about it. If you’re one of the people that signed up after reading my results, I’d love to hear how you’re doing!
2. While my personal results have been very good so far, there is still significant risk in this investment – as with any investment. Keep in mind that my $10K initial investment is still only 1% of my overall investment portfolio, so this is a relatively small personal investment.