Lending Club Update And Returns – September 2012
by Hank Coleman
Ever since I wrote about almost losing my shirt with defaulting loans thanks to my own greed, I have been steadily bouncing back with better and better Lending Club returns on my Lending Club loans.
When I originally started to invest with Lending Club
, I was bound and determined to invest in risky peer-to-peer lending loans in order to earn a high rate of return, upwards of 18% or more. Now that I have decided to start only investing in A and B ultra safe P2P loans in my Lending Club portfolio, my Lending Club returns have started to do much better.
Here is what my Lending Club portfolio looked like when I was going for broke with 20%+ annual rates of return on primarily only small business loans through the site:
- 66 loans are current
- 22 loans have been paid off
- 0 loans are 16-30 days late
- 3 loans are 30-120 days late
- 14 loans have defaulted and/or been charged off
My net annualized return (NAR) dropped from 18% to around 2.09% thanks to all of those charged off loans.
Now that is only part of the story of course. As I have mentioned before, I have started a new safer Lending Club portfolio full of only five A, thirty-seven B, and one C loans which have an average rate of return of 11.54%. Here is a breakdown of that specific portfolio:
- 42 loans are current or in funding
- 1 loans have been paid off
- 0 loans are 16-30 days late
- 0 loans are 30-120 days late
- 1 loans have defaulted and/or been charged off
I am still really enjoying investing through Lending Club especially now that I am only investing in conservative loans. This has been a good tactic since changing my strategy last year. I have been able to improve my returns over the past year by moving away from risky loans and investing solely in A and B grade loans.
What about your Lending Club investments? Have you been making changes to your investing strategy?
About Hank Coleman
Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and is currently pursuing his Certified Financial Planner credentials. Email him directly at Hank[at]MoneyQandA.com.
Hank Coleman has written 436 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.
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{ 2 comments… read them below or add one }
Nope, my strategy has remained the same. I mine the historical data for statistically significant relationships between loss and the borrower, municipality, and macro enrivornment. This allows me to calculate risk of loan loss and compare it to the interest rate. There are price/risk disparities and I pick the loans with the biggest disparities in my favor.
Hi Hanks, I just purchased my 9th note but it looks like I have one heading for default. The others remain solid though. Right now I am sitting at 18.08%. Question maybe you or one of your readers may have some input on. If you have a note that is 31-120 days late but it has said a couple of times that they made contact with the lender, is that any indication that they would typically be paying back? The worst part is, this is one with a C grade but they had a great and steady credit score. Thought I was playing it safe.
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