Over the weekend, I spend some time getting caught up on our finances in Quicken. It’s been a few months since I updated my Lending Club performance, so I thought I’d take this as an opportunity to share some results from the past year.
As things currently stand, Lending Club lists my net annualized return (NAR) stands at 9.07%. That number does not, however, reflect the effects of idle cash or activity on the secondary trading platform (FOLIOfn). Thus, I always like to ground truth things with my Quicken data.
So what did Quicken have to say? Well… From January 1 – December 31, 2010 my Lending Club account returned 8.8%. Not too shabby. This number has been negatively impacted by my initial experiment, in which I had Lending Club auto-select a high risk and low risk portfolio.
Not surprisingly, that high risk portfolio has suffered a number of defaults that have pulled my returns down. My manually selected loans have done much better (as have the auto-selected “low risk” loans) but, in the interest of transparency, I’m presenting the data for my entire Lending Club investment.
Over the past months, I’ve refined my loan picking criteria and my returns have been gradually improving. Perhaps the biggest thing that I’ve done recently has been to move all of my loan picking to the secondary platform, where I can buy “proven” notes at a slight discount.
In terms of real numbers, my current Lending Club balance is around $10k and I’ve invested in a total of 452 notes. Of these:
- 395 loans are current
- 41 loans have been paid off early
- 1 loan is currently 16-30 days late
- 8 loans are currently 30-120 days late
- 7 loans have defaulted and/or been charged off
All in all, I’ve had a pretty good experience. While I wouldn’t rely on P2P lending as the core of my investment portfolio, it’s been fun to play around with, and the returns have been solid if not spectacular.
Of course, it’s still too early to predict how my long-term returns will look, as my notes are all three year notes. I’ve only been doing this for about 20 months, so I still don’t have a “fully seasoned” portfolio.
The primary downside for me has been the time required to select loans. Even with the filters that I use, I’m still left with a number of notes to sort through. This time commitment is amplified by the fact that I never invest in notes above $50 (to spread my risk around).
What about you? If you’ve been investing with Lending Club, how have things been going for you? Do you have any tips or tricks for improving performance?