I’m now convinced that investing through Lending Club is (at least for me) more than just a passing fancy. As such, I decided that it was high time to start tracking things in Quicken.
I’ve actually been avoiding this task because I’ve already invested in over 100 loans, and the prospect of tracking so many independent investments is a bit daunting. But then it hit me… There’s no real reason that I have to track every loan separately.
The system that I’ve settled on is similar to my strategy for tracking CDs with Quicken. I update the data based on my monthly statements, and use just a single “meta-security” instead of tracking each loan individually.
Here’s a quick rundown of the initial setup*:
- Create a new “brokerage” account in Quicken
- Create a new security with a value of $1/share (I called mine “LC loans“)
- Transfer (XFR) your starting (cash) balance into the account
And here’s what I do at the end of each month:
- Transfer (XFR) funds in or out of your account to reflect any real-world transfers
- Buy shares of “LC Loans” in a dollar amount equal to the total of any new notes issued during the month (this reduces your cash balance)
- Sell shares of “LC Loans” in a dollar amount equal to any principal repayments for the month (this increases cash balance)
- Record you total interest payments for the month as dividends (DIV) on your “LC Loans” shares (this increases cash balance)
- Record your investment fees for the month as a miscellaneous (MISC) transaction (this reduces your cash balance)
While you’ll lose the ability to track individual loans, this system is very quick and easy to maintain, and still gives you accurate performance numbers on an account-wide basis. Another benefit is that this approach accounts for the performance drag created by your uninvested cash balance.
For all transactions, I use an effective date of the last day of the month. The order in which you record the individual transactions doesn’t really matter since everything will balance out on that same day.
What about you?
*Note: These notes are based on Quicken 2007 on a Mac, so there might be some subtle differences if you’re using a different version. The overall approach, however, should remain the same.