Lending Club Returns at 15.85% in January 2012

After 4 months of using Lending Club, I’m giving my first report of my progress. My goal is to achieve a greater than 13% ROI, and so far, I’m well ahead of that goal.

I aim to reduce delinquencies by using smart criteria for picking loans, and it appears to have paid off.

15.85% Interest Rate

I couldn’t be happier about this, and I’m so encouraged that I actually sold a few of my 11-12% loans so that I could have the cash to invest in loans with higher interest rates.

Here’s a quick snapshot of my loans:

Issued & Current – 169 loans for $5,028
Fully Paid – 4 loans for $100
Late 31 – 120 Days – 1 loan for $24

As you can see, almost all of my loans are in good standing, with only one being late. That loan had a missed payment in December, but I’m hoping it gets back on track as the payment is currently ‘processing.’ Of course, I am prepared for the worst. Let’s assume that he goes into default: that is still only 1 of 174 loans, about 0.58% default rate, far better than the 3% average for Lending Club.

Of course, having loans paid off early hurts my performance, but since that first bump, I’ve been a little more careful not to pick borrowers who are too good.

Future Lending Club Plans

I’m going to be investing the $125 I have in available cash this week so that it’s not sitting there earning nothing. My goal is not to have idle cash sitting around for more than a week, and since I can invest in a loan for as little as $25, I’ve been lagging in January.

Overall, I’m extremely pleased with my performance and I hope to keep up the good work!

8 Responses to Lending Club Returns at 15.85% in January 2012

  1. awesome rate! I’ve always been curious about lending club, but have never pulled the trigger. Hopefully I can in 2012.

    • Daniel says:

      @Jeff @ Sustainable Life Blog, Do it now, you will not regret it! The sooner you start, the sooner you’ll see the quality returns!

  2. Great job. I started with $1k and it’s been OK so far. My goal is around 10%.

  3. JT says:

    How specific are your parameters to achieve returns like these? Is there potential for a lot of scaling, or is it something that would always have to be a small part of a total investment portfolio?

    LC supposedly does like $300MM in loans per year, of which a minority are high interest.

    So, I guess my question is whether or not you could continue to build your LC portfolio alongside a traditional retirement portfolio or whether you’d have to cap its size at some point so as not to dilute quality/performance.

    I’ve been trying to learn more about this, but it seems that everyone who documents their progress has like $500k in a 401k then $10,000 in LC, which doesn’t do a whole lot to instill confidence.

    • Daniel says:

      @JT, It’s definitely scalable. I only invest $25 per loan. If I had twice as much money, I’d simply invest $50 per loan and would expect to see the same returns.

      I’ve never had any trouble finding loans to invest in, and in fact, I investing all $5,000 in about a month.

      The downside is that it takes awhile to review each loan individually. If you want to invest $100+ in each loan, you can do it, but it’s not quite as easy as putting in a stock trade I guess.

      Peter at SocialLending.net has $100,000 in Lending Club if I’m not mistaken.

      • JT says:

        @Daniel, thanks for giving a frame of reference with the time it takes to place $5,000 in loans. It definitely makes sense that you could throw in $50 in any particular loan to double down. Only loss is that you can’t go back and add more to investments that you’ve identified to be good risks. That’s only a minor consideration if you can screen for potential opportunities fairly quickly.

        I’ll check out SocialLending.net. From first glance, I’m not sure I’ve looked around there yet. Thanks!

  4. wow, that’s amazing. I have been hesitant because it seems so risky, but maybe I will start off small this year. Who knows…

    • Daniel says:

      @Corey @ Passive Income to Retire, It’s funny, I see this as not a very risky investment. Those who invest more money see better returns. Plus, we shouldn’t expect to see big variations based on external market factors. I assume you invest in the stock market? Seems a lot riskier to me.

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