After more than two years, I am taking a portion of my money out of my Lending Club Roth IRA. I’m not selling any current notes, I’m simply taking some of my earnings out and transferring them over to my Roth IRA in Vanguard.
I am not leaving Lending Club for good, but it is time to reevaluate the platform as the best use for my funds. There have been a few issues that makes it not the best for me personally.
Why I’m Transferring Money Away From Lending Club
Over the past several months, it’s become harder to find notes that fit my requirements. It’s not that Lending Club is issuing fewer notes, it’s that all the “good notes” (ones that fit my investing strategy) have already been fully funded by the time I get to them. What’s left are a handful of loans, and since I want to invest $25 in each loan and am expecting nearly $250 in payments each month, I would need to find 10 loans that fit my criteria. With index funds, you don’t need to spend any time investing and re-investing. With Lending Club, it’s a much more active investing style.
I don’t have the patience to be looking for loans to invest in a few times a week. I could set reminders, but in reality, it’s just not something high on my priority list. And worse than finding the time to log onto Lending Club is that I have built up over $1,000 in cash the past few months that’s sitting there earning 0% interest. I might as well put that money to good use by moving it into my Roth IRA account in Vanguard and let it track the S&P 500, which requires no time or effort at all.
Transferring Funds to Vanguard Is Very Simple
It was a pleasant surprise to find out that the transfer process is very simple and can be done rather painlessly. First, I am having $1,000 transferred (that’s how much available cash I have in Lending Club right now) from my Lending Club account to my account with Self Directed IRA Services. They’re the ones that my actual Roth IRA is with. Once those funds have been transferred (which can take a few business days to clear), I can move on to step 2.
Step 2 is very simple, thanks to Vanguard. They have a page set up for people who want to transfer their existing IRA accounts to Vanguard. Simply click the ‘Start your transfer online’ button and they will guide you through the rest of the process. If you already have a Vanguard account, you can sign in, tell them how you want your new-to-Vanguard money invested, and provide them with the old account information and amount you’d like like transferred. They take care of the rest.
I’m Not Saying Goodbye To Lending Club
I really like the idea of Lending Club and if I was finding more notes to invest in at $25 each, I’d continue adding more funds. But at this time, it’s not a great fit for me. Maybe I’ll find more time in the future to dig through notes, but at the moment, I’m moving funds away and will revisit the idea if I get another large chunk of cash sitting in my account.