Thursday, November 3, 2016

LendingClub Update November 2016

Last month I put $2,500 into LendingClub.  I select automated investing with a mix that's just below 'safe, lower returns', going for 'still safe, better returns'.  I opted to split my money into 100 x $25 notes. These were picked up relatively quickly, and loans were issued usually within a week.  There's one note hanging, stuck in Review. I'm not sure what's going on there. According to LendingClub documentation the loan can sit in that status up to 30 days before it's either issued, or canceled. If canceled, my $25 will be released and automatically put towards another loan that matches my investment mix target.

Since no payments have been due yet, all notes are 'current'. The first payments are expected on November 4th, and each day thereafter some money is expected to come in. Thus far, on paper, my account has accrued just over $25 in interest. If everyone pays up, I'll also get about $50 in principal back, or a total payment of $75. This will get invested in new notes automatically.  I tweaked my new target mix to a bit more conservative -- allowing only 3 year terms, and better investment grades. This is just to see how things go and I'll adjust to higher risk/return if things are going well.

The main question of course is: how many notes will become late ?  It'll be exciting to see the money come in the first month, and I'm sure it'll (hopefully) get pretty boring after that. For reporting purposes, I'll use the total account value that LendingClub reports. They take into account notes that have been charged off etc.  If lots of payments start running behind, I'll stop the automated investing option. If all is paid on time, I'll get more aggressive.

I think this is a great way to diversify my overall investment portfolio. Stocks and dividends are great, and this is another, unrelated source of income. It's too early for any conclusions though, and I'll report back when I have more thoughts on this.

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