It’s been a few months since I released an update on my Lending Club investments. I’ll first go over some recent statistics:
- Total notes purchased so far: 36
- Total dollars invested: $900
- Net annualized return: 12.9% (per Lending Club)
- Interest received: $19.78
- Total payments received: $50.76
I have to say I’m still having a ton of fun investing in Lending Club notes. I’ve already received enough payments to purchase 2 additional notes above and beyond my usual lunch funding.
My Net Annualized Return (NAR) is a little misleading. I have one note that is in the “Late 31-120 days” period, meaning the buyer hasn’t made a payment in more than 30 days. This note’s future payments and interest are still being used in my NAR calculation. However, since I also know that this borrower has filed for Chapter 7 bankruptcy, I find it hard to believe that I will ever get the full dollar amount back, if anything. Once the note gets labeled as “In Default” (I’ve got a few months yet for that), my NAR will reflect that and should drop a bit. Time will only tell how much, since I’m not going to take the time to figure it out .
I’ve also had a few borrowers pay a couple days late, but all of these payments have been within the grace period, so I haven’t yet gotten the opportunity to collect any late fees.
I’ve decided to make a small adjustment to my target note allocation. I no longer plan to invest in any ‘G’ rated notes, as they’re expected return is lower than those of ‘F’ rated notes due to a high rate of default. Why accept the added risk for a lower expected rate of return? My current note allocation is as follows:
Another interesting tidbit is that I now have enough notes such that, even if I didn’t transfer any more money to Lending Club, I would still be able to purchase about 1 note per month purely on the amount of money deposited into my Lending Club account from borrowers’ payments.
Overall I still plan on following the Law of Lunches and continuing to invest with Lending Club for the long haul. I sitll don’t have a target total investment in mind, but I’m not there yet, that’s for sure.
In other Lending Club News: I mentioned a while back that I would be doing a regression analysis on my notes to see if any one input can explain a borrower going into default. I’ve decided that was a dumb idea, so don’t expect any further updates on that topic. If there was a golden nugget that could explain who is a poor loan candidate then surely the banks or Lending Club would have figured it out by now. That, and who was I kidding, I don’t have time to do random statistical analysis on a whim!
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