Friday, August 19, 2011

One Month Of Lending Club

(See other Monthly Status Updates)

Well, I was surprised today. I had a little extra money come my way, so I wanted to try a new investing platform, peer-to-peer lending. I'll discuss in another post more about my philosophies and the difficulties of government regulations in trying to get started in peer-to-peer lending, but I wanted to give some stats after the first month (more for me to look back and say, "What a fool I was.").

Currently I am using a Google docs spreadsheet to track my notes and my performance. I started out looking for a minimum of 16% per year average return. After the first month (mid-July to mid-August), Lending Club reports that my Net Annualized Return (NAR) is 24.20%, which puts me in the top 18% of lenders at lending club. More specifically, of those who have invested less than $1,000, I'm in the top 100%. The average return for the less than $1,000 invested crowd is 5.72%. The average for all investors in 9.64%.

I'm afraid this is more of beginner's luck than experience. As much as I'd like to say that it is my investor savvy, with the little bit of money and few notes I have, I'm afraid I've just gotten lucky so far (no defaults, but investing in the riskiest notes).

So, so stats from my spreadsheet:

I have 15 Active notes right now. I've purchased those notes with $340. The scheduled monthly income from those notes (principle and interest) is $10.46, or around 3% per month (at which rate it will take about 2 1/2 years to recover my investment). I do put every note up for sale, at an annualized 16%+ interest rate (more on the + when I post about my philosophies). I've sold 17 notes so far, although I'd rather not sell notes. My median annualized return on selling notes is around 46%. I average about 3 1/2 notes sold per week. I'd like to get this down to 1 1/2 notes sold per week. Apparently 16%+ is too low an asking price. If you annualize the proceeds from the sale of the notes (minus tax) I'm getting about 18% per year on selling notes. The notes that sell I hold for of an average of about 2 weeks.

I haven't had a default yet. Of the notes that I currently hold, I have one each of A, B, C and E. I have two F5 loans. The rest are G loans. I paid an average of $22.65 per note.

So there is the snapshot of my first month. I look forward to seeing how this data changes over time.

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