Lending Club Performance Update

I see P2P lending as a critical part of my retirement portfolio and currently have accounts with both Prosper and Lending Club. I’ll provide monthly performance and strategy updates. For now, I’m going to focus on Lending Club.

Background and strategy change
I started investing with Lending Club in April of 2011. While I learned the platform, I started off very conservatively and only invested in very safe notes (A and B grades) trying to avoid defaults. The notes do have low default rates, but as you would expect, they also pay out far less than the riskier grades. I decided to change my strategy. A look at Lending Club’s statistics page shows that the lowly grade F notes actually have the highest rate of return. So, while you’ll have more defaults, the much higher ROI more than compensates.

Goals
I’m happy with a 10% return. This is similar to what the stock market historically does. However, I think that I’ll actually be able to do a bit better than that. Even starting off very conservatively, I’m doing almost 12%. Once my A and B loans start giving way to D-F, I should see a bump up.

To start investing in riskier loans, I’m using the strategies from Brave New Life and the excellent Lend Academy. I’m buying loans with each strategy and sorting them into a separate portfolio so I can track their individual progress. It will take me a while to ramp up these investments, so I won’t have good statistics for a while. Finally, each time I post an update, I’ll add to the chart below. That way, it will be easy for you to see my progress. *The website, Nickel Streamroller has a portfolio analyzer that takes into account late loans. Some would argue that this is a better indicator or ROI.