Lending Club Sadness

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steelerfan
Posts: 127
Joined: Wed Feb 27, 2013 3:33 pm

Re: Lending Club Sadness

Post by steelerfan »

I am still hanging tight. My loan profiles I seek are on the safe side and I still get defaults. I am primarily A/B and hi Cs and a few Ds. I filter very carefully. Very little else. Currently sitting at 5.6% on the IRA and 7.4% on the taxable. I would invest more in the IRA but the hoops I have to jump thru make it a no-brainer to send my IRA funds to my Scottrade Roth. This is like 1% of my portfolio so it is more fun than anything. I thought we would get interest on the grace period but I am not sure as I still have late people and never see the interest portion go any way but down. I also have stock in the company in the hopes that Wells or some other bank buys the channel/platform. Holding these notes drives in the point of how unreliable the average person is even if they own a home and make bigger money than I do. It is disgusting actually. It is hard to commit too much to this when I can buy stocks like MO/T/VZ/O/JNJ/OHI and see annual div increases and DRIPing new shares each month. Last month in one of the LC accounts I earned about $50 in interest with $43 in charge offs for a net of $7 LOL. That is not typical but is not exactly confidence inspiring!

slowtraveler
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Re: Lending Club Sadness

Post by slowtraveler »

I've had Lending Club in a Roth for several years. I was treating it as the bond/fixed income part of my assets. I had bad luck.

I am in the process of divesting but these notes are not very liquid so I'm selling any remaining notes to hopefully get enough to pay off the account termination fees and get out.

tommytebco
Posts: 257
Joined: Sat Oct 27, 2012 4:48 pm

Re: Lending Club Sadness

Post by tommytebco »

UPDATE
This investment has fallen on hard times. My current return is 1.53%. I guess I got greedy back when someone touted high returns with risky levels.
How do you liquidate quickly? I didn't find a simple way. I just wait and transfer out $1000 each time it accumulates. I'm down to $9K and it's taking forever now. What's the penalty for auctioning off??

cmonkey
Posts: 1814
Joined: Mon Apr 21, 2014 11:56 am

Re: Lending Club Sadness

Post by cmonkey »

You can sell notes via Folio Investing, but I have never done it.

Dragline
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Re: Lending Club Sadness

Post by Dragline »

I've used that platform, but not recently. It was kind of a pain in the butt.

slowtraveler
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Re: Lending Club Sadness

Post by slowtraveler »

@tommytebco
There is no quick way to liquidate. I've been selling at a discount for a long time and am barely getting ready to close the account.

I'd recommend against setting up a Roth with them due to the large amount of fees from SDIRA.

tommytebco
Posts: 257
Joined: Sat Oct 27, 2012 4:48 pm

Re: Lending Club Sadness

Post by tommytebco »

Thanks for the reply I figured out to just suffer through. The fees do add up though. That must be why the yield is down so low. Any way, LIVE AND LEARN. This too shall pass.

slowtraveler
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Joined: Sun Jan 11, 2015 10:06 pm

Re: Lending Club Sadness

Post by slowtraveler »

Still in process of closing my Roth with Lending Club.
I closed mine with prosper with a quick call...

SDIRA is forcing me to take a distribution to close my Roth with them instead of letting me forfeit a few dollars. This means an indirect Roth rollover is what I'll need to do as soon as they respond about how to fill their forms.

The termination fee was initially 250, then the dude said it was 150 and now it's 50 so I get a few bucks back.

jacob
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Re: Lending Club Sadness

Post by jacob »

https://www.bloomberg.com/news/articles ... at-you-owe

Coming soon: A market based ETF for those who are still interested in consumer junk loans. You can short it too.

henrik
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Re: Lending Club Sadness

Post by henrik »

I'm quoting myself from rube's journal a few years ago:
henrik wrote:
Sun Jun 08, 2014 1:25 pm
My returns (actual realised, XIRR, annualised) have hovered between 20 and 22%. I'm surprised by how stable it's been, but I have every expectation that as my portfolio and the whole platform becomes more mature, the returns will go down. I believe this also happened with LendingClub and other more popular ones as they grew and matured.
I just finished liquidating the remains of my P2P lending portfolio on Bondora. I made the first loans in the end of November 2013, so it makes for a nice round 5 years. Never added any new funds, but kept reinvesting until 2016. About half of the 300 or so loans I made eventually went sour. I had to sell the last 6 written off loans at a discount of 95%. In nominal terms I did come out in the green though - the total net return was 2.8% (0.55% annualised). Lessons learned - do your own calculations; don't invest on platforms where you can't keep up with changing rules and reporting methods.

Edit: numbers corrected to account for income tax paid (cannot be deferred for P2P/crowdfunding type investments here)

arcyallen
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Re: Lending Club Sadness

Post by arcyallen »

Henrik, thanks for sharing the final results. I've always thought "10%+ on a loan that's safe? that...that doesn't make sense. Junk bonds are less than that (and I know THEIR failure rates) - No." But it feels good and markets well, which is a staple characteristic of every cool new investment that eventually cracks.

steelerfan
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Re: Lending Club Sadness

Post by steelerfan »

I am the OP. As a followup, I am currently sitting with about 400 notes outstanding. I am reinvesting everything which results in about 12-14 new notes each month, I have and annualized return of 6.00%on the smaller older pool and 3.76% on the newer pool. The chargeoffs are largely the lower grade stuff that I bought in the first month or two and typically the lender has more than half the principal paid. I expect the returns on this pool to slowly climb as the mix continues to trend to the A notes which are currently 52 percent of the portfolio. I am not horrendously excited about this investment but I feel in the next couple of years it will improve. The big risk obviously is a severe downturn. I hand pick notes usually A homeowners with monthly income >10K per month. LC continues to raise the rate on the A notes with A1 now around 6.1 percent and the lower A notes over 8 percent.

I view this portfolio as more entertainment than an actual investment. It is sunk money as I don't want to take the time to liquidate. It will be the first spigot that gets turned on when I start drawdowns. To be honest I am much more positive than I was two years ago.

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Seppia
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Re: Lending Club Sadness

Post by Seppia »

I have left my small, test portfolio alone.
I'm seeing returns of about 1% when all is said and done, not really worth it for the risk
Currently left with about $500 in notes after 4-5 years, in hindsight it was a stupid move.
I'm not salty at MMM because for as much as he benefitted from affiliated links (I'm assuming), he still was the spark that changed my life and brought me here.
Overall, I'm thankful

prognastat
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Re: Lending Club Sadness

Post by prognastat »

@Seppia
I'm glad this is one of his recommendations that I avoided. I did do Betterment and have been less than impressed by the results there.

steelerfan
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Re: Lending Club Sadness

Post by steelerfan »

I think LC is a difficult investment for an average Joe such as myself. The individual loan slices you make are more much risky than buying a share of stock and even riskier than most investable junk bonds. There is a reason that they generally want you to be an accredited investor and have a certain NI/NW to start. At the point I started this thread 2.5 years ago I had a whopping $525 invested as someone noted and the defaults were starting. I was freaking even though the exposure was/is/will be an insignificant portion of my investments.

In the beginning I chased high rates which was the prevailing theory at the time here. Predictably I got slaughtered. What has saved me to this point was the fact that I still invested across the spectrum and invested in A/B notes from the beginning. I also continued to invest new money monthly until I hit my target. My first portfolio is small but I learned from some of my mistakes and got much more conservative in a hurry. I am sure luck is a factor as well… As a result it is performing ok.

I started fresh a couple of years ago with a new investment and my impatience led to another mistake. I invested in loans that were below the threshold of what I had already knew was acceptable. I was in a hurry to load up. Once again the losses mounted. Even though I made bad loans however, these loans were slightly higher quality than before and at least paid in for longer. There is a big difference between a loan that skips after a payment or two and a default that occurs when someone has already paid $20+ (P&I). You still lose but to a much lesser extent and some of the principal is redeployed to hopefully better decisions.

At this point, as a hobbyist investor in LC, I take my time selecting each loan and really take a detached long term attitude toward what happens. Shit happens and even the best notes sometimes fail. It is a game. You are slowly building a pool of loans. It is time consuming to build a pool as I feel you need to have loans in a ladder state before things start to stabilize. This will take at least a full loan cycle of reinvesting to accomplish and most people get discouraged and quit before they achieve this. I am not sure evaluating the pools average returns in the correct way to look at it. Just about everybody will lose at some point early in the process and the early return rate will eventually reflect this. I believe that the key is if there is one is to try to build up a consistent thick rope of payments as your end goal. If in the end I have a thousand+ people paying me monthly from that beginning seed investment I really don’t care where the return was along the way. I was looking for a monthly income stream. It takes a long time to accomplish. If I put $5K in a blue chip stock today it will be expensive and a few years down the road I will not be rich from it. The payoff if it comes will come later. I wish I put $5K in BTC when it was $200 and was prescient enough to sell it at the peak as well. I considered buying a beater SUV last summer ago for $3000 in ETH. I held off (blew it) and he dodged a bullet LOL. There is volatility in LC at points but I have other investments that have not paid off. When I consider LC versus other investments I invested in or hold like crypto or riding SDRL into the sea LOL GE anyone?, I feel like a genius….At least I am still in the black.

The key is diversify. Don’t take too much risk on one thing and don’t take yourself too seriously and you will do fine. I am sure there are people that do much better than I have and have better loan underwriting algorithms to maximize things but they are keeping quiet or working for a big outfit. I met some people on Seeking Alpha that seem to be pretty happy with LC and they were in it long before me and are still piling in big. There probably are better things to invest in but here I am. It is hard to get out without taking a big loss and I will probably sit tight. Right now new money is in cash for me until things shake out. Good luck everyone.

Lucky C
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Re: Lending Club Sadness

Post by Lucky C »

I bought a bunch of notes around 4-5 years ago with a filter based on past performance. I ran a statistical analysis on the filter to gain confidence that it wasn't just data mining. However even with a good filter, if you have a high number of notes you're only bound to do a few tenths of a percent above the mean.

Since that big purchasing binge I haven't been buying more, just withdrawing, and my net annualized return is 5.60%. After taxes this is only like 4.4%. This portfolio did its job of providing me with returns better than US treasuries with not much volatility. It was a good substitute for bonds during ZIRP, but I didn't want to keep purchasing more since interest rates were expected to increase, and since it would not be fun liquidating LC notes if we hit a downturn in the credit cycle while still having years left to go on the notes.

I don't think I'd buy more LC notes unless we ended up in a similar situation of near-zero interest rates but are in a period of expansion.

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Mister Imperceptible
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Re: Lending Club Sadness

Post by Mister Imperceptible »

I need $50,000 before December 31.

Would Lending Club be the best avenue for this?

My credit score is over 800 and I make bank.



.....Would the forumites be interested in crowd-sourcing a short term loan? This is not charity, I have identified a time-sensitive investment and I do not want to incur the cost of liquidating my current investments. Is anyone in search of yield that is better than cash?

Gilberto de Piento
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Re: Lending Club Sadness

Post by Gilberto de Piento »

I really hope this is the culmination of a long con. If it could be more oceans 11 and less Bernie Madoff that would be great but really either one would be entertaining.

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Mister Imperceptible
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Re: Lending Club Sadness

Post by Mister Imperceptible »

ERE-sourced loan experiment

viewtopic.php?f=3&t=11034

steelerfan
Posts: 127
Joined: Wed Feb 27, 2013 3:33 pm

Re: Lending Club Sadness

Post by steelerfan »

As a creator of this thread, I wanted to be the first to share the news that lending club is getting out of the individual note platform effective at the end of the year...I still have notes in various stages. They are converting cash payments and cash on hand to a savings account. Ancedotally, the notes available now are bearing a pretty high interest and my rates have been inching up. I will probably stop buying notes now and let them runoff.

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