It has been almost 2 years since I joined lending club as an investor, and I wanted to go over it with all of you readers. Things started out well for me, and then turned sour after about 18 months, and I stopped updating on what I’d been doing with it at that point. Well, this will probably be the final update about lending club, as I’m planning to wind down the last of my position. It just wasnt a profitable expriment for me (most likely because of the low investment amount of $1,000 that I’ve put in.
Last time, I mentioned that I was going to wind down about half of my position and move it into the market (which I did do). I had been using this as cash to play with on individual stocks (because all my other funds are Index Funds). That has been going well (I’m up overall, but down on 1 position and was able to get one of the ones I purchased to double before I sold it.
So above, you’ll find the returns and my current lending club account value. My initial investment was $1,000 and my total cash in lending club never got above $1,040 dollars because of defaults and charge offs. I have not had any charge offs or defaults (Or late notes) since I last updated, but as you can see by the average return, I would have been better off investing in an index fund as the stock market returned ~30% in 2013. Instead, I got 1.4%, which is just about double a regular savings account rate for exponentially more risk. Obviously, I’m not cool with this and have decided to sell the last of my notes.
Where am I going to put all this cash? Well I’m planning on investing it in my fledgling online business and hoping that I’ll be able to generate more returns with it that way, as well as give my fledgling business a little bit of a boost.
Unfortunately, this was a failed experiment (for me), but as I’ve mentioned in the other posts and this one, I think it’s because my balance was too small to ride out the defaults that were bound to happen (even though I thought I had picked good loans). A lot of people mentioned that had my balance been higher I would have been able to ride out the defaults and have been fine. I dont think that lending club is the worst idea and there have been reports of wall street firms investing in lending club (cant find a link).
Loans are also much harder to get a hold of these days, making it a more time consuming process than it was 2 years ago.
With that, my lending club experiment is over, and I’ll talk a bit more about my online business in the future.