I am stunned how easy it is to invest with Lending Club. However, I do not say it is easy money, so do nothing when investing with Lending Club. An investor still should do the due diligent work, study the loans, diversify as much as possible and reinvest. If you plan to throw your money in the Lending Club account, be greedy and act stupid way, you probably lose. I am trying to find as many information as possible about how to invest better using this investing vehicle to maximize my return and I am glad I was able to find articles out there which confirmed that my strategy is going in the right direction.
I am surprised that I didn’t find this investing vehicle earlier.
So far, my account is returning 12.10% annualized return (NAR).
What other investment you can find out there providing it?
You do not have to take care of any fluctuation, volatility, bad market news, manipulation, pump & dump, panics and “beat the market by negative 8%” annually as when investing in the stock market. The only risk you deal with is the delinquency of the borrowers, which you can minimize by studying the loans into which you want to invest.
Recently I found a blog by Pinyo “Moolanomy Personal Finance“. I like that blog. I read couple of his thoughts on investing, personal finance and Lending club strategies. His a bit older post from February 2008 compares Prosper and Lending club features. He has a couple great points and that post made me to think about my strategy a bit and ideas I would like to see in Lending club.
First, Pinyo speaks about his desire to invest $800 dollars so his monthly payment (interest) can purchase one note monthly without contributing more money. It is a great idea which I am actually heading for too. I like tracking my own investments myself and I like creating spreadsheets in Excel (I actually use Open Office Calc spreadsheet) and I like to create formulas and dig deeper into different point of views of my investments. With Lending Club I do the same and it is apparent that I would be able to start buying my additional monthly note earlier than with $800 initial (or overall) investment. I started investing roughly $100 a month buying 4 notes monthly and after I invested $500 the interest and returned principal allowed me to start buying fifth note monthly (reinvesting). See my spreadsheet:
 Click to enlarge |
As you can see, in June I was able to start adding another note to my regular monthly purchases (this month is still showing zero, since the available cash is only $7.76 and I am expecting the most payments to come around August 12 to 16th). When you check the Expected Monthly Payment column, it is currently at $23.25, so next month I will be able to use interest only to purchase another loan note as Pinyo says, but most likely I will be able to start buying two more shares than just one.
I also found an interesting article describing the opportunity to download all notes available to invest as a spreadsheet (CSV format). The downloaded data provide a lot of information that you cannot see when reviewing individual loans. As a spreadsheet geek I am going to give it a try and create a filtering spreadsheet which will help me better evaluate loans and I believe lower the potential risk even more than today. When I’ll have the spreadsheet ready I will publish it.
There are a few features I am currently missing with this great investing opportunity and which would be great to have with Lending Club:
- It would be great if Lending Club allows you to fund your account using credit cards. Usually I am against using borrowed money for investing and I do not recommend it, however, since my credit score is quite great (739 Equifax at myFICO), I have some credit cards with very low interest rate and some with zero interest rate. I would like to use arbitrage with my credit card and use my zero APR cards to fund the account.
- Another option would be if Lending Club allows investors to use Paypal account even when you set up your bank account. Since you enter your bank account, the Paypal option disappears and is no longer available (Let me know if I am mistaken.). At least I couldn’t find it. I think, that transferring money to my Lending Club account from my credit cards via Paypal may not be (not verified) considered as cash advance and I would be able to use even more credit cards with my zero introductory rate to fund my Lending Club account.
- Allow to download account summary as CSV format (not only a PDF statement), with which I would be able to do more analysis and automate a lot of steps.
Other than that I am very satisfied with this investing opportunity and I will continue investing, learning and playing with this investing card. It has a great potential.
If you think you would like to give it a try and invest with Lending Club, let me encourage you to open the account and invest.
For those that are curious, here’s the current (as of 03/22/2010) list of eligible states for investing directly in new Lending Club loan origination:
* California
* Colorado
* Connecticut
* Delaware
* Florida
* Georgia
* Hawaii
* Idaho
* Illinois
* Kentucky
* Louisiana
* Maine
* Minnesota
* Missouri
* Mississippi
* Montana
* NewHampshire
* Nevada
* NewYork
* RhodeIsland
* SouthCarolina
* SouthDakota
* Utah
* Virginia
* Washington
* Wisconsin
* WestVirginia
* Wyoming
(source: fivecentnickel.com)
If you want to give it a try, you can open your own investing account here. I think if you use this referral you receive $25 bonus (not verified). If you invest initial $2,500 or more, you will receive a $100 bonus through this link.
Good ideas about stock trading!
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Good article about Lending Club!!! I have an account with them too. I was considering canceling it, but now I may reconsider!!!
Will you write more about your experience with Lending Club?
Good web site on investing. I really like it. I like Lending Club too.
Good investing site!
Will you write more about Lending Club?
Can I invest in Lending Club when I reside in Arizona? I couldn’t find that info! But great investment ideas here!
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Opening an account with Lending Club is so easy! I started this week thanks to your input and I am already making money! Great investing vehicle!
Do you have a link to Lending Club?
C’mon! Nothing is easy money! Not even Lending Club! You have to be careful investing with them! What about other clubs around? Do they exist?
Thanks for info on how to invest with Lending Club. I tried to use your advice, but noticed, recently there are no good quality debt notes available much in Lending Club. Getting risky!
Good job on describing Lending Club strategies. Thanks
Hi, i believe that i noticed you visited my web site so i came to ?return the want?.I’m trying to to find info about Lending Club to enhance my website!I suppose its ok to make use of some of your ideas!!
Very good information you write about stocks and options, it is very clean. I’m very lucky to get this info how to invest in stocks from you.
Nothing is easy money and investing with Lending Club can be tricky as well, mainly these days when many borrowers can lose their job easily and stop paying back. That’s what’s happening with my account, seeing a lot of people being at work for one or less years, losing the job and defaulting.
It’s appropriate time to make some plans for the future and it’s time to be happy. I have read this post and if I could I desire to suggest you few interesting things or tips. Maybe you can write next articles referring to this article. I want to read more about tips and tricks when investing with Lending Club!
Dow misses 2009 of moving ahead. The Dow will have to be over 12800 this year to even seea gain in 2011!! I dont know who’s portflio they are looking at???
European banks were already bailed out when AIG was bailed out by US tax payers. Now they need another traunch of cash? Time to fail and fire all these idiots. They already took home the billions in bonuses. The money isn’t there – really – where are they supposed to raise capital this time more fake bank notes?
Hope to read more updates about Lending Club strategies soon!
I can’t believe my husband bought stocks in this mess. He says there is no sense to what is going on in the markets. The logic is there is no logic , when things should up they go down,and the reversed. So lets take a chance, they have taken almost all of it, might as well let them take the rest. Maybe there will another fools rally and we can cash out with a little less loss this year. Who knows, the euro is up, see what he means.
I invest with Lending club and I am amazed of the results. Making 14% annually. Where else can you find it?
I found Lending Club recently. Thanks for your info on how to invest with them.
Investing with Lending Club can sometimes be tricky, but if you do your homework, you can eliminate a lot of bad notes.
Hi there, I found your blog via Google and thank you for informing how to invest with Lending Club. It helped a lot.
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