My Lending Club Performance – December 2011 Update
December was another solid month for my portfolio of Lending Club loans. My Lending Club account balance has now risen to $95,779.23 and I’m currently earning a net annualized return of 13.21%.
I did not place any new money into my Lending Club account during the month of December because I made a $10,750 investment in Prosper. I’ve outlined the strategy that I’m using in Prosper the post titled “My Prosper Investment Strategy.” I will write a performance update on my Prosper investments next month when I start to receive interest payments from the notes that I’m investing in. I’m finding there aren’t a large number of loans that meet the criteria that I’m using, so it may take some time to fully invest my initial $10,750 into Prosper notes.
All of my Lending Club funds continue to be fully invested in notes using the strategies that I’ve outlined in the post, the Great Lending Club Experiment. My net annualized return rose from 13.11% in November to 13.21% in December. This growth isn’t statistically significant; it just means that I haven’t had much of any new notes be charged-off during the month. I anticipate that my NAR will settle down to somewhere between 8% and 10% after the portfolio ages out over the course of the next couple of years. There are now 1,921 notes in my portfolio, up from 1,838 last month, with an average note size of $53.00.
Nickel Steamroller’s Portfolio Analysis tool is also providing me a good idea with how my various portfolios are performing. You can read about the strategies that I’ My “Common Sense” strategy is underperforming the other strategies that I’ve listed, but this is primarily because the average age of notes in the portfolio is much older. Currently, my LendStats D-F strategy is yielding the highest ROI at 13.26% and my LendStats B-C strategy is yielding a rate of return of 10.25%. My “LendStats A” strategy, a small portfolio that I’m using to determine if I can create a portfolio that has no late payments or defaults, is currently yielding an ROI of 7.41%, and has had no late payments to date.
My “Crowdsourced” strategy is not performing as well as I’d like. It has had a number of early late payments and is currently sporting a ROI of 9.01%. The idea for this portfolio was to invest in “popular loans” that get funded quickly. This experiment is beginning to demonstrate that just because a loan has a lot of interest from investors, doesn’t mean it will perform well. You are much better off creating your own set of criteria for loans based off of historical data from LendStats.
I continue to be happy with my Lending Club investment. During the month of December, I earned $992.89 in interest from the notes that I own. By the end of 2012, my goal is to have peer-to-peer lending investments which will generate a total of $2,000 in interest payments each month.