I am pleased with my small investment into Lending Club as my loans are generally doing well. I invested the minimum $25 in each loan that I funded so that I could spread the risk around. I will continue to invest only $25 in each loan so that I have less to lose if one person defaults on the payments.
Here is the breakdown of my 25 loans as of this month:
- 3 fully paid off
- 1 charged off
- 21 current
My net return is 6.22% which is a bit low but is currently higher than what I could be earning even with my online savings from ING. The main reason my net return is so low is that I have chosen loans with very low risk because I am very risk averse.
I broke my loans down into portfolios based on the interest rate as follows:
- 10.4% or less: 9 loans (Low)
- 10.5% to 14.9%: 9 loans (Medium)
- 15% or more: 5 loans (High)
Expected payments from loans are as follows:
- Low: $6.31 (weighted average 8.68%)
- Medium: $6.64 (weighted average 12.12%)
- High: $4.47 (weighted average 17.50%)
This gives me a total of $17.42 in expected payments for the month. My goal is to have enough loans to generate $25 in repayments for the month so that I can use the repayments to fund new loans instead of having to include that investment amount in my monthly budget.
The loan that went into default cost me $21.80 because the person had only paid back $3.20 before heading into default. The loan that was fully paid off gave me $27.01, resulting in a profit on my investment of $2.01.
I will be getting four new loans at the beginning of next month because I decided to use some of the money I got this month from advertising on the blog to set up new investments.
I do hope that all my loans continue to do well so that I can start to build up a nice income stream that will give me extra money to put towards paying off my debts.