Wednesday, April 07, 2010

Doubling my Lending Club portfolio size (again)

As I had been hinting in recent posts about Lending Club, I am going ahead and doubling the size of my investment loan portfolio since my work started up again at the beginning of April. I also switched banks, so I had to wait to verify the new bank before initiating the funds transfer on Monday. According to Lending Club the money should be available for investment sometime on Friday or Monday. I am actually using money from my federal tax refund.

I still need to decide whether to invest in $50 or $100 loan slices. The larger amount means fewer loans which is easier to vet and manage but greater exposure to risk of any loan, while the smaller amount means more effort but less risk. Or, I could pick a number in the middle. What I really need to do is think about what investment activity I expect in the future so that these investments are consistent with that goal. I'll probably double my portfolio again within three or four months, so I am leaning towards the larger loan size.

Even with this doubling my Lending Club investment is still a modest size experiment. Even doubled again it would still be modest size. If all goes according to plan (not that I actually have a plan), by the end of the year I should finally have a real investment in Lending Club loans.

My goal continues to be a 15% return, but I figure I need a little buffer so that repayments (and maybe even defaults) don't push me below my goal too frequently. I may in fact keep pushing upwards with loans in the 16% to 18% range until I get my return up to 16% and then gradually work the average back to 15.5%. I was briefly above 15% a couple of weeks ago, but then I fell back to 14.88%. Yesterday I finally crept back up to 14.99%.

So far, my Lending Club portfolio has been perfect, with no delinquencies or even late payments. I started investing with Lending Club back in June 2009.

This is still just an experiment for me since I have no prior experience with this type of investment, but so far in has been very encouraging. I intend to double the size of the experiment in June or July (assuming my work income continues.)

-- Jack Krupansky


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