Lending Club Investing: Good Passive Income Source? (Answer: NO)

[Mineralogic]

Received my first interest payment today!! Woo hoo 14 cents! Which BTW, is 14 cents more than I received from my checking account interest at my bank which has 10X the money.



Its a concern but I don't lose sleep over it. I think the best defense against digitized money is to own your own home, that way the only payment is taxes and utilities. Still a government lease (taxes) but 200/mo sure beats $11k/mo.

What? I was thinking your update would be like 140 bucks, not 14 cents. Spilt milk out of my nose realizing you still did better than in a bank! HA

 

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[MJ DeMarco]

I was thinking your update would be like 140 bucks

Naw, I don't have that much cash committed. My first note paid on time (woohoo!), I think I have 200 more.

 

[Mineralogic]

Naw, I don't have that much cash committed. My first note paid on time (woohoo!), I think I have 200 more.

very cool!!!

 

[GlobalWealth]

I am definitely warming up to p2p. I get payments almost daily.
I still only have a small amount but the payments come regularly.

With mintos on car loans the have a buyback guarantee and I have had 1 out of 20 loans bought back. But it went very smoothly and they pay the interest at buyback.



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[MTF]

Its a concern but I don't lose sleep over it. I think the best defense against digitized money is to own your own home, that way the only payment is taxes and utilities. Still a government lease (taxes) but 200/mo sure beats $11k/mo.

Great point. It definitely feels safer than keeping money in a bank account where it earns almost nothing and isn't really that secure.

With mintos on car loans the have a buyback guarantee and I have had 1 out of 20 loans bought back. But it went very smoothly and they pay the interest at buyback.

About 80-90% of my loans at Twino are repaid on time. The rest are delayed but they pay interest for the delay, too, so I don't worry about it at all. Already made back over 30 euros in interest and it's been just a few weeks, so nothing to complain. Sure beats almost nothing my bank pays for the deposit (though it's obviously much better liquid-wise, as even with 1-month loans in which I invest exclusively it can take up to 60 days to get the money back).

I guess in some way it can also serve as diversifying yourself internationally a bit as it's essentially storing your money offshore (if you don't have a bank account in Latvia already).

 

[NYCGoblin]

I wasn't able to invest at Lending Club, so I went over to Prosper instead. I have had a few notes be late, 2 get paid off early, and 1 person file for bankruptcy.

Overall my notes have done well I am at about 11% now. I bought a good amount of higher interest loans earlier this year, but will be moving to lower interest note purchases for a bit now. Love it so far.

 

[Mineralogic]

I wasn't able to invest at Lending Club, so I went over to Prosper instead. I have had a few notes be late, 2 get paid off early, and 1 person file for bankruptcy.

Overall my notes have done well I am at about 11% now. I bought a good amount of higher interest loans earlier this year, but will be moving to lower interest note purchases for a bit now. Love it so far.

does anyone know the deal with taxes etc when it comes to Lending Club/Prosper. Last I checked it looked like a nightmare in accounting for it

 

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[MJ DeMarco]

does anyone know the deal with taxes etc when it comes to Lending Club/Prosper. Last I checked it looked like a nightmare in accounting for it

I'd imagine it's a simple 1099-INT form.

 

[rc08234]

I wasn't able to invest at Lending Club, so I went over to Prosper instead. I have had a few notes be late, 2 get paid off early, and 1 person file for bankruptcy.

Overall my notes have done well I am at about 11% now. I bought a good amount of higher interest loans earlier this year, but will be moving to lower interest note purchases for a bit now. Love it so far.

In the case of the bankruptcy what happened?

 

[Mineralogic]

I'd imagine it's a simple 1099-INT form.

loos like multiple forms or sections possible MJ

http://www.lendacademy.com/lending-club-prosper-tax-information-2014/

 

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[iAmTrade]

These kinds of nouveau investment firms is how people lose millions. One moment you're lavishing at how your $500,000 account has accrued $150,000 in interest, and the next day you're reading an article at the Wall Street Journal detailing how the firm has gone bankrupt and has misappropriated billions of dollars to "fund operations" and "stay afloat" -- suddenly your $650,000 which was merely a digital imprint on a screen, is frozen, or worse, gone.

Can't merely say something won't work because of an emotional aspect of fear. Yea, things can turn to shit as easily as it is for someone's boss to say "you're fired"...

But lets take a look...

With Lending Club...
1. You are a lender.
2. You choose who to lend the $ to.
3. You have no limit to how many people you lend $ to (SEE Appendix A)
4. You get your interest if people pay on time, and you get squat if they don't.
5. You lose money if you have to go to collections to get paid.

Now... compare that to a bank...

1. Bank is a lender.
2. They choose who to lend the $ to.
3. They have no limit to the number of people they can lend to (SEE Appendix A)
4. Banks get their interest if they get paid on time, and they get squat if they don't. Or foreclose a home, repo etc, in essence they still lose money if they have to go to any kind of collections to get paid.

------
Now ...APPENDIX A...

What the bank does = $
What lending club does = $


Hence... $ from lending club for us, investors = $ for the bank and their investors (those people that keep deposits in their bank accounts for a .01% interest rate)...

Ah, so what do we see here? We can say..

Lending Club = A Bank (you get the point)...with better gains for the investor...
A Bank = lending club without the nice interest rates but with the security of not losing your money and in fact LOSING YOUR MONEY due to inflation.

Hence.... remove all money from the bank and give it to lending club.

The end.

(I am for P2P lending, and have used Lending Club since 2010 (when I turned 18). Have both been a lender, and borrower (for a new car). I have never, not, been given my dues when they were due to be paid out to me, then again I don't have 50k to use.

-------------
Aside from that... http://www.lendingmemo.com/sell-late-notes-lending-club/

If you are all dabbling in Lending Club a little... I HIGHLY SUGGEST you look into the article I just linked to. To sell your notes on lending club. If you do the math (they did it for you on the article)...you may, at times, be better off selling, before you lose the entire sum you invested for some notes.

I am also copying a little bit of the article at http://www.lendacademy.com/lending-club-review/

1. NSRPlatform (https://www.nsrplatform.com)
   Has a complete suite of useful tools for Lending Club investors. There is a back testing and filter feature that provides a front end to the entire loan history of Lending Club broken down by loan grade. Investors can test various filtering strategies to determine the best historical returns. Investors can also upload their own Lending Club portfolio for analysis. NSR can also be used for order management and automation.
2. LendingRobot (https://www.lendingrobot.com/)
   LendingRobot provides order execution for Lending Club and allows you to create filters to narrow your investment criteria. Besides filter based investing, they also offer a fully automated selection, which will invest in loans for you based on whether you seek a conservative or aggressive investment approach. They also provide data on order history, sell history and provide a cash-flow forecast.
3. PeerCube (http://www.peercube.com/lc/)
   PeerCube has two main functions. It provides an alternative to the Browse Notes section of Lending Club allowing investors to run more sophisticated filters. Then in just one click investors are taken to the Lending Club site to complete an investment on the loan. There is also a Portfolio Upload section where PeerCube provides analysis of an investor’s portfolio.
4. BlueVestment (https://bluevestment.com/)
   BlueVestment specializes in automation for LendingClub. Through BlueVestment, users can create their own filter criteria using 22 attributes and also create advanced filters using the node builder. From there, the strategy can be added to a Lending Club account for automation.

If you want to put a considerable amount of money in lending club, I suggest you take a look at the above 4 tools you can use.

If you want to see some results of someone sharing all his knowledge/progress with Lending Club... http://www.lendacademy.com/my-returns-at-lending-club-and-prosper/ look for Peter Renton's articles as they are full of gold nuggets. Everything at lendacademy is a nugget if you're seriously considering putting a lot of cash in P2P lending.

---------
Hope it was okay to post all these links. I gain nothing from the links themselves, I just copied and pasted some things I had saved in my bookmarks over the years.

Thats all I have to say. If you want returns above dumb bank runs, enjoy. Peter's the owner btw...

 

[MJ DeMarco]

Can't merely say something won't work because of an emotional aspect of fear. Yea, things can turn to shit as easily as it is for someone's boss to say "you're fired"...

But lets take a look...

With Lending Club...
1. You are a lender.
2. You choose who to lend the $ to.
3. You have no limit to how many people you lend $ to (SEE Appendix A)
4. You get your interest if people pay on time, and you get squat if they don't.
5. You lose money if you have to go to collections to get paid.

Now... compare that to a bank...

1. Bank is a lender.
2. They choose who to lend the $ to.
3. They have no limit to the number of people they can lend to (SEE Appendix A)
4. Banks get their interest if they get paid on time, and they get squat if they don't. Or foreclose a home, repo etc, in essence they still lose money if they have to go to any kind of collections to get paid.

------
Now ...APPENDIX A...

What the bank does = $
What lending club does = $


Hence... $ from lending club for us, investors = $ for the bank and their investors (those people that keep deposits in their bank accounts for a .01% interest rate)...

Ah, so what do we see here? We can say..

Lending Club = A Bank (you get the point)...with better gains for the investor...
A Bank = lending club without the nice interest rates but with the security of not losing your money and in fact LOSING YOUR MONEY due to inflation.

Hence.... remove all money from the bank and give it to lending club.

The end.

(I am for P2P lending, and have used Lending Club since 2010 (when I turned 18). Have both been a lender, and borrower (for a new car). I have never, not, been given my dues when they were due to be paid out to me, then again I don't have 50k to use.

-------------
Aside from that... http://www.lendingmemo.com/sell-late-notes-lending-club/

If you are all dabbling in Lending Club a little... I HIGHLY SUGGEST you look into the article I just linked to. To sell your notes on lending club. If you do the math (they did it for you on the article)...you may, at times, be better off selling, before you lose the entire sum you invested for some notes.

I am also copying a little bit of the article at http://www.lendacademy.com/lending-club-review/

1. NSRPlatform (https://www.nsrplatform.com)
   Has a complete suite of useful tools for Lending Club investors. There is a back testing and filter feature that provides a front end to the entire loan history of Lending Club broken down by loan grade. Investors can test various filtering strategies to determine the best historical returns. Investors can also upload their own Lending Club portfolio for analysis. NSR can also be used for order management and automation.
2. LendingRobot (https://www.lendingrobot.com/)
   LendingRobot provides order execution for Lending Club and allows you to create filters to narrow your investment criteria. Besides filter based investing, they also offer a fully automated selection, which will invest in loans for you based on whether you seek a conservative or aggressive investment approach. They also provide data on order history, sell history and provide a cash-flow forecast.
3. PeerCube (http://www.peercube.com/lc/)
   PeerCube has two main functions. It provides an alternative to the Browse Notes section of Lending Club allowing investors to run more sophisticated filters. Then in just one click investors are taken to the Lending Club site to complete an investment on the loan. There is also a Portfolio Upload section where PeerCube provides analysis of an investor’s portfolio.
4. BlueVestment (https://bluevestment.com/)
   BlueVestment specializes in automation for LendingClub. Through BlueVestment, users can create their own filter criteria using 22 attributes and also create advanced filters using the node builder. From there, the strategy can be added to a Lending Club account for automation.

If you want to put a considerable amount of money in lending club, I suggest you take a look at the above 4 tools you can use.

If you want to see some results of someone sharing all his knowledge/progress with Lending Club... http://www.lendacademy.com/my-returns-at-lending-club-and-prosper/ look for Peter Renton's articles as they are full of gold nuggets. Everything at lendacademy is a nugget if you're seriously considering putting a lot of cash in P2P lending.

---------
Hope it was okay to post all these links. I gain nothing from the links themselves, I just copied and pasted some things I had saved in my bookmarks over the years.

Thats all I have to say. If you want returns above dumb bank runs, enjoy. Peter's the owner btw...

Some great links and info, thanks.

Just a point regarding risk. In a 2008 near financial collapse scenario (which could be brewing now) will these companies survive? I honestly don't know and I don't prefer to have six or seven figures into it to find out. On the other side of the coin, I'm not too worried that Vanguard or Ameritrade Holdings will survive. If the P2P companies don't survive, the world would chalk it up to more startup and disruptive technology failures, if the latter doesn't survive, the world would be in deep shit-- like apocalyptic.

 

[CMA]

I have been investing in P2P loans through Prosper for about a year now. I must say that this is quickly becoming one of my favorite investments. You pick the loans and have the ability to be as picky as you want, you get paid pretty much daily and the returns have been spectacular on my end (9.78%.) I only have a small % of my speculative money in it, but I will keep increasing if returns stay over 7%. I can share more details (loan types, etc.) if it'll help anyone.

 

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[MJ DeMarco]

Chinese P2P platform exposed as Ponzi scheme. (To the tune of 76 BILLION dollars. Yup, "B".)

http://www.marketwatch.com/story/ch...tors-of-76-billion-in-ponzi-scheme-2016-02-01

 

[GlobalWealth]

Chinese P2P platform exposed as Ponzi scheme. (To the tune of 76 BILLION dollars. Yup, "B".)

http://www.marketwatch.com/story/ch...tors-of-76-billion-in-ponzi-scheme-2016-02-01

Damn. 76B. Yikes.

Not surprised though with China.

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[iAmTrade]

Oh my. Can you imagine... How do people fall for things to the tune to give away 7.6Billion USD like that?

I don't understand how they can keep it running for so long.

(You know, any organization you give $ to online, can perform a wire transfer to an offshore account. Leave the country, change their name and disappear forever...

I find it impeccably interesting how there isnt an organization that handles*prevents these things.


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[GlobalWealth]

(You know, any organization you give $ to online, can perform a wire transfer to an offshore account. Leave the country, change their name and disappear forever...

Even more interesting, and possibly more disconcerting is that the US is the largest of these offshore tax havens. The US enforced FATCA on the world, but is one of only 4 countries so far to refuse to sign it. Irony?

The US wants to know everything about US account holders abroad, but refuses to reciprocate with ANY foreign agency when they want to know about their subjects' assets.

The huge irony in all of this is that those hidden trillions of untaxed assets, are mostly sitting in banks right in he the gold ole US of A. Primarily in NY.

So your point is correct, except that the money actually ends up at Chase or BofA.

 

[iAmTrade]

Bleh, reminds me of a forensic accounting and auditing course I took in college 2 years ago.

The smart move to have been done- is just be legitimate, and take a higher cut as they put such a cut in their pocket as an employee bonus or whatever. Thats perfectly legal. And likely would have given the same security as the 7.6 Billion.


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[GlobalWealth]

The smart move to have been done- is just be legitimate, and take a higher cut as they put such a cut in their pocket as an employee bonus or whatever. Thats perfectly legal. And likely would have given the same security as the 7.6 Billion.

Unfortunately for some the lure of the scam is too great.

I always wonder as you said, why not just be legit and make the cash indefinitely.

 

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[MJ DeMarco]

Now 30 days into it and the account is reporting 6.6% annualized return. Thus far my impressions are that this is going to be a nice tool to have in the money system toolbox.

 

[GuestUser140]

Now 30 days into it and the account is reporting 6.6% annualized return. Thus far my impressions are that this is going to be a nice tool to have in the money system toolbox.

My initial thought was: Why so low? He must have started off conservatively. Then I realized he's in the US.

@GlobalWealth : I noticed US and UK p2p platforms that have been in business for a while tend to have lower returns 4-6% vs 9-14% for young European platforms.

How come? Does competition / saturation even it out in the end? Is this to be expected for the younger EU platforms over time, too?

 

[MJ DeMarco]

Why so low?

That's the return they are predicting with loan losses. The weighted average rate of my notes is 10% which is skewed low because I bought too many loans from good credit borrowers, hence a lower rate.

 

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[GlobalWealth]

My initial thought was: Why so low? He must have started off conservatively. Then I realized he's in the US.

@GlobalWealth : I noticed US and UK p2p platforms that have been in business for a while tend to have lower returns 4-6% vs 9-14% for young European platforms.

How come? Does competition / saturation even it out in the end? Is this to be expected for the younger EU platforms over time, too?

A few years ago Prosper was paying 12% or so. Same with LendingClub. But a lot of institutional miney is there now driving down yields.

Its just a matter of supply and demand.

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[MTF]

@GlobalWealth : I noticed US and UK p2p platforms that have been in business for a while tend to have lower returns 4-6% vs 9-14% for young European platforms.

How come? Does competition / saturation even it out in the end? Is this to be expected for the younger EU platforms over time, too?

Don't forget that interest rates in some of the countries served by the young EU platforms aren't as ridiculous as in the US or the UK, or most of Europe for that matter. For instance, interest rate is 8% in Georgia and 1.5% in Poland. Loans from these countries are available on Twino.eu. Then there's also less competition in these countries as well as more difficulties getting a bank loan (and hence, people being fine with paying more in interest because otherwise they wouldn't be able to borrow money at all).

Chinese P2P platform exposed as Ponzi scheme. (To the tune of 76 BILLION dollars. Yup, "B".)

http://www.marketwatch.com/story/ch...tors-of-76-billion-in-ponzi-scheme-2016-02-01

That's super disturbing. Any ideas how to identify such traps and avoid them? I've already shared some ideas before (like splitting money over a few platforms, perhaps withdrawing some money from time to time, etc.) but if they could do it with 76 billion, then the risk is probably even much higher with young platforms like Twino or Mintos.

 

[iAmTrade]

My initial thought was: Why so low? He must have started off conservatively. Then I realized he's in the US.

@GlobalWealth : I noticed US and UK p2p platforms that have been in business for a while tend to have lower returns 4-6% vs 9-14% for young European platforms.

How come? Does competition / saturation even it out in the end? Is this to be expected for the younger EU platforms over time, too?

Want to know why...?

European mentality and culturallity lends to state that when in debt, pay that $hit. There is corruption, are high fees, being shunned, people don't believe they should take $ and not pay it back, they are not consumer based- they dont consume bc it makes them "feel good and in the hood for having an apple iPhone"

That** AND people don't make too much $ in these smaller, 3rd world countries. So rates are high and in fact "average" to be at 13/14 because of the lack of infrastructure, and sources of funding (Macedonia, has 2 banks.... Hmmm...can I repeat? A country- only has *2* banks to choose from...what a nice monopoly)....

It shocks me to see those rates are at 13/14- in Africa its around 25%.

Invest in the poor countries, they need it more and are willing to pay more for it [emoji6] Kind of cruel, but true in capitalism.


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[GuestUser140]

Want to know why...?

European mentality and culturallity lends to state that when in debt, pay that $hit. There is corruption, are high fees, being shunned, people don't believe they should take $ and not pay it back, they are not consumer based- they dont consume bc it makes them "feel good and in the hood for having an apple iPhone"

That** AND people don't make too much $ in these smaller, 3rd world countries. So rates are high and in fact "average" to be at 13/14 because of the lack of infrastructure, and sources of funding (Macedonia, has 2 banks.... Hmmm...can I repeat? A country- only has *2* banks to choose from...what a nice monopoly)....

It shocks me to see those rates are at 13/14- in Africa its around 25%.

Invest in the poor countries, they need it more and are willing to pay more for it [emoji6] Kind of cruel, but true in capitalism.


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Are there any african p2p lending websites?

 

[CMA]

Thought you guys might find this helpful. This is how my Prosper account returns are playing out. Seasoned returns are those held for 10 months or more. I have had 3 notes default and a few more on the way which will hurt returns. I only invest the minimum amount of $25 and try to diversify the loans. There is a higher AA rating, but I do not invest in those as the return is around 5%. Happy investing!

 

[Mineralogic]

I'M in with my first loan selections at Lending Club...currently in process though looks like some might kick out.

 

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[GuestUser140]

Thought you guys might find this helpful. This is how my Prosper account returns are playing out. Seasoned returns are those held for 10 months or more. I have had 3 notes default and a few more on the way which will hurt returns. I only invest the minimum amount of $25 and try to diversify the loans. There is a higher AA rating, but I do not invest in those as the return is around 5%. Happy investing!

Why not go for more E and HR loans? If you diversify enough...

 

[CMA]

Why not go for more E and HR loans? If you diversify enough...

Interesting part is that I haven't had any E or HR loans default, but E and HR loans are very high risk and are actually pretty limited as far as the overall loan pool. Most borrowers have better loan ratings. I prefer to keep these to a minimum amount in my portfolio.