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

Anything related to investing, including crypto

SethLBender

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I started Lending Club last October I believe and here is the status.

Initially I deposited $2500 but then withdrew about $2000 so invested roughly $500.

If anyone wants to try it out you can deposit $1,000 and then withdraw any amount I believe therefore investing even less.
 
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lludwig

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I started Lending Club last October I believe and here is the status.

Initially I deposited $2500 but then withdrew about $2000 so invested roughly $500.

If anyone wants to try it out you can deposit $1,000 and then withdraw any amount I believe therefore investing even less.

Not recommended you should have at least $2,500 to be diversified.

If $2,500 is too much for you, you shouldn't even invest in Lending Club.
 

SethLBender

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@lludwig thanks for the advice. I agree it would be more better protected against notes that default.

I heard so many mixed things about P2P that I decided to invest less and I pick every note myself. I’m going to keep reinvesting the principal and interest as well as lend more notes.

Also I wanted to see how liquid the investment is.

Sometimes I think it’s better to get started than not get started at all.
 

MTF

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Quick update regarding EstateGuru (European P2P lending platform for real estate loans with collateral) where I invested in five loans: four were repaid (one a few months after the original repayment date), one is still in default.

They posted the collateral on auction three times, and three times the auction failed. It's now 10 months past the repayment date and I'm yet to receive my money back. I hope that eventually they'll sell it.

I'm glad that I stopped investing in P2P loans as it doesn't make sense to risk so much money (or liquidity in case they eventually repay the investment) for 10-12% a year.
 
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FinTech

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This is a long thread and haven't read every single post. Sorry if I repeat anything already said.

When I created my site Investor Junkie, Lending Club in fact was the first I reviewed.

Lending Club for Investors Review 2018 | Still a Good Investment?

I started with the service in 2010 and invested actively till 2015. During that period I documented around 10.50% NAR or around 9.5% return. At my peak I had a little more than $25k invested.

I got out in 2015, because I knew rates were on the rise and other investments would become more attractive. It also seems during this time Lending Club wasn't as good with loan origination. I also felt they mispriced some notes and invested in the ones not accurately priced during this time.

I thought my 5 year run more than proved Lending Club was a viable service. Though of course had it's issues.

From the recent comments on my review, it seems many had issues around the time I started exiting Lending Club.

Recently Lending Club offered me $5k to update the review and note my progress in their service if I invested new money. I am completely able to state anything I want about the service and has no strings attached. So for since Jan 2018 (granted it's not a lot of time yet) but getting 10.5% NAR returns. I suspect this will go around the 8-9% range.

The issues with both Lending Club and Prosper are:
  • Lack of liquidity. Hard to exit and should be a long-term investment
  • Must constantly actively search for new notes. This isn't a passive investment and requires a least a few hours a month to review existing and new notes to invest in.
  • As rates rise other investments that will earn similar returns for little or no work
  • Income is taxed as ordinary income
  • The secondary market for Lending Club is just ok, but at least improved since I first started.
  • The next recession returns will be substandard.
  • Unsecured debt so they can just stop paying and only recourse is a bad credit score.
If you have any questions about these services let me know.

Interesting this was the same time 2011-2015 I had about 50k there. I ended up with about 7%... meh. I was expecting closer to 10% and Lending club definitely seemed to loosen up credit standards as they started going after institutional investors. I wouldn't mess with it again. Too much risk on the business getting greedy. Prosper was a S show. I thought lending club was better but they turned into prosper.
 

lludwig

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I wouldn't mess with it again.

I'm not messing with it again because of where we are in the economic cycle. I may reconsider when we are at the tail end of the next recession.
 

raritee

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On my lending club account page, it gives the percentage I have made annualized. I've made a little over 6 percent on average. In the beginning, the average was 15 percent. I know it isn't all that great, but I've done worse. I'm assuming some of you guys lost money. My strategy isn't anything special. What am I missing? Do you guys just don't like something as low as 6 percent? I kinda don't like the lack of transferability on death, or the other unknowns.
 
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Marco Skin

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On my lending club account page, it gives the percentage I have made annualized. I've made a little over 6 percent on average. In the beginning, the average was 15 percent. I know it isn't all that great, but I've done worse. I'm assuming some of you guys lost money. My strategy isn't anything special. What am I missing? Do you guys just don't like something as low as 6 percent? I kinda don't like the lack of transferability on death, or the other unknowns.
I see that you have a lot of criticism with lending clubs. I wonder if you are allowed to invest in European platforms in the US.
I use a couple of them, and they are all in euros.
To gather information I look at the usual financial blogs like this review of mintos, but there are many similar online.
and industry forums.
If I can attach a picture of my account.
The ways of investing that I use are only 2.
One fully automated and one custom.
 

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BooBoosHelix

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There are many profitable opportunities in crypto where for example people have to deposit ETH as a collateral and borrow against it (for example to avoid a taxable event) and if liquidated it will go to the stakers which in some way is more safe than the fiat version if you believe in ETH that is. If you find a coin which pays % of the fees + staking rewards you can have massive gains. Also one of the coins Iam invested in is 100% self governance by Code no human interaction! So impossible to be a complete ponzi fraud. I reviewed all codes myself on GitHub and know a company who did also. Iam invested and staking LQTY, ALCX, PERP and Alpha. Also if the coin/token appreciates you have a massive upside while the downside is somewhat protected from the passive income (if we see another crypto winter only coins that mint stable coins will do somewhat well I guess, which would be LQTY for LUSD and Perp for USDC).
Note that perp is more about option trading than lending but I like my passive income a lot.

for example I have been staking 1000 perp and make about 20 coins a week which at current prices is 164$ on a 7000$ Investment (which appreciated to 8200$ at the Time of writing). My investment was already 14000$ worth so please be aware crypto is highly volatile and the % gains by passive income will drop over time. However if perp appreciates in marketcap i can see a 150-450$ price per coin which would increase my now weekly to 3000-9000$ week.

Tldr: look into crypto for p2p lending
 
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chicagobluu

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Not sure the level of interest still in P2P. I did Lending Club for a couple years till they more or less shut down. My returns were mediocre and I think I did end up with maybe 4% overall. Not worth the effort.

For better or for worse, I decided to give it another try with Prosper. I was intrigued by the idea of using a separate algorithm service which chooses which loans to buy. Supposedly, they use metrics from which loans perform the best and then choose the loans most likely to do well. I've been at it for about a year and a half and so far according the Prosper, my overall performance is 9% (with reinvesting payments). If any interest I can share more. I imagine that over time this return will probably dwindle to 6 or 7 though.Screenshot 2022-12-19 at 8.06.32 PM.png
 
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