Wednesday, February 24, 2010

Reinvested Lending Club cashflow in another investment loan

It has only been a few weeks since my last Lending Club investment, but already I have received enough interest and principal repayment from my portfolio of Lending Club investment loans to invest in another loan. My current Net Annualized Return is still only 14.55%, below my goal of 15%, so I picked a pre-approved loan at 16.48% that is already 74% funded with more than half of the funding period remaining. I expect that this loan is likely to reach full funding within a couple of days.

Lending Club says that the historical default rate for loans such as this one is about 3.9%, so that my expected return is about 11.83%. In truth, my goal of 15% should factor in a default rate of about 3.5% or so, giving an expected return of about 11.5%. That is still quite respectable, especially in this economic and financial environment.

I thought of holding off on this investment until I had twice as much cash flow to make a larger investment, but I decided to just get it out of the way. Since I more than doubled my portfolio a couple of weeks ago, I expect that next month I will start seeing enough cashflow to support a larger reinvestment every month or so.

Come April, I am still expecting that I will double the size of my investment portfolio again.

-- Jack Krupansky

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