Reinvested ongoing Lending Club cashflow in another investment loan

Recent cashflow from my portfolio of Lending Club investment loans coupled with early repayment of one of the loans gave me enough cash this morning to invest in yet another consumer loan. My current Net Annualized Return is only 14.47% (it dropped with that early repayment), below my goal of 15%, so I picked a pre-approved loan at 16.45% that is already 76% funded with five days left in the two-week funding period. 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 3.78%, so that my projected return is about 11.94%. That includes Lending Club taking 0.72% as a servicing fee. 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.

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.

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 April (assuming my work income continues.)

-- Jack Krupansky