I use Lending Club as part of my passive investment strategy.
For more detail about my personal experience both borrowing and investing with Lending Club, read my Lending Club review.
Lending Club returns as of March 2012
An up-to-date look at my Lending Club investment account as of February of 2012:
NAR (Net Annualized Return): 9.33%
Interest received: $555.60
Amount invested: $2,056.34
Available cash: $3,683.36
Account total: $5,739.70
Overall I’m happy as a clam about investing in peer loans via Lending Club.
Who wouldn’t be happy earning nearly 10% on their money?
Here’s another investor testimonial from DFA reader Michael:
I wanted to say thanks yet again. My regular Lending Club account is currently at 13.99% NAR. Just following the simple rules from your blog. Loved it so much that I’ve opened a Roth IRA with them as well. Received 2 of my first 6 payments. Already at 9.09% NAR.
I love it, so thanks!
He’s beating my returns by quite a bit so perhaps I’ll get his advice on tweaking note filters to pick the best notes to invest in (you can filter out notes based on tons of different criteria).
Lending Club IRAs
Like Michael, you can also open IRAs with Lending Club and basically combine Lending Club’s predictable returns with the tax advantages of an Individual Retirement Account.
They offer Traditional IRA, Roth IRA, SEP IRA, or Simple IRA through Lending Club.
It’s easy to rollover your 401k or transfer funds from your current IRA, and there are no fees for opening or maintaining your account.
Read more about Lending Club IRAs if interested.
Peer lending outlook
Awhile back I stopped funding new notes because we needed the cash flow. A month ago we did a short sale of our home and moved out-of-state. During the 6 month short sale process, as a hedge against the unknown, we kept cash liquid.
Times have changed.
Now we’re earning more, have lower expenses, and much less debt. We still have student loan debt, so paying it off is our first priority. That said, we know it’s good to save and invest while repaying debt (whenever possible) – so, because our situation has stabilized we’re planning to start funding investments again soon.
I’ll use the available cash in my Lending Club account ($3,683.36) to begin funding new notes.
Invest in peer lending
If you like the idea of earning returns while helping people, read more about peer lending, then open an account – not the other way around. Never invest in things you know nothing about.
For a few tips and tricks on earning higher returns, read the article I wrote on finding good notes to invest in.
Start small, tweak your strategy continually, and watch your returns grow.
That’s what I do, and like Michael said, I love it!