I’ve previously noted how to buy Lending Club loans if you’re located in Massachusetts. I have built my entire portfolio on the basis of purchasing loans off the FolioFN platform and there have been various pros and cons to this. More importantly right now is that my March 2012 Lending Club Performance was fairly good. On a monthly percentage basis my portfolio was up 1.2% which equates to a 14.4% annualized gain.
My Lending Club Performance in March 2013
Most people who update their Lending Club Performance on their blogs go with the statistics on their Lending Club dashboard. I come from an asset management background and thus I have my entire life and investments on a personal excel sheet that I track monthly. Thus I play around with the data to represent it in the form I prefer and that is how I’m going to show it going forward. Lending Club does a fairly poor job of showing you true values and percentage returns but I’ll try to show how I input my data at least for this March 2013 entry.
With this sheet I can get what my end of period cash value was. Since I’m purchasing from the FolioFN platform I make a considerable effort to ensure that I have no pending loans on that platform at the end of the month. Since FolioFN and Lending Club aren’t connected, anything that is pending in FolioFN is ignored from your Lending Club capital balance. This is an issue I would hope they can resolve in the future but you can’t do much about right now.
This is the most important page for me. It shows what my loan interest received is and is the crux of how I calculate my percentage performance. Additional parts of the monthly Lending Club Performance .pdf will show how much you paid in premiums and fees for your loans and those are important as well.
How I Calculate my Lending Club Performance
Here is the spreadsheet that I personally use to calculate my Lending Club Performance:
This is for the first three months of the year (January, February, March). And you can tell from this that I originally put in $2,000 and then another $1,000 in February. From compiling various numbers on the Lending Club website and performance report I’ve managed to calculate what the premium is that I paid for the loans purchased off FolioFN. The most dangerous part of FolioFN is purchasing loans at a premium because Lending Club has no way of accurately tracking how much of your money is going towards that and it can eat up a lot of capital.
You can see from my spreadsheet that I calculated I’ve paid $32 in loan premiums over the past three months which significantly ate into my gains. In March however I was disciplined in my investments and the loans I chose and added only $33 in loans and paid less than a $1 in premium for this. The end result is that my portfolio has had the following results:
So the first two months the premiums I paid to acquire FolioFN loans ate into my returns, but discipline allowed me to have a 1.2% return in March. I can’t complain about this but it really highlights the importance of not paying excess premiums for your loans.
Status of My Loan Portfolio
I currently have 127 loans total in my portfolio. 7 of them have been fully paid off early and 1 of them is late by 15 days. I haven’t decided my strategy for late loans yet, and it will likely be based off what happens with this loan. If it comes back and is current again I may consider selling it but most likely I’ll keep it. If it goes into collections I may start selling loans as soon as they go late, which is what many people have been doing.