After the end of every month now I’ve been eagerly awaiting my lending club performance updates. Unfortunately it takes Lending Club a little while to actually process the performance .pdf and upload it to their website and it came out even later this month than previously. But alas, I have now processed my lending club performance for the month of April and I came in at a very strong 1.2% again (14.2% annualized).
Lending Club Asset Allocation
A common question I see many people asking themselves is where Lending Club belongs in your personal asset allocation. In my opinion you should consider all of your loans on the lending club and folioFN platforms to be incredibly risky. Yes you may have been investing on the platform for 1-2 years now with very strong returns, but the social lending industry hasn’t been around long enough in my opinion to warrant it being classified as a safe investment.
Just by the nature of the loans it is risky. Usually people are refinancing and the loans are easily dischargable through bankruptcy. If somebody declares bankruptcy your loan is likely the first to be written off and you come away with nothing.
That’s not to say that Lending Club isn’t great, I’m one of it’s biggest proponents. But in the real world with logical asset allocation you should keep Lending Club as a very small proportion of your wealth. In fact, my Lending Club assets as a % of my net worth are only at 1.1%. I’m considering going up to a maximum of 5%, but that is the limit of my risk tolerance for such an investment.
My Lending Club Performance for April 2013
Let us get back on topic with my performance for the month of April. After running everything through my personal excel spreadsheet with all of my investments I had a return of 1.2%. You can see in the images how I account for all of the gains and losses in my lending club portfolio.