I have to admit that I have been slacking in regards to my lending club performance update and portfolio maintenance. If you’re looking for a truly passive investment income perhaps purchasing Lending Club loans on the secondary FolioFN marketplace isn’t the best for you. I still have the spare time to monitor my loans and purchase new ones, but if you can’t commit to at least an hour a week to really go deep into your portfolio and available loan inventory then I wouldn’t recommend this asset class. In positive news the performance from my Lending Club portfolio was solid again in the month of May.
Lending Club Performance Update for May 2013
This month my portfolio again returned 1.2%. The little indicator on the Lending Club platform has my Net Annualized Return at 15.49%, but I prefer to calculate things on my own. One important thing to realize is that if you have cash sitting in your lending club account you’re not earning anything on that. I try to use all of the available cash I have because even though it doesn’t harm your Lending Club stated Net Annualized Return, it does harm your actual return. Earning $20 per month in interest on $500 invested seems great at 4%, but isn’t so great if you have $2,000 in cash sitting doing nothing for you. That means your actual return is $0.8% ($20/$2,500), because you need to take into account all available capital.
If I don’t plan on using the cash in my Lending Club account within the next week or two I transfer it out and back into my checking/savings account at Schwab so I can potentially use it for other purposes. Plus even though interest rates are next to nothing, at least I’m generating some interest income in my Schwab account comparedto 0% if it sits in my Lending Club account unused.
And to show the update of my excel sheet I’ve changed how it is displayed slightly so it gives a clearer picture of how my returns show up and a good way to go about calculating it for yourself. Remember if you have any questions on how to calculate this feel free to comment or leave me some feedback, I’m more than willing to help others out.