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CHARLES posted:I got my first one too this past week. It made me start to wonder about the secondary market. Does anyone have any experience delving into that side of LC? I don't even care about individual notes anymore. I'd you have 200 notes that's $5000 in principal. If 4 of those are suddenly not paying then that's 2% off your rate of return. There's nothing you can really do about it anyway except have enough total notes that your exposure to defaults spread out. After accounting for that, my rate of return is like 7-9% which is pretty decent.
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Aug 27, 2015 12:04
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| # ? Apr 25, 2024 18:33 |
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http://100mdeep.com/ - "Quantitative Strategist" made some cool charts using data from Lending Club and talks about different investment strategies
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Sep 22, 2015 15:46
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Some quick napkin math shows that over the past 3 years, I am earning an average of about 2% of my total notes in bonus notes every month - meaning, since I have about 1800 notes right now, if I leave it alone, I will have about 1836 notes in a month. Extending that over a long time (say 20 years) yields some... very interesting results. I am sure I'm missing something, or by the time I hit retirement age, I'll have something like 63,000 notes. What am I missing? I should add, I calculated this by taking my total of open notes, subtracting the total from the previous month to get total new notes, and then subtracting the ones I've paid for, to get bonus notes, then dividing bonus notes by total notes. It varies quite a bit month to month, but the average is right around 2%. Can someone better at math than me help out? Can someone else who's been in for a while confirm/deny the bonus note rate?
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Sep 22, 2015 16:51
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Does interest radar auto invest actually work? I set up Aprils filter recently, and on the analysis page it will show some notes found, but auto investment never happens. I have both my filter and main auto investing set to 'Online'. What am I missing?
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Sep 22, 2015 18:27
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withoutclass posted:Does interest radar auto invest actually work? I set up Aprils filter recently, and on the analysis page it will show some notes found, but auto investment never happens. I have both my filter and main auto investing set to 'Online'. What am I missing? IR has been in the process of shutting down and merging with BlueVestment. I made the switch a couple of months ago, so I am not sure if IR is still working, or what settings you might need to change. Check your API number maybe?
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Sep 22, 2015 18:36
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April posted:Some quick napkin math shows that over the past 3 years, I am earning an average of about 2% of my total notes in bonus notes every month - meaning, since I have about 1800 notes right now, if I leave it alone, I will have about 1836 notes in a month. I think it's more informative to look at the monthly account value, subtract last months value, subtract any deposits you made, then divide by last month's value. I get roughly 0.8% higher total account value per month which is about 9.5% annual return. This jives with what LC says my adjusted return is. Still a nice return and projected out to retirement age it's great if the returns hold up over time. But I feel like it's a higher risk asset class and also there are tax implications to consider (should have done it all in an IRA from the get-go).
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Sep 22, 2015 18:55
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Saint Fu posted:I'm getting a similar number of new notes per month but this doesn't mean it's 2% in gains every month. I think counting total notes doesn't take into consideration the amount owed on each note so as they age, they'll provide less interest per month and therefore are less valuable...? On the first paragraph, I agree, BUT if I'm reinvesting every bit, I'm continuously getting brand-new notes as well, so although the interest in old notes is less, the new ones should offset that. Starting in December of 2011, here is the interest per open note I've received each month (total open notes/interest received): $0.1130 $0.2630 $0.1036 $0.0933 $0.1970 $0.2674 $0.1700 $0.1575 $0.1836 $0.1478 $0.1332 $0.1176 $0.1558 $0.2238 $0.2306 $0.2592 $0.2553 $0.2685 $0.2532 $0.2469 $0.2473 $0.2365 $0.2419 $0.2162 $0.2351 $0.2467 $0.2057 $0.2268 $0.2053 $0.2036 $0.2069 $0.2002 $0.1899 $0.1819 $0.1958 $0.1599 $0.1812 $0.1719 $0.1538 $0.1750 $0.1674 $0.1540 $0.1541 $0.1670 $0.1432 **Note - this does not take into account notes that are late. It does look like it's trending downward, but it seems like it bounces, and stays right around $0.18 per note on average every month. So total notes might not be the perfect indicator, but I think it's a simple way to project it moving forward, at least somewhat. I'll have a better idea in the next 6 months or so, but even if the average interest per note drops, the increase in total notes should keep the overall gains going up. Notes are fun!
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Sep 22, 2015 19:19
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April posted:Some quick napkin math shows that over the past 3 years, I am earning an average of about 2% of my total notes in bonus notes every month - meaning, since I have about 1800 notes right now, if I leave it alone, I will have about 1836 notes in a month. I'm lazy so I put $45k with no extra money being added into my compounding interest app. 20 years at 18% net interest hits $1.6m. When I first started looking at p2p lending this is something that I asked about. When I did a financial simulation of the returns I found a similar result. Two factors seem to be at play: the revenue from the loans being amortised (front loaded interest) and the return of loan principle which you can reinvest for more front loaded interest. You result stacks up in my excel spreadsheet but I've been meaning to do a more detailed internal rate of return calculation. I might get around to that in January when I have more free time. e: The thing is there are some other factors that break predictions. Obviously the $1.6m above is based on $25 face value of notes but the average value will be somewhere over half of the face value. In addition to that whenever you add money to p2p lending it will take 5 years before the rate of increase in notes will settle down. At New Zealand p2p interest rates money put into 3 year notes will turn into 3 times the number of notes, and additional money put into 5 year notes will turn into 4.5 times the number of notes in 5 years. Then after that the net number of notes will be the new notes - notes that are fully repaid. The thing is 4.5 times the number of 5 year notes will produce 4.5 times the cash flow (but that does have compounding interest reinvested). The interest received is only based on the actual principle invested, but $25 at 12% compounding for 5 years yields $45 (an 81% gain versus 4.5 times the cash flow). It's this aspect that I want to analyse more as it seems to be where banks benefit from amortisation. e2: What I suspect I will find is a higher effective interest rate but I need to look at the mechanics of it. Devian666 fucked around with this message at 23:05 on Sep 22, 2015 |
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Sep 22, 2015 20:52
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April posted:Some quick napkin math shows that over the past 3 years, I am earning an average of about 2% of my total notes in bonus notes every month - meaning, since I have about 1800 notes right now, if I leave it alone, I will have about 1836 notes in a month. I'm not sure you're missing anything - seems like you discovered the principle of compound interest. Take that back, I think the one thing you might be missing is assuming Lending Club will be around in 20 years, doing what it's doing right now.
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Sep 22, 2015 23:10
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Yeah anything that returns 18% yoy for 20 years without periods of dramatic, terrifying losses is going to be bid up to returns much less than 18% eventually.
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Sep 22, 2015 23:18
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mrmcd posted:Yeah anything that returns 18% yoy for 20 years without periods of dramatic, terrifying losses is going to be bid up to returns much less than 18% eventually. The real rate for April's returns are likely to be less as that's just based on raw notes so the return will be more like 9-13%. There is the other issue of ending up with so much money that it's difficult to reinvest in LC which will force investors to withdraw money to put in other investments, or to take on more risky investments.
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Sep 22, 2015 23:34
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April posted:IR has been in the process of shutting down and merging with BlueVestment. I made the switch a couple of months ago, so I am not sure if IR is still working, or what settings you might need to change. Check your API number maybe? What advantages does BV have over LC's automatic investment feature? More specific/narrow criteria for choosing notes?
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Sep 24, 2015 12:51
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April posted:Some quick napkin math shows that over the past 3 years, I am earning an average of about 2% of my total notes in bonus notes every month - meaning, since I have about 1800 notes right now, if I leave it alone, I will have about 1836 notes in a month. You will hit the wall that financial institutes have already hit and are spending billions trying to move. Customer base.
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Sep 24, 2015 16:18
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He/she could start increasing the note amount from $25 to $50 or more. By that point diversification wouldn't be much of an issue.
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Sep 24, 2015 17:20
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SpelledBackwards posted:What advantages does BV have over LC's automatic investment feature? More specific/narrow criteria for choosing notes? Yep, custom metrics and statistics that aren't otherwise available, and a different risk model. Speed of snatching up notes is somewhat questionable, as LC has never really come 100% clean on how they select auto-investable notes as far as I know.
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Sep 27, 2015 04:11
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I spent some time on Friday building a spreadsheet to analyse notes in more detail. The p2p notes pay out the the listed interest on the principle. When you put new money into notes it does boost the new number of notes until the 3 or 5 year term of the notes has run it's course. So you do have higher cash flow for that period of time. That's about all I found out.
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Sep 27, 2015 05:43
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Is anyone planning on removing joint application loans from their automated investing?
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Oct 7, 2015 15:09
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I feel like it's a good thing for lenders. More people for the collections people to not leave voice messages with when the loans are late?
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Oct 7, 2015 15:16
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5% charge off rate on 200 notes... why god why.
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Oct 9, 2015 18:06
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I'm at 35 defaults out of 638 total notes. Seems about right
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Oct 9, 2015 18:14
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My returns took a few hits after write offs but otherwise the gross income is alright. After tax I'm netting about 9.6% and have changed strategy to move away from most of the D-F credit grades.
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Mar 7, 2016 23:11
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Devian666 posted:My returns took a few hits after write offs but otherwise the gross income is alright. How did you make the chart?
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Mar 8, 2016 15:05
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The chart is platform generated based on realised annual return. It's calculated on a daily basis using their internal db records. I barely keep monthly data so I couldn't generate something with this much detail.
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Mar 8, 2016 22:03
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Using Bluevestment, is it possible to have it allocate $X to one filter and $Y to another filter? I want to start a long term test and im too lazy to sort them myself.
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Mar 26, 2016 07:06
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Maybe it's because I just don't make that much money but the revolving credit balances on many of these reports gives me anxiety attacks.
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Apr 8, 2016 09:26
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I have officially reached 2,000 open notes. That is all.
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Apr 23, 2016 13:12
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http://www.nytimes.com/2016/05/10/business/dealbook/as-lending-club-stumbles-its-entire-industry-faces-skepticism.html This whole industry and lending club in particular are in the news a lot recently for bad reasons, just wondering what the thoughts are of people who actually use these services in this thread. Are they actually altering loans to make them seem better to lenders? Can you see that happening?
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May 10, 2016 14:44
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I've seen the loans which get funded/issued have a small increase in interest rate. Can't say whether their tightening of underwriting has made any difference. Probably won't really be able to make any judgements for at least a year as my revolving basket of notes slowly get replaced by new notes. I only have a small percentage of my NW in p2p, roughly 2-3% so incremental changes don't move the needle much for me personally.
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May 10, 2016 15:21
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So with the latest news on Lending Club and trouble with the SEC, is anyone worried about the investors on the P2P lending side or just investors who got boned in the stock market?
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May 13, 2016 21:13
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Anyone here have thoughts on WeFinance? A personal friend needed to finance her programming bootcamp and I chipped in a few thousand dollars -- I felt like I had a lot more information on her creditworthiness than banks ever would. The site keeps nagging me to fund other people's debt, but before considering it further I'd like to compare it with the other options first.
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May 31, 2016 04:30
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ShadowHawk posted:Anyone here have thoughts on WeFinance? A personal friend needed to finance her programming bootcamp and I chipped in a few thousand dollars -- I felt like I had a lot more information on her creditworthiness than banks ever would. At first glance, it appears to be a hilarious market that will overflow with scammers and will utterly fail to compensate lenders for risk.
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May 31, 2016 11:58
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baquerd posted:At first glance, it appears to be a hilarious market that will overflow with scammers and will utterly fail to compensate lenders for risk. I opened too many tabs at once and thought I was in one of the Bitcoin threads when I read this. 
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Jun 1, 2016 04:52
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Pryor on Fire posted:http://www.nytimes.com/2016/05/10/business/dealbook/as-lending-club-stumbles-its-entire-industry-faces-skepticism.html People rush to invest in a new hot niche investment concept and end up getting burned how shocking. Well I'm glad to see how Lending Club has learned fast and can copy Wall Street's model of fraud such as how the CEO altered millions of dollars in loans.
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Jul 9, 2016 13:38
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Has anyone actually moved away from LC because of this? Or moved over to Prosper? I haven't added any more cash but I'm still making a pretty good return so I am not feeling particularly concerned.
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Jul 9, 2016 15:52
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withoutclass posted:Has anyone actually moved away from LC because of this? Or moved over to Prosper? I haven't added any more cash but I'm still making a pretty good return so I am not feeling particularly concerned. Same here. Last month set a record for my interest paid.
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Jul 9, 2016 16:31
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etalian posted:People rush to invest in a new hot niche investment concept and end up getting burned how shocking. The regular note investors aren't getting burned here. I opened up a Prosper, but I really don't like their user interface (can't seem to set saved search filters).
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Jul 9, 2016 22:18
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Is anyone else concerned about what will happen with their loans the next time a recession hits the U.S.? I suspect people would give pretty low priority to loans obtained through LC or other P2P lenders, and the recovery rate for charged-off loans is laughably awful.
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Jul 11, 2016 21:29
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JulianD posted:Is anyone else concerned about what will happen with their loans the next time a recession hits the U.S.? I suspect people would give pretty low priority to loans obtained through LC or other P2P lenders, and the recovery rate for charged-off loans is laughably awful. That's the main concern, yes. I wasn't involved in p2p lending in 2008 but the recession tore through the main p2p site at the time (I forget the name, maybe it was Prosper?)
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Jul 11, 2016 21:45
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Why happens in the next US recession and the stock market is also destroyed?
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Jul 11, 2016 23:08
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withoutclass posted:Why happens in the next US recession and the stock market is also destroyed? You hold onto your diversified index funds and wait for the market to recover. Kind of a silly question if you ask me.
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Jul 12, 2016 04:16
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