Lending Club – June 2013 Update

As part of my effort to catch up from my blogging hiatus this past summer I am going back and posting my monthly updates.

Peer-to-peer lending intrigued me from the moment I first heard about it, and Lending Club is where I first started investing back in 2009. Each month I plan on updating my Lending Club investments in both my taxable and Roth IRA accounts. Nothing is more exciting than watching my investments compound on a regular basis, and Lending Club gives met that compounding in spades! Now let’s take a look how June turned out.

Roth IRA Account:

Lending Club Roth IRA - Main Screen - June 2013

As of the end of June, my Roth IRA account with Lending Club saw an increase in available cash to over $667. The primary reason for this increase was twofold. One, I slightly switched gears on how I was investing, and it took a while for that transition to take place. Two, life was busy. Crazy busy in fact! I had just switched to a new position at work, recently got engaged, and was playing softball several days a week. But enough about me, back to the numbers! Even with the increase in available cash, I experienced a great month, although more late loans are starting to appear.

Given my overall risk of the notes in which I’ve invested (weighted-average of 18.05%), these late loans are expected, with many eventually ending in default and being charged off. While disappointing for sure, this is part of the risk of investing in something with an average interest rate that high. Currently, I am not pursuing a selling policy on these notes, and am instead just a buy and hold investor. Naturally I will keep you informed should I start churning notes for any reason, late or not.

As for my earnings, during June, I earned $149.38 of net interest in my Roth IRA account and my internal rate of return since opening the account, using Excel’s XIRR function, increased from 7.79% to 9.15%. As I said before, my weighted average interest rate in this account is 18.05% and did not change from the prior month.

As I am beginning to see a higher number of underperforming notes in my portfolio, I would anticipate seeing some decreased net interest numbers as those loans go into default and get charged off.

Taxable Account:

Lending Club Taxable - Main Screen - June 2013

After the tough month of May, my taxable account bounced back quite nicely and recorded the highest level of net interest in 2013 so far. Given the strong performance, I received net interest of $16.08 during the month of June. Now that I have zero notes late, it should be a few more months before I see any negative overall results for these monthly updates.

Considering June was a recovery month, my overall internal rate of return since inception increased from 10.24% to 10.39%. And finally, my weighted average interest rate for my taxable account remained unchanged at 15.05%.

Lending Club Summary:

All told, it was a still a great month for my Lending Club accounts as they brought in a total of $165.46 in net interest. This was an increase of $27.34 over May’s $138.12 of net interest. Check out the chart below to see the ever increasing amount of net interest received by month in 2013.

Isolating the month of June, my overall internal rate of return came out to be annualized 18.06%! WOW! My highest yet for my month-to-month return! Moving forward I would expect this to stay in the 12-14% range as defaults, late loans, and uninvested cash drag the returns down slightly. All of this is to be expected, as I mentioned before, given my overall higher risk profile of the notes I am investing in currently.

Lending Club - Net Interest by Month - June 2013

I have updated my Lending Club page with this information. Please note when tracking my balance and return I do not include the accrued interest in the account, only the interest actually received net of fees, charge-offs, and defaults.

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