Comments on: Lending Club – March 2013 Update

By: writing2reality

writing2reality — Sat, 12 Oct 2013 16:03:45 +0000

Lending Club IRAs are actually very tax efficient. Money held within the IRA, if a traditional IRA, is deferred until you pull the money out until retirement. With a Roth IRA, all the interest will be tax free no matter when you pull the money out. Please note I am not a financial professional, so consult your personal tax adviser for additional direction with a Lending Club IRA.

By: vijiscientific

vijiscientific — Fri, 07 Jun 2013 23:46:47 +0000

I am thinking of rolling over my 401K from my previous employer (basically from prudential and fidelity) to lending club IRA. I read that Lending Club IRAs are tax inefficient and I would pay high tax on the interests. I would like to hear your suggestions?

By: Jacob@CashCowCouple

Jacob@CashCowCouple — Tue, 09 Apr 2013 15:42:58 +0000

Thank you for that detailed reply! We appreciate that!

By: writing2reality

writing2reality — Sat, 06 Apr 2013 04:41:36 +0000

Awesome! I am glad I was able to get you to think about your Lending Club returns differently! Always good to get new perspectives and learn from those around us. That is one of the biggest benefits from the blogging community.

By: Martin

Martin — Sat, 06 Apr 2013 04:35:51 +0000

oh I will definitely return to read it. I am a (how to say it properly) a number crunching geek and I like to have a method to see my account from every possible ankle. I didn’t pay attention to numbers in LC originally and relied on LC’s NAV, but your comment on my web made me think about it a bit more deeply. Then I played with XIRR a bit and since you were in one of your posts posting number around 4% XIRR, so when my number came up at 13.21% I was suspecting having something wrong. This post however clears it up. I am definitely eager to learn more to polish the calculations to get even more precise numbers out of my account. Thanks for posting this.

By: writing2reality

writing2reality — Sat, 06 Apr 2013 04:21:44 +0000

Martin, the difference between your 10k and mine is the age of the accounts. I rolled the money into the IRA with Lending Club at the end of this past November. Because I have been sticking to my filters it has taken me a while to get invested. In fact, I am not quite there as you can see by my available cash in the account. Once the account ages and the money becomes fully invested, you will see my internal rate of return rise to reflect the fully invested dollars.

When calculating my return, I am capturing all of the idle cash not invested in notes, thus giving the appearance of a lower return on the money actually invested. I choose to calculate it this way to ensure I am getting the best and most consistent return figure for every dollar in my Lending Club account, even those not invested.

I am actually planning a post to explain this entire process and method. I hope you return to read the post!

By: Martin

Martin — Sat, 06 Apr 2013 01:14:00 +0000

W2R,

These are great results. I only wonder how come your XIRR is that low. I plugged my numbers into Excel and it spitted out 13% (roughly 1% below LC 14% stated NAV). We have about the same size account, but totally different results. The only thing coming on my mind would be a shorter period of invested cash on your side. With 10k invested you only received 171 in interest while my account at 11k received 1.1k in interest. That could be the difference. Is that correct or am I doing something wrong?

By: writing2reality

writing2reality — Thu, 04 Apr 2013 22:04:42 +0000

Wow! That is quite the commitment! Not to mention you will create strong stream of recurring interest income. Hopefully they clear up the taxation of the interest/charge-offs in the next couple of years.

By: Mr. 1500

Mr. 1500 — Thu, 04 Apr 2013 21:14:19 +0000

Nice! I’m going to start pumping some big bucks into my P2P accounts before the end of the year. The goal is to have 100K in them in about 4 years, assuming nothing changes for the worse.

By: writing2reality

writing2reality — Thu, 04 Apr 2013 17:05:03 +0000

Sounds great! It is quite spectacular how quickly one can start compounding your investment when achieving +10% returns! Thanks for stopping by!