account Archives - Lend Academy

New LendingClub Account Performance – Q4 2018

We share the third update on a LendingClub account which was opened in 2018.

January 23, 2019 By Ryan Lichtenwald 3 Comments

In April 2018, LendingClub provided us with $5,000 to open a brand new account. Since then we have been chronicling the status of the account on a quarterly basis. Below are links to the full series of blog posts in chronological order:

One of the things required for investing in marketplace lending is patience. Even though our new LendingClub account has been open around 9 months we still won’t have a full grasp on returns until around the 18 month mark. For now we can continue to look at the trends we’re seeing in the account.

What’s interesting is that my adjusted net annualized return is now 9.56% as of January 23 2019, significantly higher than last time I checked in at 7.81%. This is largely due to an improvement of the amount of loans that were in the buckets between late through charged off. It is a good example of how any numbers displayed early on in an account’s history should be taken with a grain of salt.

My portfolio now has a weighted average age 8.5 months and judging by the chart below I am currently trending above accounts that have a similar average interest rate.

Remember that for this account we have left the loan selection completely up to LendingClub’s Automated Investing service. As of today my account shows that I am currently overweight in my allocation to C grade notes and underweight in A grades.

Finally, it’s worth taking stock of the total interest earned for the year. Below is the screenshot from my December 2018 statement outlining my total interest earned for the year of $425.39.

Every quarter I like to look at any changes or communications related to LendingClub’s platform. LendingClub shared their Q3 2018 platform update which provides their thoughts on the economic backdrop, credit environment and interest rates. The company made changes to grades A and B loans which was the fourth increase in rates for 2018 at the time of the update. Interest rates rose between 49-114 basis points depending on the grade and sub grade. In addition to the platform update, the company released a Marketplace Insights report which specifically addressed marketplace lending in a rising rate environment. This report went in depth on this rate cycle, how marketplace lending has performed compared to other assets, changes to their platform over their history and the impact of other macroeconomic measures. You view their report for free here.

New LendingClub Account Performance – Q3 2018

We share the second update on a LendingClub account which was opened in 2018.

November 1, 2018 By Ryan Lichtenwald Leave a Comment

Last quarter we discussed that any reported returns from screenshots of the account should be taken with a grain of salt. Once this account becomes seasoned around the 18 month mark we will begin to provide returns using the XIRR calculation.

Note that the account currently has a weighted average age of 6.5 months. The below chart depicts a gradual decrease of adjusted annualized return until returns finally settle. With this account I took a balanced allocation to loan grades which has resulted in a weighted average interest rate of 12.76%. All notes are purchased through LendingClub’s automated investment feature. Returns are likely to fall in the middle of the road as you can see other investors have experienced as evidenced by the red dots below.

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New LendingClub Account Performance – Q2 2018

We share the first update on a LendingClub account which was opened in 2018.

July 12, 2018 By Ryan Lichtenwald 10 Comments

Back in April 2018 we shared that LendingClub had provided us with $5,000 to start a brand new LendingClub account. We wanted to both report on the new investor experience and also share the performance of the account over time. In the last blog post I included a video which went through LendingClub’s automated investing tool. Before we get into the details of the account I also want to mention any changes that happened within the quarter that LendingClub investors should be aware of. On May 8th, 2018 LendingClub announced interest rate changes:

Effective May 8, 2018, interest rates on the LendingClub Corporation (“LendingClub”) platform have been updated. The changes are an increase of 0.12% for loan grades A2-A5, 0.15% for loan grades B1-B5, and 0.45% for loan grades C1-C5.

As a reminder, this account was setup to invest in LendingClub’s suggested ‘All Grades’ automated investing strategy. Below is a screenshot of my target allocation shortly after account setup with about half of my capital allocated to LendingClub notes.

Below is a screenshot as of today with all $5,000 invested which now closely resembles my target allocation.

You’ll notice that investing across LendingClub’s All Grades is skewed towards being conservative as opposed to allocating the same percentage across loan grades. Nearly 80% of my loans in this account are A, B or C grade loans.

At time of account opening, LendingClub noted historical returns range from 2.94% – 6.98%. This has decreased slightly based on the most up to date historical returns. Below is a snapshot of my LendingClub Summary. It’s important to note that Adjusted Net Annualized Return is not a good metric until the loans have seasoned. As we move further along in this experiment we will start to get a better idea of where returns are trending and will begin to include return calculations using XIRR.

Conclusion

The current status of my LendingClub account is very typical for new investors. A handful of loans have been paid in full while just a couple have entered either grace period or the late 31-120 days stage. A majority of the loans are issued and current. As loans begin to season we will see more enter grace period at which point some borrowers will catch up on their payments and some will ultimately become late and eventually charge off. We’ll publish our next update in early October to provide a full update on the third quarter.

How to Open Up a New LendingClub Account in 2018

In this post we share the process of opening up a new LendingClub account, the first in a new series we will be sharing over the coming quarters.

April 5, 2018 By Ryan Lichtenwald 6 Comments

Peter Renton, the Founder of Lend Academy opened his first LendingClub account in mid-2009. I opened my first LendingClub account in early 2013. While we are intimately familiar with the platform and the changes over the years things are on autopilot from the investment perspective. It has been a long time since we have gone through the process of opening a new LendingClub account.

Recently LendingClub reached out to us offering to fund a new LendingClub account so we could go through the new investor experience step by step. We wanted to take this opportunity to take a fresh look at opening and investing through LendingClub as a complete beginner. As outlined after the video below we’ll be sharing video content and blog posts along the way as this account matures.

Opening up a new LendingClub Account

The new LendingClub account setup is a simple, straight forward process, taking less than five minutes. As you’ll see in the video below LendingClub asks for some basic information during the signup process and then asks for information for the initial funding of the account.

Although I had to link my bank account manually in the video below, LendingClub now has the ability to connect your bank account quickly, simply by using your bank’s login credentials. Up to 15,000+ banks are available for linking, including USAA, Citi, Bank of America, and Chase.

New LendingClub Experiment

As mentioned earlier, LendingClub is funding our new account with an initial deposit of $5,000. This is part of a new program they are launching this year with a small subset of bloggers in the investing space. While they paid to fund this account we have complete freedom to write whenever and whatever we want. We considered this a good opportunity to start a new account from scratch and share the experience as both my and Peter’s accounts at LendingClub have been open for many years.

Once we invest this initial capital all principal and interest payments will be reinvested in new loans. Every quarter we will detail what is going on with this account, much like Peter shares his own returns.

In this series of posts we hope to answer several questions new investors may have such as:

What does signing up for a LendingClub account entail?
How do I setup automated investing?
How long does it take to deploy funds?
What returns could a potential investor expect starting in 2018?

Stay tuned in the coming weeks for our next video as we outline how to setup automated investing.