I believe in index funds and not timing the market. Most of my investments are in low cost market tracking index finds. Sure I have some play money in individual investments… I own Oracle (ORCL) (100 shares for sentimental reasons as my former employer); I own Haier Electronics (via OTC: HRELF) (11,000 shares as a play money bet that a title sponsor of Beijing Olympics will receive a significant lift); and I own Etrade (ETFC) my bank and brokerage which I like very much… (1500 shares bought very recently at an average price of $4.94.)
My p2p lending style is very similar. I believe in indexing into to the credit grades for which I have faith in the ROI. Sure I will take some fliers on stories or people I know, but in general I want all loans which will yield X% (X being the risk free rate of ~5% plus a risk premium for that credit grade) estimated ROI. What I want from LC is an easy automatic way to index the market with specific extended credit.
Lending Club has a tool called LendingMatch. If you are going to invest at least $500 you can use LendingMatch to quickly build a diversified portfolio of loans… In my opinion this tool has 2 current significant shortcomings which if addressed would make this a near perfect vehicle for ongoing continuous hands-free lending at LendingClub.
The shortcomings:
- Inability to add extended credit filters
- LendingMatch is a one shot deal
How to address…
The 1st shortcoming seems the easiest and one that needs to be addressed for manual bidding as well. Add extended filters on search and LendingMatch.
The 2nd shorting coming I will admit is a little tricky… I would like to set up a continuous LendingMatch portfolio (with an extended credit filter) based on a risk level… Which means that as money is paid from existing loans or as I add money to the platform the LendingMatch portfolio would look at my current portfolio and determine which credit grades of loans could be added, find loans that meet both the LendingMatch risk diversification and the extended credit filter, and bid on those listing automatically. It is tricky because there would need to be some leeway in the algorithm.
Which credit grade should “next” in a currently perfectly risk balanced portfolio? Any! Which credit grade should “next” in a currently unbalanced risk portfolio? Any! At the end of the day however, the portfolio should have an average daily risk balance of the risk level of the portfolio, plus or minus some acceptable tolerance with the goal of getting money invested as quickly as possible.
That would be AWESOME!
Questions, Comments, and/or Screams of Anguish?
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8 comments ↓
RateLadder:
Very interesting and helpful post.
The good news is that your comments confirm the direction we are working on for LendingMatch and other functions we are planning to add to our site.
Great to have you using our site and providing feedback. I would love to discuss further with you in person, and why not? you may want to help us test some of the functions before we make them public?
Best regards
Rob Garcia
Director, Web Production
Lending Club
Great site! I’ve started a blog about prosper investments as well and am looking for a great graphical tool to track my investments. Any ideas? Would be great to show progress of current loans. I’ve enjoyed reading your posts. Scott
I’ve just started lending on Lending club after 8 months on Prosper. Does Lending Club provide monthly statements like Prosper does? I can’t find anything indicating that it does on the site.
If not, how do you track your interest gains? I’d like to track my gains in MS Money, and some posts here helped me do that with my Propser investments, but is it possible for Lending Club?
They don’t have a lender statement… I have told them about that too…
I guess I can just wait for my first payment to come in … but how do you distinguish between interest and principle repayment when you receive a Lending Club payment?
With very limited bid searching, klunky automatic bidding mechanisms, and now no statements or break out of principal vs interest in payments, I’m starting to have second thoughts about my decision to become a lender on LendingClub - the lender-focused infrastructure just doesn’t seem all that developed.
Seems that for a “Social Banking” site, they are a little too focused on the “Social”, and not enough on the “Banking”.
Kevin, what are your plans for tracking your LendingClub loans in Quicken?
@Jay
I feel your pain. For the moment I am just tracking principal invested. I am taking on faith that the lender statement will be available soon. When it is available I will take the same approach I take with Prosper.
[...] for a complete advanced filter and a lender statement and as a stretch had hoped it would have continuous lending match with a complete advanced filter. While the changes are extensive they fall a short of my [...]
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