Good morning.
I got my Lending Club statement today. I've been critical of the company in the past because I think they have overstated their returns. Their returns quoted are based on a rapidly growing portfolio, which makes the average duration of the loan in their portfolio shorter than the average duration of a lending club loan.
In late 2012, I decided to stop adding income to my account and do a combination of withdrawing some money and reinvesting. I started with Lending Club in mid 2011. My average balance in the account was $9,300 and my total return after charge offs was $364. This is before accounting for the additional cost in using TurboTax premier verses deluxe to properly account for the capital losses. I've tried hand picking the loans and blind purchasing, neither of which seem to make a big difference. The only category of loans that seem to be worth the risk/return is C or worse, 36 month loans. Not surprisingly, you can't buy these anymore because the institutional money jumps on this debt.
I am in banking by trade and was really optimistic about Lending Club, unfortunately I believe either their customer selection or collection process leaves a lot to be desired.
I'd like to get everyone's opinion, but at a 3.9% return last year before the 33% tax hit, I think I'm better off buying something like Chevron Stock. It pays 3.4%, the dividend has better tax treatment, and the security is more liquid.
