My April 2010 Lending Club Performance Update – Earning a 15% Annual Rate of Return

by Hank Coleman

As of today, I’m enjoying a 15.3% annualized return on 31 loans with Lending Club.  This month I have been rounding out my investment portfolio with Lending Club by adding a few A and B loans which are the most conservative loans. They only tend to return about 10% to 11%. Only 10%, right? It is a rough life and a great investment opportunity to earn a great rate of return.

For those of you who do not know, Lending Club is the awesome peer to peer lending investment website where you can lend money without a bank straight to individuals who need it the most.  I have been investing a small portion of my investment portfolio with them to squeeze out an extra percentage point or two by lending money directly to people who need the money the most. The beauty of the service for investors is that you can earn a great interest rate on your investments while helping people. You are the bank!

For those of you who are not familiar with Lending Club, there are usually about 180 loans on the website at any given time waiting for lenders like you and me to come along and fund them.  And, you can search through them all by several criteria.  Check out my review of Peer-to-Peer Lending, what it is, and how to get started.

Despite investing in some A and B Grade loans this month, my portfolio of loans primarily contains a mix of Grade C, D, and Grade E loans.  I try not to waste too much of my time with conservative A or B class loans which do not pay as much interest as the higher risk loans, but this month, there have been better loan applicants from entrepreneurs who are starting or improving their existing businesses.  One of the most important parts of the Lending Club experience is picking the right loans to invest in.  I love lending money to small business persons, and this month, there were more great A and B loans in this category, and that is the reason for me lending money to them. Here are some of my lending criteria that I use when choosing loans with great returns.  Being picky with my loans helps to curtain the defaults from the loans I participate in. As of right now, I only have one loan that is late out. While savings accounts, money market funds, and certificates of deposit are paying minuscule rates of return, I continue to be quite happy with my Lending Club experience and the excellent return that I have been earning.

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