$10,000 P2P LendingClub & Prosper Loan Portfolio Update – April 2013

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Here’s the April 2013 update for my peer-to-peer lending portfolio, the last of three “real money” portfolios being tracked monthly as part of my Beat the Market Experiment. See also the $10,000 Benchmark and $10,000 Speculative portfolio updates.

For this one, I started with $10,000 split evenly between Prosper Lending and Lending Club, and went to work lending other people money and earning interest with an 8% target net return. So it’s also a race-within-a-race to see which option offers the best returns.

$5,000 LendingClub Loan Portfolio. Below is a screenshot of my LendingClub account as of 4/1/13. I’ve had loans at LC before, but sold them all on the secondary market and started fresh for this tracking experiment. Here are screenshots of my total balance and my portfolio details. I would say my overall risk level is moderate-conservative with mostly A and B rated loans (top two grades).


(click to enlarge)

The portfolio is now 5 months old, with 208 currently active loans, 9 loans that were paid off early, and 5 in funding. Two of the active loans are currently between 31-120 days late, which according to LendingClub have a 53% recovery rate overall. But to be conservative I will now assume the remaining $48 in principal to be completely lost. The current weighted average interest rate is reported as 12.33%, which will hopefully offer enough cushion to still net an 8% return.

I pick loans using a preset filter based on my LendingClub filters post as well as my Prosper filter research noted below. I never spend any time reading individual loan descriptions, keeping it passive and scalable. The filters are saved online and it takes just a minute to reinvest interest, although I still tend to forget until I do these updates. In addition to outstanding loan principal, the account also has $37.02 in idle cash, $125 in funding limbo, and $40.39 in accrued interest.

LendingClub.com account value: $5,161 (includes principal + accrued interest, minus 30+ day lates, after fees)

$5,000 Prosper.com Loan Portfolio. Below are screenshots of my Prosper account page as of 4/1/13.

[Read more...]

$10,000 Beat-the-Benchmark Speculative Portfolio Update – April 2013

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Here’s the April 2013 update for my speculative portfolio, the second of three portfolios being tracked monthly as part of my Beat the Market Experiment. Here’s an update on the overall race; the bull stock market has pushed the passive benchmark portfolio into the lead past my lagging stock picks.

$10,000 Beat-the-Benchmark Speculative Portfolio as of April 1, 2013. Many people speculate with their money, buying and selling stocks now and then, but they rarely track their performance even though they may brag about their winners. Honest tracking is the primary reason for this “no-rules, just make money” account. I am using a TradeKing account for this portfolio as I’ve had an account with them for a while and am comfortable with their low-cost $4.95 trade structure, free tax-management gain/loss software, and free dividend reinvestment. Here is a screenshot taken from my TradeKing home page on 3/31/13 after market close:

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$10,000 Benchmark Portfolio Update – April 2013

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Here’s the April 2013 update for my benchmark portfolio, the first of three portfolios started on November 1st, 2012 as part of my Beat the Market Experiment:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 P2P Consumer Lending Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment class of person-to-person loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Benchmark Portfolio as of April 1, 2013. My account is held at TD Ameritrade due to their 100 commission-free ETF program that includes free trades on the best low-cost, index ETFs from Vanguard and iShares. I funded it with $10,000 and bought all the ETFs required to be fully invested on 11/1/12. All trades were commission-free.

Here’s a screenshot from my account showing exact holdings and their market value on 3/31/13. With the current bull market, the benchmark portfolio gained nearly 10% in just 5 months.


(click to enlarge)

Here’s the asset allocation pie chart, tracked with a simple Google Docs spreadsheet:
[Read more...]

Investment Returns By Asset Class – April 2013 Update

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Here is my April 2013 update of the trailing total returns for selected major asset classes. Passive ETFs are used to represent major asset classes, as they represent actual investments that folks can buy and sell. Return data was taken after market close at the end of March 2013.

Asset Class
Representative ETF
Benchmark Index
1-Mo 1-Year 5-Year 10-Year
Broad US Stock Market
Vanguard Total Stock Market (VTI)
MSCI US Broad Market Index
3.91% 14.62% 6.682% 9.24%
Broad International Stock Market
Vanguard Total International Stock (VXUS)
MSCI All Country World ex USA Investable Market Index
0.87% 8.72% -0.54% 10.43%
Emerging Markets
Vanguard Emerging Markets ETF (VWO)
FTSE Emerging Index
-1.56% 1.69% 0.90% 16.44%
REIT (Real Estate)
Vanguard REIT ETF (VNQ)
MSCI US REIT Index
2.90% 15.97% 7.37% 12.36%
Broad US Bond Market
Vanguard Total Bond Market ETF (BND)
Barclays U.S. Aggregate Float Adj. Bond Index
0.08% 3.66% 5.46% 5.04%
US Treasury Bonds – Short-Term
iShares 1-3 Year Treasury Bond ETF (SHY)
Barclays U.S. 1-3 Year Treasury Bond Index
0.00% 0.48% 1.61% 2.56%
US Treasury Bonds – Long-Term
iShares 20+ Year Treasury Bond ETF (TLT)
Barclays U.S. 20+ Year Treasury Bond Index
-0.31% 6.70% 8.28% 7.43%
TIPS / Inflation-Linked Bonds
iShares TIPS Bond ETF (TIP)
Barclays U.S. TIPS Index
0.22% 5.17% 5.80% 6.45%
(est.)
Gold
SPDR Gold Shares (GLD)
Price of Gold Bullion
0.58% -5.02% 10.90% 16.5%
(est.)

For an easy visual comparison, here is a chart of the 1-year trailing returns:

April 2013 Trailing 1-year Returns

I collect this information because it allows me to keep an eye on the market while still keeping the long-term returns in perspective. Often, the asset classes with the best long-term returns have had recent poor performance. The 1-year chart helps me decide where to invest new funds and also for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for details.

[Read more...]

Cash Reserves Update: Best Available Interest Rates – March 2013

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Our family keeps a full year of expenses put aside in cash reserves; it provides us with financial stability with the additional side benefits of lower stress and less concern about stock market gyrations. Emergency funds can actually have a better return on investment than what you see on your bank statement.

I’ve been slacking in terms of updates on this topic. While I still like to maximize my interest, there just hasn’t been many new developments that make me want to jump from one bank from another. However, if you haven’t optimized your cash recently, you may be stuck in a money market fund or megabank saving account paying 0.05% or less. You can definitely still do better than that! Here are what I consider the highlights of the best currently available interest rates.

Certificates of Deposit

If you have a large cushion, it’s quite likely to just sit there for years or more. Therefore, you may wish to put some of it in longer-term investments where you can take the money out in a true emergency and paid an early withdrawal penalty.

  • Everbank’s Yield Pledge Money Market and Interest Checking account both offer 1.10% APY guaranteed for the first 6 months for new accounts. Since it is fixed, this is essentially a 6-month CD with a higher rate than any other 6-month CD rate out there and with no early withdrawal penalty to worry about.
  • Ally Bank Raise Your Rate CDs have a rate bump feature; the 2-year term pays 1.05% APY and the 4-year term pays 1.30% APY (as of 11/1/13). You can change your rate after your account is opened — if their rate on this CD goes up, yours can bump up to match it (one interest rate increase with the 2 year term, two interest rate increases with the 4 year term).They also offer traditional Ally Bank High-Yield CDs with 3-year CDs at 1.20% APY and 5-year CDs at 1.60% APY (as of 11/1/13) currently. Early withdrawal penalty is only 60 days.
  • Discover Bank CDs are currently offering 3-year CDs at 1.25% APY, 5-year CDs at 1.65% APY, 7-year CDs at 1.80% APY, and a 10-year CD at 1.90% APY. Early withdrawal penalty varies from 6 months for the 3-year to 15 months on the 7 and 10-year CD.
  • PenFed Credit Union CDs are currently offering 3-year CDs at 1.60% APY, 5-Year CDs at 1.65% APY, and a 7-Year CD at 1.75% APY. Early withdrawal penalty varies from 6 months for the 3-year CD to 12 months on the 5 and 7-year CD.

Ally Bank’s Flexible Certificates of Deposit

Ally Bank LogoLet’s focus on the Ally Bank certificates of deposit, where you can still access your money as long as you pay a early withdrawal penalty of 60 days interest – significantly less than at other banks. Why is this good?

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$10,000 P2P LendingClub / Prosper Loan Portfolio Update – March 2013

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Here’s the 3rd and last piece of the monthly updates for my Beat the Market Experiment, a set of three real money portfolios started on November 1st, 2012. See also my $10,000 Benchmark and $10,000 Speculative portfolio updates for March 2013.

For this one, I started with $10,000 split evenly between Prosper Lending and Lending Club, and went to work lending other people money and earning interest with an 8% target net return.

$5,000 LendingClub Loan Portfolio. Below is a screenshot of my LendingClub account as of 3/1/13. I’ve had loans at LC before, but sold them all on the secondary market and started fresh for this tracking experiment. Here are screenshots of my total balance and my portfolio details. I would say my overall risk level is moderate-conservative with mostly A and B rated loans (top two grades).


(click to enlarge)

The portfolio is now 4 months old, with 206 currently active loans, 7 loans that were paid off early, and one is in funding. Two of the active loans are currently between 16-30 days late. The current weighted average interest rate is 12.36%, which means I can lose 4.36% to defaults and still net an 8% return.

I pick loans using a preset filter based on my LendingClub filters post as well as my Prosper filter research noted below. I never spend any time reading individual loan descriptions, as I’m trying to keep this mostly passive and scalable. The filters are saved online and it takes just a minute to reinvest interest, although I still tend to forget until I do these updates. In additional to outstanding loan principal, the account also has $249 in idle cash, $25 in funding limbo, and $38 in accrued interest.

LendingClub.com account value: $5,160 (includes principal + accrued interest, after fees)

$5,000 Prosper.com Loan Portfolio. Below are screenshots of my Prosper account page as of 3/1/13.
[Read more...]

$10,000 Beat-the-Benchmark Speculative Portfolio Update – March 2013

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Here’s the 2nd piece of the monthly updates for my Beat the Market Experiment, a set of three portfolios started on November 1st, 2012. Since this update is rather boring, let me provide an update on the overall experiment:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 Consumer Loan Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of peer-to-peer loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Beat-the-Benchmark Speculative Portfolio as of March 2, 2013. Many people speculate with their money, buying and selling stocks now and then, but they rarely track their performance even though they may brag about their winners. Honest tracking is the primary reason for this “no-rules, just make money” account. I am using a TradeKing account for this portfolio as I’ve had an account with them for a while and am comfortable with their low-cost $4.95 trade structure, free tax-management gain/loss software, and free dividend reinvestment. Here is a screenshot taken from my TradeKing home page 3/2/13 mid-day:

[Read more...]

$10,000 Benchmark Portfolio Update – March 2013

aa_updated2013_stocks

Time again for a Beat the Market Experiment monthly update, for the first of three portfolios started on November 1st, 2012:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 P2P Consumer Lending Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of person-to-person loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Benchmark Portfolio as of March 2, 2013. My account is held at TD Ameritrade due to their 100 commission-free ETF program that includes free trades on the best low-cost, index ETFs from Vanguard and iShares. I funded it with $10,000 and bought all the ETFs required to be fully invested on 11/1/12. All trades were commission-free.

Here’s a screenshot from my account showing exact holdings and their market value on 3/2/13 mid-day:


(click to enlarge)

Here’s the asset allocation pie chart, tracked with a simple Google Docs spreadsheet:

No new trades over the past month as the allocations are still close to targets. Still no dividends or money market interest. Here is the target asset allocation:

[Read more...]

Investment Returns By Asset Class – March 2013 Update

trailing1303

Here is my monthly update of the trailing total returns for the major asset classes that I find useful. Passive ETFs are used to represent major asset classes, as they represent actual investments that folks can buy and sell. Return data was taken after market close at the end of February 2013.

Asset Class
Representative ETF
Benchmark Index
1-Mo 1-Year 5-Year 10-Year
Broad US Stock Market
Vanguard Total Stock Market (VTI)
MSCI US Broad Market Index
1.29% 13.89% 5.62% 9.12%
Broad International Stock Market
Vanguard Total International Stock (VXUS)
MSCI All Country World ex USA Investable Market Index
-1.20% 6.98% -0.93% 10.33%
Emerging Markets
Vanguard Emerging Markets ETF (VWO)
FTSE Emerging Index
-1.73% 0.14% 0.34% 16.60%
REIT (Real Estate)
Vanguard REIT ETF (VNQ)
MSCI US REIT Index
1.23% 17.36% 8.00% 12.34%
Broad US Bond Market
Vanguard Total Bond Market ETF (BND)
Barclays U.S. Aggregate Float Adj. Bond Index
0.51% 3.09% 5.41% 5.46%
US Treasury Bonds – Short-Term
iShares 1-3 Year Treasury Bond ETF (SHY)
Barclays U.S. 1-3 Year Treasury Bond Index
0.07% 0.43% 1.65% 2.58%
US Treasury Bonds – Long-Term
iShares 20+ Year Treasury Bond ETF (TLT)
Barclays U.S. 20+ Year Treasury Bond Index
1.29% 3.24% 8.62% 7.17%
TIPS / Inflation-Linked Bonds
iShares TIPS Bond ETF (TIP)
Barclays U.S. TIPS Index
0.01% 4.06% 5.66% 5.9%
(est.)
Gold
SPDR Gold Shares (GLD)
Price of Gold Bullion
-4.61% -10.62% 9.90% 15.9%
(est.)

For an easy visual comparison, here is a chart of the 1-year trailing returns:

March 2013 Trailing 1-year Returns

I like collecting this information because it allows me to keep an eye on the market while still keeping the long-term returns in perspective. Often, the asset classes with the best long-term returns have had recent poor performance. The 1-year chart helps me decide where to invest new funds and also for rebalancing. Note that I do not necessarily invest in all the listed asset classes, see my personal portfolio for details.

[Read more...]

$10,000 P2P LendingClub / Prosper Loan Portfolio Update – February 2013

1302_lc_full

Here’s the 3rd and last piece of the monthly updates for my Beat the Market Experiment, a set of three real money portfolios started on November 1st, 2012. See also my $10,000 Benchmark and $10,000 Speculative portfolio updates for February 2013.

I started with $10,000 split evenly between Prosper Lending and Lending Club, and went to work lending other people money and earning interest with an 8% target net return.

$5,000 LendingClub Loan Portfolio. Below is a screenshot of my LendingClub account as of 2/1/13. Keep in mind that I had loans before, but sold them all on the secondary market and started fresh for this tracking experiment. However, the charged-off loans from that period stayed on my record even though the overall return for my very conservative loan portfolio back then was over 5%.


(click to enlarge)

I now have a total of 194 active and issued loans. I used simple loan criteria based on my LendingClub filters post as well as my Prosper filter research noted below, saving me from having to look through individual loan descriptions. The portfolio is very young, but so far all loans are current (16 days past due is considered late). The current weighted average interest rate is 11.66%, which means I can lose 3.66% to defaults and still net an 8% return.

LendingClub.com account value: $5,113.27 (includes principal + accrued interest, after fees)

$5,000 Prosper.com Loan Portfolio. Below are screenshots of my Prosper account page as of 2/1/13.
[Read more...]

$10,000 Beat-the-Benchmark Speculative Portfolio Update – February 2013

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Here’s the 2nd piece of the monthly updates for my Beat the Market Experiment, a set of three portfolios started on November 1st, 2012:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 Consumer Loan Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of peer-to-peer loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Beat-the-Benchmark Speculative Portfolio as of February 1, 2013. Many people speculate with their money, buying and selling stocks now and then, but they rarely track their performance even though they may brag about their winners. Honest tracking is the primary reason for this “no-rules, just make money” account. I am using a TradeKing account for this portfolio as I’ve had an account with them for a while and am comfortable with their simple $4.95 trade structure and free tax-management gain/loss software. Here is a screenshot taken from my TradeKing home page after market close 1/31/13:


(click to enlarge)

New activity. Well, this certainly wasn’t a great month for my stock picks. I basically tripled-down on Apple prior to their earnings announcement in late January, betting that they would have record-breaking profits in the 4th quarter. Well, they did, but the stock went down anyway due to growth concerns. I’m still giving it until the end of 2013 to see this play out, although I may pare back the position. I think Steve Jobs left us one last surprise… or I might just lose a bunch of money on this highly un-diversified move.

I also sold my Emerging Markets ETF (DEM) at a slight profit and used the proceeds to buy 500 shares of Enphase Energy (ENPH) at $3.77. Enphase manufactures micro-inverters for solar photovoltaic systems, which converts DC to AC and also allows you to individually track the power output of each panel on your roof. I believe that residential solar PV will take off soon, as electricity prices continue to rise and equipment costs drop. (Low interest financing won’t hurt either.) However, betting on a specific solar installer like SolarCity (SCTY) or a solar panel manufacturer when there is so much competition seems even harder. In addition, I believe that Enphase is a good takeover target in the future.

Here’s a pie chart of my holdings, tracked with a simple Google Docs spreadsheet (2nd tab):

[Read more...]

$10,000 Benchmark Portfolio Update – February 2013

1302_tda_full

Time again for a Beat the Market Experiment monthly update, for the first of three portfolios started on November 1st, 2012:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 P2P Consumer Lending Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of person-to-person loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Benchmark Portfolio as of February 1, 2013. My account is held at TD Ameritrade due to their 100 commission-free ETF program that includes free trades on the best low-cost, index ETFs from Vanguard and iShares. I funded it with $10,000 and bought all the ETFs required to be fully invested on 11/1/12. All trades were commission-free.

Here’s a screenshot from my account showing exact holdings and their market value as of 2/1/13 before market open:


(click to enlarge)

Here’s the asset allocation pie chart, tracked with a simple Google Docs spreadsheet:

No new trades over the past month as the allocations are still close to targets, no dividend distributions, no money market interest. Here is the target asset allocation:

[Read more...]