$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.

(click to enlarge)

My Prosper portfolio now has 214 currently active loans, 12 loans that were paid off early, and 2 in funding. 4 of the active loans are between 1-30 days late. I’ve already had a few loans that were late which go back to current, so I’ll just wait and see. Prosper tells me that my current annualized return is 10.12%. This portfolio is also mostly loans from their top two grades.

I use Prosper’s free Quick Invest feature which automatically uses any free cash to invest in loans that satisfy my preset criteria (see my Prosper loan filters post for details). Essentially, I have automatic dividend reinvestment.

Prosper.com account value: $5,188 (includes principal + accrued interest, after fees)

Total P2P loan value: $10,349 (includes principal + accrued interest, minus 30+ day lates, net of fees)

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  1. Looking good John! I had a Lending Club account a few years ago, but I remember the taxes being difficult because there were many loans that only accrued a little bit of interest. Can you detail how your tax experience has been with these entities? I’m thinking of opening an account with Prosper in the future, but only if the tax situation isn’t very complicated.

    Congrats on paying off the mortgage as well!

  2. I too tried P2P but stopped due to tax being too difficult. In addition, interest earns on those loans is treated as regular interest (1099-INT) and not as capital gain, which subjects to a higher tax rate. So, I rather stick with my Vanguard funds than dealing with P2P can of worms.

  3. I just posted recently on P2P lending and taxes:


    I wouldn’t say it is very complicated, but it is more complicated than say a bank account.

  4. This looks like a good alternative to sticking the money in the bank (especially if you live in Cyprus!).

    I am surprised that your default rate has been as low as it is.

    In the current economic climate I would have expected it to be a bit higher.

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