I have reached a small milestone in my P2P lending career. Just this past week the first note in my portfolio was fully paid off. On the whole this is a wonderful thing. It means that the note that I chose to invest in has fully paid for itself. The total capital that I invested has returned to me as well as the interest from the length of time that it took for the borrower to pay everything back. So the portfolio "wins" from this investment and it is closed.
Although this is exactly what we want from our P2P portfolio there are some important things to take into account when a note closes out. The most important of these is that the capital that you had invested which was working for you, no longer is. In my case, these notes are all issued at $25 each. Now that this note has closed out the $25 plus interest is sitting in my account no longer working. It seems imperative to monitor the Lending Club account very closely to ensure that capital is being put to work as quickly as possible once it becomes available. Conversely one could enroll in the "Automated Investing" offered by Lending Club however it does have an entry requirement of a $2500 balance which is well above the size of my trial portfolio. I am also enjoying the process of choosing my own loans for the time being. The process of having a loan approved also takes a chunk of time out of your investments, sometimes for weeks.
I have personally had notes that sat for almost two weeks waiting for approval and in the end they were rejected. That is half a month where my investment dollars were making me 0%. If you are looking for a "set and forget" investing strategy outside of the stock market Lending Club may not be what you are looking for. Unless you have $2500 and trust their automated platform Lending Club needs regular monitoring. I would suggest weekly in the least. I obviously enjoy having an up-to-date view of my investments so this is not an issue for me. I am also really enjoying "being the bank" for a change and am looking forward to issuing more notes as the year continues.
Capital Returned - Now What?
Although this is exactly what we want from our P2P portfolio there are some important things to take into account when a note closes out. The most important of these is that the capital that you had invested which was working for you, no longer is. In my case, these notes are all issued at $25 each. Now that this note has closed out the $25 plus interest is sitting in my account no longer working. It seems imperative to monitor the Lending Club account very closely to ensure that capital is being put to work as quickly as possible once it becomes available. Conversely one could enroll in the "Automated Investing" offered by Lending Club however it does have an entry requirement of a $2500 balance which is well above the size of my trial portfolio. I am also enjoying the process of choosing my own loans for the time being. The process of having a loan approved also takes a chunk of time out of your investments, sometimes for weeks.
I have personally had notes that sat for almost two weeks waiting for approval and in the end they were rejected. That is half a month where my investment dollars were making me 0%. If you are looking for a "set and forget" investing strategy outside of the stock market Lending Club may not be what you are looking for. Unless you have $2500 and trust their automated platform Lending Club needs regular monitoring. I would suggest weekly in the least. I obviously enjoy having an up-to-date view of my investments so this is not an issue for me. I am also really enjoying "being the bank" for a change and am looking forward to issuing more notes as the year continues.
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