This post is was originally published on Freedom Thirtyfive Blog

Contents from freedom 35 blog. (www.freedomthirtyfiveblog.com)

Year In Review

It’s been a year since I began investing in the peer to peer lending platform Lending Loop. I was anticipating a return of 8% when I first wrote about it. However things turned out better than I expected. I started the year with $20,000 and have earned just over $2,000 in interest now. So my year to date return is currently about 10%. I’m really happy with that! 🙂 Here’s a recent snapshot of my account.

Here’s what my account looked like back in June.

I currently hold about 40 different loans. I usually commit about $500 to $1,000 per new loan. Each company has a different credit rating based on its likelihood to pay back debt. The table below shows how Lending Loop categorizes the risk bands.

I generally invest in the range between B and C rated loans. The interest rate I receive on the investment should be high, but I don’t want super risky loans with high rates of default. I do my research on a company before I invest so I do not automatically put money into every C+ loan that Lending Loop offers. I don’t have any A or A+ rated loans because the rates of return on those after fees are too low for me.

The reason I was expecting only 8% annual return is because I had factored in loan defaults that would cut into my gross interest earnings. However, across my ~40 different loans not a single one has defaulted yet. 😀 Phew. Thank goodness for that. *Knocks on wood* But I’ve only been on this platform for 12 months. Most loans in my portfolio have a lifespan of 24 to 36 months. So as time goes on I should probably expect to see some defaults, but hopefully not a lot.

 

10% Return Goal For 2018

Here are my portfolio expectations for next year. 🙂

  • Average yield after 1.5% fee to Lending Loop = 12.5%
  • Estimated loan loss due to defaults = 2.5%
  • Total return after fees and defaults = 10%

So my 2018 goal is to earn a 10% return on Lending Loop. My portfolio is held in a regular taxable account so after income tax (roughly 30%) my net return should be about 7%. Hopefully I will make more than this but I would consider 7% after tax to be a decent return for a fixed income investment. 🙂

Overall I am very happy with my returns on Lending Loop so far. My plan going forward is to deposit $8,000 of my savings into my Lending Loop account at the start of the new year. This way I will have about $30,000 in 2018 to lend out. I hope there will be no defaults in my loan portfolio again next year but we shall see. 😉

 

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Random Useless Fact

Ultrasound for a cat usually cost between $200 to $400.

Contents from freedom 35 blog. (www.freedomthirtyfiveblog.com)

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