I received a nice email today from Lending Club congratulating me for earning a net annualized return (NAR) of 14.23% for my first 3 months of investing. The NAR calculation, as described by Lending Club, is as follows:
Net Annualized Return is the output of a formula where the numerator is composed of interest received, plus late fees received, minus the 1% service charge paid.
It is interesting in their email text that they specifically say the loans will pay out over three years. There was a recent post on SocialLending.net about Lending Club nudging investors away from their 5 year products.
Checking LendStats for comparison, my ROI is 12.3%, taking approximately a 1% hit on a few notes in Grace Period.
Based on my analysis with Nickel Steamroller’s Analyze My Portfolio tool, there are definitely a few notes that I should sell because of overly conservative plays (less than 10% IR) made when I was first building my portfolio. So, I’m fairly confident that I can improve on this number over time as long as I don’t run into an inordinate amount of defaults. I’m also being diligent about reinvesting the payments I receive to keep my money constantly working.
Overall, I’m satisfied with the performance of my investments with Lending Club and look forward to continuing to learn ways to improve my returns.