Thought some of you might find this interesting.
So I have been withdrawing excess cash from my account since its peak value in Jan 2017. I still invest in loans that meet my criteria, but I have always thought it would interesting to see how much money would be in the account once I withdrew all of my principal. I know I know, it is the gain in the account, but never knew what that gain would be when the time came. Based on my current rate of withdrawal, I am about 1.5 months from withdrawing all of my principal. Currently I still have $33,154.71 to withdraw, then I will have no "skin" left in the game and it is all profit. Today that profit would equal $180,165.99. I will continue to invest in loans that meet my criteria, but I doubt I will ever add funds to my account again as LC shows no signs of returning to "hay days" / 10% returns I used to make. I currently make 5% and for the risk involved with these loans that is not sufficient and will continue to move to other investments. Saying that, my guess is (based on other accounts I oversee), my account will settle in around $125k and at that point the monthly payments generated will be sufficient to fund purchases of loans that meet my criteria.
Overall, I have been happy with my investment at LC, but now it is more work that it is worth. I don't have proof of this as I have not done the analysis, but my guess is simply buying the S&P ETF with the funds I deposited into my LC account over the last 9 years would have been a lot more lucrative.
Notes on the account -
- Account was opened in Dec 2009
- Last deposit into account was in June 2016
- Best month ever based on $ return. $4,517 Oct 2016 (account worth $571k)
- I have always been conservative, meaning more than 50% in A and B loans. During most profitable time, over 80% was A and B. Moved away from A's as interest rates fell.
- Actively sell non performing loans. A year or two ago, I did an in depth analysis on all the loans I had sold trying to figure out if I did the right thing. At that point, I had saved myself right at $5k. Meaning that if I never sold a single loan, I would have had an additional $5k in losses compared to what I did lose selling non performing loans.
- Never bought more than $100 per loan
Enjoy. Interested to hear other comments/thoughts.
Thanks for the interesting post. Well done!
I'd guess in the top 1% performance of all accounts over that period.
There is rarely a situation where A/B loans should outperform the stock market, especially when just compare the bull market part of the cycle. If your money in LC has a risk profile that can be invested in the stock market, then it should probably be there instead
Thanks for the kind comments guys. I did set out to find a non market correlated investment. Unfortunately, I was looking for that non market correlated investment right as we were starting to save money and the market had just gone through the recession and there was no way I was going to put our savings into the market. Turns out that is exactly what I should have done. Oh well. Lesson learned.
If returns would have held up to what they were (meaning net 8-10%) and they did not continue to lower interest rates, I think things would be totally different. But LC went down a different road.