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Author Topic: What point for you is the point of steeply diminishing marginal returns to time?



  • Posts: 6
I use LC passively (set filters and invest) and I hardly spend any time at all on it anymore. I just withdraw money every month. Many of you lenders with higher ANARs seem to invest far more time in LC management. Me, I've never even looked at Folio. After doing the bare minimum of due diligence several years ago, and tweaking my filters every year as NSR and IR became available, I've stopped pretty  much everything. My 8% ANAR is fine.

Where do you guys draw the line?
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  • Posts: 3
I have been very passive for a while as well.  While there are better filters to be applied, I don't believe we really know what's right going forward.  My assumption is that LC and Prosper are hard at work optimizing risk/APR equation.  I tested many suggested filters and they just weren't that great.  I am extremely skeptical of any claims that fully aged portfolio can return above 10%.

10%, or 8%, risk adjusted returns are awesome, but you are right, spending ton of time on it is just not something worth doing unless you have a couple million on the line. 

I have gone back to rather active approach.  But this is only because it benefits my day job.  If I was, say an architect, I'd try to scrape enough for PRIME account and put it on autopilot.  I would certainly stay invested in the platform as it is still highly attractive from yield and diversification stand point. 
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  • Posts: 10
New here. I would agree that selling late notes on folio makes sense and at least you can potentially get something out of a potential default.  This is why after signing up and starting the Ira rollover funding process I now concerned about investing because I just learned that IRA accounts cannot use folio to sell.  Apparently, this is a relatively new disclosure on Lending Club that wasn't stated previously.
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  • Posts: 52
I've been getting consistently around 10.75% for years.  The API has helped as I have found that investing automatically at each of the 4 drop times, setting my filters to have (on average) just enough notes available to keep me fully-invested, I can select the notes that fit my filters in descending order by interest rate.  My portfolio is averaging over 17% interest rate.

The trick is to set the filters tightly enough that you can cherry pick the best notes while loosely enough to keep your money invested.  You also have to hit the window at each drop time precisely as the good ones go fast.
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  • Posts: 42

Here is a good article by Simon Cunningham of Lending Memo interviewing several well known P2P experts and their viewpoints about the long term expected returns from P2P. Commenters in the article who are well known on this forum include our own Peter Renton, Bryce Mason of P2P Picks, Anil Gupta of Peer Cube.

Xin, thank you for starting this thread--the concept of how much time each investor is willing to devote for an expected rate of return is an important issue we all need to explore. And I thank all the other contributors for a great discussion of the variations seen among investors.
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  • Posts: 32
In my opinion, contrary to the article posted by edward, above,  interest rates on  personal unsecured loans cannot decrease due to the high risk that accompanys them.   Additionally,we are currently in a rising interest rate economy which will continue to put an upward pressure on the LC rates. 

My personal LC account, started in April, 2013, now has 2000 notes, totalling $50,000.  My NAR is 16.5% and my XIRR is 11.5%.  I find these levels acceptable relative to the time required to tend to the account.  If I manage to make every release ( which is not possible for me), LC requires about 2 hours ( not counting time spent on this Forum) each day, 7 days each week.

My biggest concern right now is will I be able to sustain account growth.  If not, then I will have to turn my interest to other  investment oportunities.  It is becoming increasingly difficult to acquire C-G loans on the LC platform.  I have recently increased my fractional purchase amount from $25. to $50. which should help in the short term.  However, with the number of "Fully Paid" increasing, the notes that are not issued, and the interest accumulated, that becomes alot of money to reinvest without significantly increasing your account.  For retail investors with $100,000+ accounts it must be a major problem.  Until the retail investor is on a level playing field with the institutional investor,  I don't see this changing.


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Other than you enjoy the time spent doing it?

I must admit, Dan, there is an element of enjoyment to it that I have never experienced with the stock market. 

Yes, 30 minutes is about right!  I have 3 active filters that I use manually. If I am lucky, I might get 10 loans to look at during each release.  Approx 15 minutes used in that process.  Additionally, I usually have about 5% of my portfolio on Folio.  With the recent changes, notes have to be added regularly as they come out of "processing".  Another 10 minutes used!  Then there is account maintenance to factor in including the weekly wire transfers.

My initial planning was to put in $100,000 and since 500 notes appeared to be the magic number for adequate diversification I doubled it to 1000 notes and therefore selected $100 as my note size.

I am retired also.  However, your pre-planning was superior to mine.  I had never been into fixed income investments previously other than "junk" and tax-free bonds 10-20 years ago.  P2P investing seemed to me to be a better way to have control over your capital, but I went into LC without any "initial" plan. My first investment of $2500. was invested in 11 loans!  It was more of an experiment!  Then I read about diversity and the wisdom of $25. investments to guarantee diversity thereby reducing the down-side risk.  I only recently, unfortunately, increased to $50.  However, in support of my preponderance number of $25. notes, my loss to date is a very acceptable $40.  My filters deserve more of the credit rather than the note denomination.   
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  • Posts: 282
In April 2013, there was a Poll in this Forum about "Time Spent on LC Investing":

There were 34 votes last time, and only 11% spent more than 10-hr per week.
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