Originally Posted by hobo13

So I'm far from an experienced Lending Club investor, but I figured I'd share my limited experience.

I opened my Lending Club account in the fall of 2012, after watching the peer-to-peer lending space for several years. I had a SPG Amex card that needed $5K spend, so it seemed like a good opportunity. I opened the account, and funded it. No issues. LendingClub gives you a call to chat and give you some tips. No pressure, they just want you to understand the concept. They were really nice.

I slowly started to pick some loans. I read a little on various websites and blogs to get some tips. Mostly I've been picking C,D rated loans, as I think I read somewhere that this is the sweet spot of risk / return. I have a very simple approach, and look for the following:

Purpose = credit card refinancing or debt consolidation (I'm not going to loan money for someone to take a vacation!)

Loan Rating: mostly C,D with a few B and E.

Term: 3 years. I avoid the 60 month notes.

Total loan amount: <$10k, and preferably not a round number like $10k (where it seems that somebody just guessed, rather than figuring out exactly how much they need to pay off a debt)

It took me a couple of months to get my $5k invested because I only put $25 in each note and there are only so many notes in funding at any given time. And then there is a fairly sizable number of notes that never get funded (I'm not sure exactly why). So you have to check back occasionally. And in reality, I think you have to plan to check back regularly because as the P&I trickle in, you either make new investments, withdraw your balance, or else leave your money uninvested. So do plan to put a little bit of time into it -- maybe 5 minutes per week. It's not quite like buying an index fund where you can look at it once per year! (I think LendingClub might have some automated screening tools you can use, but I haven't tried them. I suppose if they had screening tools, maybe they could have an auto-reinvest feature?)

After several months, all of my notes are current. One of them was paid off early (in the matter of weeks), which, if it happened a lot, could be annoying. LendingClub claims that my annualized return is 16% right now, but of course, that's because I haven't had a default yet. They actually predict that my portfolio should earn about 11% net of defaults and the LendingClub fee -- sounds pretty good to me.

Overall, I am happy with the experience so far. I view the $5K as an 'aggressive' component of my portfolio, and sort of like play money to invest with.

I hope this helps. If you want a referral, let me know.