[mattzito]

I haven't had a bad experience, per se, but after running through almost all of my initial loans and not opting to reinvest in more, it seems like a relatively decent but not great way of investing your money. I think if I were willing to carefully vet the loans, or focus on a particular vertical, I could have done better.

So, in my case, I did three portfolios - a fully manual hand-picked small portfolio, a blended approach with a higher risk, and then a portfolio of all high-interest, high-risk loans.

The hand-picked ones did extremely well, netting me 8.5%. The very high-risk ones got around 5-6%, and the blended around 4%.

It wasn't bad returns, but the interest income (iirc) is taxed as income, and that wasn't ideal for me.

EDIT: because I opted not to reinvest, all the numbers above are what my return is as my portfolios all wind down. At the beginning the returns were much better, 13-15%, but a significant percentage of people get about 75% of the way through paying off their loans and then get behind and default.

[pktgen]

The tax issue can be worked around to some extent by using an IRA. Lending Club will also open trust accounts so it should be possible to open one in the name of a solo 401(k) (only an option if you're self-employed). I'm going to try this in a bit.

[gtremper]

I opened my LendingClub account in a roth IRA for the same reason. Its not a very tax efficient investment, and I don't want to deal with it at tax time.

Be forewarned, though, that you can't buy or sell loans on the 3rd party exchange with a tax advantaged account.