[rtanaka]

I spent a lot of time handpicking my 200 investments and I'm sitting on a 12.23% (adjusted) return right now. I think by most measures, this would qualify as a good experience. For me though, it's not. When someone defaults on me (I've had 1 officially and 2 more that will likely get charged off soon) I feel bad about it. Yes, it's expected and yes, LC makes a reasonable amount of effort to collect but it doesn't help how I feel. Especially when the people filling out the loan application write things like, "I'm a hard worker. I always pay my loans back, etc, etc" As someone, that would never short change someone on money owed I feel very let down when it happens to me and I take it a little too personally. It also doesn't sit right with me that LC takes a cut of every payment but doesn't share the pain of losses in any way. What it boils down to, I suppose, is that LC is just not the right investment vehicle for me.

edit: correcting default stats.

[AjithAntony]

How long have you held these notes? That seems like an exceptionally high return, and low default rate, unless this is like your first year.

[rtanaka]

I started in January of this year. It does seem high for sure. I'd like to think I spent a lot of time finding people that had the most to lose when making a decision (mortgage, relatively high income, stable job, etc) to lower my risk. But who knows.

edit: so i just checked for real. looks like it's been over a year (time flies). for the record, it shows 199 (instead of my stated 200) because i put $50 into one investment instead of the standard $25. http://i.imgur.com/o2DdDLU.png

[AjithAntony]

> i put $50 into one investment instead of the standard $25

It's funny you mention that. I went through a phase where I started doing $50 and $100, becuase I couldn't find enough high quality borrowers. I figured that since I trusted these people with $25, why not a little more. It just hurts more when they default. When I see a high value note charged-off, I just feel more betrayed than usual.

[pmorici]

I think that's one of the mistakes people make when investing in LC. The safety of the investment comes from having a small amount invested in a large number of notes. Until you are invested in 800+ notes you shouldn't be investing more than the minimum in any one note. If you look at LC's statistics on investor returns 800 notes seems to be the magic number to amortize the default risk.

[rtanaka]

It was hard sticking to $25 but other than that one investment I was able to remain patient even though it took me almost 6 weeks to invest my full amount. There was just one person I really felt like I could take the extra risk. Incidentally that person paid off the entire loan in the first payment.

[jliptzin]

Sometimes shit happens and people really just don't have the money to pay back their loans. I'm sure they feel even worse about it.

[rtanaka]

I'm sure they do and I hold no ill will toward them. I still feel bad about it though which takes away from how I feel about lending club.

[pkaye]

What was your mix of loan grades? Did you have any grade A loans default?

[rtanaka]

I went with mostly B/C since they seemed to yield the best return for the risk. Here's the actual breakdown: http://i.imgur.com/egbkFfh.png My charged off one is B and I have an A and a C that are 31-120 days late now.

edit: updated with actual chart and data (i guessed the first time)