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Continuing on what Swigline is saying, I feel that keeping LC or Prosper loans in an IRA is a bad move due to the uncertainty and company risk involved, which is a real shame considering the *massive* tax advantages for these types of instruments in particular.
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Dec 28, 2013 02:58
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At least with LC, Google invested in it, giving it a lot more legitimacy in my eyes: http://dealbook.nytimes.com/2013/05/02/google-to-invest-in-lending-club/?_r=0 I'm not saying they're without risk, but I assume that Google Ventures has done their homework well. That said, I'm not putting anything more than "play money" into my LC account.
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Jan 3, 2014 02:08
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I thought this might be fun with but my bullshit state doesn't allow it.
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Jan 3, 2014 02:17
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What kind of taxes are you guys paying on your returns?
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Jan 9, 2014 07:05
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Lelorox posted:What kind of taxes are you guys paying on your returns? Highest marginal income rate, though I am able to directly deduct all of my losses from income due to my losses being less than $3k and having no other capital losses.
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Jan 9, 2014 14:05
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baquerd posted:Highest marginal income rate, though I am able to directly deduct all of my losses from income due to my losses being less than $3k and having no other capital losses. On that note... Does Lending Club issue you a 1099 or is it self reported?
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Jan 9, 2014 17:57
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I'm the same as baquerd. Last year they issued what seemed like legit 1099s and I expect them to do that again this year. The year before they were all messed up and the year before that they didn't issue anything. e: now that I think about it, I seem to recall the consensus was that LendingClub hadn't reported the losses correctly on the 1099s so I entered them all in individually as loans that had gone bad (essentially deducting them from my highest income bracket, since it was less than the $3k limit). There's always a ton of discussion at Lend Academy during tax time about the best way to file and it seems to change every year. I always spend a few hours reading the arguments between the accountants and go from there. spf3million fucked around with this message at 18:03 on Jan 9, 2014 |
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Jan 9, 2014 17:59
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Saint Fu posted:I'm the same as baquerd. How do they report losses? I'm no tax expert but I'm pretty sure that since you are actually buying securities that are backed by a loan, as long as you still hold the note you would not be able to deduct it as a loss. That could be why they report it differently than you think they should. You <----> Security <----> LendingClub <----> Loan The reason why I'm pretty sure they're securities is because LC files and regularly amends a prospectus for them via the SEC, as required by securities laws: http://edgar.sec.gov/Archives/edgar/data/1409970/000140997014000041/postingsup_20140109-100001.htm  Anyway, I would consult a tax professional before possibly filing your taxes wrong for a few years in a row and therefore pissing off the IRS.
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Jan 10, 2014 03:06
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Swingline posted:How do they report losses? When a loan is fully in the "Charged Off" status, the consensus is that you can discharge it as bad debt. LC does not actually report your losses in any way on tax forms, at least not so far historically. Many tax professionals have no clue what to do with LC notes, and there's been many page long discussions involving various tax people and people relaying the advice they have received from tax people. The easiest thing to though, as you note, is to unload your notes before they default so you never have to deal with the ambiguity and it's nice straightforward capital losses.
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Jan 10, 2014 04:26
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Man, I might have to hold off on this untill I get a straight answer on filing taxes. Has anyone in the thread been audited by the IRS while reporting LC note income? I hate to be a downer in the thread, but the last thing I want to do is be audited because of this especially when I'm only planning on using about.5% of my total investments at first.
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Jan 10, 2014 08:03
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Lelorox posted:Man, I might have to hold off on this untill I get a straight answer on filing taxes. Don't do this. The IRS isn't some scary Big Bad Wolf unless you're legitimately evading taxes. If you take a defensible position on something and they come down on the other side if there is an audit the worst case is very small fines and interest. A lot of times they'll waive the fines. Taking a few $25 losses on your defaulted loans is also way under any audit radar, and losses on securities isn't a tier one issue. That means if you get audited for something else, they won't automatically investigate it. Don't let the taxman scare you away from a legal potential investment vehicle.
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Jan 10, 2014 09:47
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If you're really afraid of it, you can always just not claim any losses and eat the few $~20 defaults you may or may not get in the first year. I did this my first year in LC when I had only one default with $19 of outstanding principle. I decided it just wasn't worth the hassle.
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Jan 10, 2014 12:08
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Well, I sunk the money into my account. So I guess it's time to read through this entire thread to learn from ya'lls mistakes.
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Jan 16, 2014 00:42
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Alright so I finally made my first round of note purchases. Couple of questions/thoughts for you veterans. People with a rediculous amounts of credit lines: I've seen quite a few loans where the person has 30 plus open lines of credit. As someone with very few lines of credit open this set off a red flag in my brain. Should I not worry about this too much? Big loans vs Small loans: I'm currently trying to stay away from loans over 15k. I figure people are more likely to bail on big loans than small managable ones. This is pure conjecture on my point, so if anyone has some stats to disprove this line of thinking please show them.
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Jan 23, 2014 02:53
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I did a bunch of analysis on all of the notes available at the time several years ago and set up filters with nickelsteamroller.com to alert me when notes meeting my filter become available. At the time I remember finding that there wasn't much correlation between number of lines of credit and default rate when the total lines were less than 17. I also found that, on average, larger loans were less likely to default than small loans all else being the same. I haven't revisited those filters for a long time, mainly because I've been happy with my returns since then, also  Another interesting discovery was that low income has a relatively higher correlation with default so high income (>$70k/yr) is a big part of my filter.
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Jan 23, 2014 03:16
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Lelorox posted:People with a rediculous amounts of credit lines: I've seen quite a few loans where the person has 30 plus open lines of credit. As someone with very few lines of credit open this set off a red flag in my brain. Should I not worry about this too much? I personally have ~15 lines of credit but my utilization rate (total balance / total combined credit limit across all accounts) is about 1%. Utilization rate is far, far more important. People like to min/max credit card rewards which means opening a few each year and either not using them after you get the sign-up bonus or only using them for bonus categories like 3% cash back on gas.
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Jan 23, 2014 03:17
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Swingline posted:Utilization rate is far, far more important. Which is why it's an independent variable in FICO and most other credit risk scoring. The only time it becomes a factor is a lot of lines opened up at the same time which could be fraud or other issues, but this gets caught usually by inquiry counts or average age. In fact FICO offers a custom score that takes Inquiry counts OUT of the scoring model because everyone uses these counts as a secondary fraud check outside of scoring.
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Jan 23, 2014 05:23
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So did some back testing on my chosen indicators and got a statistically nice return and default rate , but now I've run into the issue of not being able to find loans that meet my criteria because of either large notes being issued or bots( maybe a mix of both) Also, thanks for the advice on narrowing them down, you guys. I was only able to pick up about four notes this morning out of maybe 50 candidates. Guess most of my initial investment is going to be sitting idle for a couple months.
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Jan 24, 2014 01:18
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It took me forever to invest my first $1000. Now I can only find at most a few loans a week that meet my criteria.
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Jan 24, 2014 01:23
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Yeah don't rush to spend your initial investment. Took me a solid six weeks or so to dump my initial $1500. I think we figured out earlier that bots take most of the good notes as soon as they're added, but there is still plenty to go around usually. Just check back every couple of days or so, I forget when they're added.
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Jan 24, 2014 01:50
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New loans are added 4 times per day, I believe it is 6am, 10am, 2pm, and 6pm Pacific.
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Jan 24, 2014 02:37
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Update time! As of right now, my notes look like this: quote:Total Notes: 1023 As you can see, my number of charge-offs has risen quite a bit. They are almost all notes that were issued around the time I started this thread, when I was trying to get large-ish chunks of money invested as quickly as possible. During that time, I bought notes that were riskier just for the sake of not letting my money sit for a few extra days. Yes, I was stupid. Most of the ones that have defaulted over the last few months have paid $6-7, so they weren't a total loss. Still an expensive lesson to learn about being too eager to invest. On the plus side, payments look like this: quote:Payments to Date: $8,741.32 To date, I have put in $16,950. I have received payments for over half of that amount, and still have outstanding principal of $18,590. Overall, I'm still VERY enthusiastic about this. My portfolio is generating just over $750/month, so I'm able to grow it by 30 notes a month, even if I don't add any more funds to the account. Is anyone else starting to see the compounding really kicking in? I have 927 open notes, and I've only paid for 678.
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Feb 13, 2014 19:46
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April posted:
That's pretty sweet! I only bought like 60 notes around tax time last year, now have 73 with 12.5% interest. No charge-offs yet, but one is headed that way it looks like. A pretty good year, so I'll probably dump a heavier investment into it when I get around to taxes this year.
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Feb 13, 2014 20:16
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April posted:Update time! What is your average age on your notes? I think it's interesting to see how many of your loans have been fully paid off although if I extrapolate out to a year I may be in the same boat. I have around 850 current notes, with 26 paid off but my average age of a note just crossed 3 months.
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Feb 13, 2014 20:34
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April posted:To date, I have put in $16,950. I have received payments for over half of that amount, and still have outstanding principal of $18,590. e: I'm sitting here Total Notes: 320 In Funding: 0 Issued & Current: 244 In Grace Period: 3 Fully Paid: 59 Late 16 - 30 Days: 0 Late 31 - 120 Days: 5 Default: 1 Charged Off: 8 Average age 13.6 months. I had been relying on NSR's email updates when loans matching my criteria became available but they recently discontinued their emails. I have yet to find time to sit down and set up the automatic note purchasing system through NSR. spf3million fucked around with this message at 20:52 on Feb 13, 2014 |
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Feb 13, 2014 20:47
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Have you guys been noticing that it's a lot harder to find notes in the last 2 weeks or so? I used to just go on the site randomly and find notes that I wanted to invest in (based on my criteria) but lately I need to be on at the exact time that they release the new batches of notes. Its so bad that the 5 seconds it takes me to review a note is too long and its closed when I try to buy it. I'm mostly talking about C and D rated notes. A's and low B's are usually still readily available.
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Feb 13, 2014 20:58
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smilingmike posted:Have you guys been noticing that it's a lot harder to find notes in the last 2 weeks or so? I used to just go on the site randomly and find notes that I wanted to invest in (based on my criteria) but lately I need to be on at the exact time that they release the new batches of notes. Its so bad that the 5 seconds it takes me to review a note is too long and its closed when I try to buy it. I'm mostly talking about C and D rated notes. A's and low B's are usually still readily available. There is lots of underutilized capital looking for a target.
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Feb 13, 2014 20:59
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I was figuring that would have made the "whole note" market really competitive and not the section that normal users have access to. I'm assuming your talking about the banks and institutions that have started investing in Lending Club.
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Feb 13, 2014 21:09
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Saint Fu posted:That's great but keep in mind a large portion of that $750/mo is returned principle. You're not making >4%/mo (750/18,590) in gains, probably closer to something like $175/mo, still nothing to scoff at. It ends up being a net increase 7 notes/month if you assume all of your other notes have decreased by 1/36 each (assuming 3 year length). I recently started using interest radar's auto-invest tool, and I've been pretty happy with it. I have an emotional reaction to seeing available cash in my account, like "MUST BUY NOTES NOW NOW NOW". Knowing that the software will buy the notes as soon as they are available helps me to step back and not make hasty buys that I'll regret later (see my previous post). Also, my interest payments are about $220-ish per month right now. quote:What is your average age on your notes? I think it's interesting to see how many of your loans have been fully paid off although if I extrapolate out to a year I may be in the same boat. I have around 850 current notes, with 26 paid off but my average age of a note just crossed 3 months. According to NSR, my average note age is 10.28 months. Most of my defaults were right around the 1-year mark.
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Feb 13, 2014 21:10
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April posted:I recently started using interest radar's auto-invest tool, and I've been pretty happy with it. I have an emotional reaction to seeing available cash in my account, like "MUST BUY NOTES NOW NOW NOW". Knowing that the software will buy the notes as soon as they are available helps me to step back and not make hasty buys that I'll regret later (see my previous post).
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Feb 13, 2014 21:23
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Saint Fu posted:Cool, I hadn't heard of that one before. Is it free? No, it's $60/year. Maybe a little pricey, but with the number of notes I've been buying, I think it's worth it. You can tweak the filters pretty heavily, choose what you want to spend per note, and add limits to the amount it will spend per day/week/month. Right now I'm reinvesting everything, but down the road, I could see setting limits to have some income and reinvest. If anyone is interested, this is the strategy I use: https://www.interestradar.com/analy...&HideInvested=1
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Feb 13, 2014 21:26
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Who would I write at the state legislature level to ask to allow peer to peer in Oregon? Any other Oregon goons want to spam mail the reps too?
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Feb 14, 2014 00:29
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SiGmA_X posted:Who would I write at the state legislature level to ask to allow peer to peer in Oregon? Any other Oregon goons want to spam mail the reps too? Seriously, and me for Texas. It's just unfair that I have to deal with FolioFN when most of what it wants to show me has a *negative* EROI after purchase, as if I'm going to buy those notes.
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Feb 14, 2014 02:02
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Alternatively, how.....would it be to register at my family vacation home in a different state? Is is based off of the state of my legal residence? I don't want to break the law, but I'd love to start playing with LC...
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Feb 14, 2014 04:58
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SpelledBackwards posted:Seriously, and me for Texas. It's just unfair that I have to deal with FolioFN when most of what it wants to show me has a *negative* EROI after purchase, as if I'm going to buy those notes. I think the problem is the big banks. They have lobbyists making sure that nobody else gets to play in their sandbox.
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Feb 14, 2014 11:27
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So with lending club how long does it take from when the individual makes a payment does it either show or post in your account? I just started last month and have a four loans that were due 2/13. I know with president's day on Monday, we're not 5 business days out. It says processing for all the loans, so LC doesn't seem to think they're late. Any guidance?
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Feb 20, 2014 18:58
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Bloody Queef posted:So with lending club how long does it take from when the individual makes a payment does it either show or post in your account? I just started last month and have a four loans that were due 2/13. You're correct, it usually takes 5 business days, and the holiday usually adds another day. Another thing to be aware if is that the status reads "processing" even if payment has failed. I'm not sure how long it stays that way, but if payment doesn't clear, you'll see it change to "in grace period", "16-30 days late", "31-120 days late", etc. You can see what's going on with it if you click on the note & scroll down to the collection log.
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Feb 20, 2014 19:06
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Sorry if this has been covered already (I've read through the first half of this thread so far and not found what I'm looking for) but what sort of tools/techniques are you guys using to analyze notes and decide if they're worthwhile? I have a decently strong math/science background (I majored in chemistry and took a few extra math classes for fun) but don't really know much about finance or accounting or w/e beyond the basic stuff they teach in calc or basic stats classes.
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Feb 21, 2014 02:01
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dik-dik posted:Sorry if this has been covered already (I've read through the first half of this thread so far and not found what I'm looking for) but what sort of tools/techniques are you guys using to analyze notes and decide if they're worthwhile? I have a decently strong math/science background (I majored in chemistry and took a few extra math classes for fun) but don't really know much about finance or accounting or w/e beyond the basic stuff they teach in calc or basic stats classes. Well, there's no 100% accurate way to choose, and a lot of it depends on your own risk tolerance and goals. My big red flags are people trying to borrow the maximum amount (35k), people with prior delinquencies, a very short job history, and a credit rating at the minimum LC acceptable level. I use interest radar to filter my notes, and they also have a "IR Risk" category, so I choose the ones deemed low risk. I would also advise you to read the whole thread, a lot of other people have also described their criteria, and I posted a link to the strategy I use. ETA: I also only invest in 36-month notes, for a couple of reasons. Most defaults happen in the first 12-18 months, so with a shorter term, you get more of your money back. Also, I feel that people choosing the 5-year option are doing so in order to have a lower monthly payment, meaning that they may have more trouble making the payment. April fucked around with this message at 13:41 on Feb 21, 2014 |
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Feb 21, 2014 13:38
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I signed up for Prosper, then just put a bunch of money into notes using the "Quick invest" feature with all defaults set, basically just automatically choosing any loans that are available. I realize now that this was idiotic. What's the best way to remedy this situation? Wait a few months and sell all the notes and start again?
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Mar 7, 2014 21:23
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