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Why I am Investing Another $100,000 in P2P Lending

by Peter Renton on October 19, 2011

Earlier this month my total p2p lending portfolio crossed over $100,000 in value. It has steadily risen in value every month since I started investing in July 2009 (except for one month) and I have continued to add new money on a regular basis.

But I have decided that is not enough. So today, I am announcing publicly that I will invest another $100,000 in both Lending Club and Prosper over the next 12 months – thereby doubling my current investment.

Putting My Money Where My Mouth Is

It is no secret that I am a big believer in this concept. I have stated many times that I think p2p lending is the best risk/reward investment available in the world today. But the more I have studied the numbers and talked with management at Lending Club and Prosper, the more I became convinced that I should add to my investments substantially.

I wrote a couple of weeks ago about the concerns some investors have with p2p lending and why many people do not invest. I am fully aware of the risks, I know that there are safer places for this money, but I also know there are few places I can go today to get a consistently high rate of return. In fact my goal with this additional $100,000 is to get a real world 12% return. This will require an improvement on where I am today, which is an 8.15% actual return (calculated using Excel’s XIRR() function) on my portfolio over the 12 months ending September 30, 2011.

Now, I am not going to invest this money all in one hit. It is going to be done slowly and methodically but I intend to have an additional $100,000 completely invested by October 1, 2012. I will be focusing mostly on high interest loans – grades C-G at Lending Club (interest rates greater than 15%) and grades D-HR at Prosper (interest rates greater than 20%). I will be sharing my exact criteria in upcoming posts.

Splitting the Money Between Lending Club and Prosper

Until now I have had the majority of my p2p investments in Lending Club mainly because the bulk of it is IRA money and Prosper does not offer IRA’s (yet). But this new money will be mostly in taxable accounts and will be split 50-50 between Lending Club and Prosper.

I truly believe in both companies and I think they provide a useful diversification for investors seeking high interest returns. I have started off this process by transferring $20,000 in to Prosper and I will also be adding to my Lending Club account soon.

My goal with telling you this is not so much to demonstrate my commitment to p2p lending – that should be obvious by now. In coming weeks and months I am going to have a series of posts that deals with managing multiple accounts and putting large amounts of money to work.

So, I will be sharing exactly how I am investing this money and the returns I am getting. Stay tuned.


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{ 15 comments… read them below or add one }

C. Jensen October 19, 2011 at 4:45 pm



Dan B October 19, 2011 at 5:38 pm

What’s the LC recurring deposit bonus like at the levels you’re planning to implement?


Charlie H October 19, 2011 at 8:16 pm

Double Down.

I’ve seen ~$150 in recurring deposits bonuses over the last 11 months that I’ve been investing. I would wager that Peters is probably in the $1500-2000 range over that same period based on his larger account balance. :)


Chris October 19, 2011 at 8:55 pm

Peter, it’s encouraging to see more people bring over larger contributions. Do you plan on a different investment strategy with this $100k or are you maintaining the same approach as the first $100k? With regard to you “putting your money where your mouth is”, I think announcing a 50/50 split between both platforms is a vote of confidence to both – which is also very encouraging to those entertaining the idea of larger positions.


Bilgefisher October 20, 2011 at 7:18 am

Good luck. It should be interesting to see your outcome.



Louis Lamoureux October 20, 2011 at 7:19 am

The LC Prospectus states “In addition, no investor may purchase Notes in an amount in excess of 10% of the investor’s net worth, determined exclusive of home, home furnishings and automobile.”
Will you bumping up against that limit with $200k invested?
Does that apply to just regular accounts and not the IRA accounts?
If a husband and wife each have accts (like your family does) is it 10% of household or does each individual get to put in 10% of the household net worth?
I’m wondering because at my age, the traditional rules for retirement say that 60% of my investments should be in stocks and 40% in bonds (age in bonds). I understand LC & Prosper are not bonds, but they present the same diversification benefits (in that they are not stocks, they have a low to no correlation to the performance of stocks, and provide a relatively high fixed percentage interest rate).



Peter Renton October 20, 2011 at 9:05 am

@Dan, I am still looking into the bonus options at Lending Club because I haven’t committed any new money to them yet.

@Charlie, I will let you know when I find out what the bonuses are right now.

@Chris, My strategy continues to evolve. I really had no consistent strategy until about nine months ago, but this new money will definitely be geared at lower grade (higher interest) notes. I will share my exact strategy in upcoming posts.

@Bilgefisher, Thanks, I agree it will be interesting.

@Louis, I am still under 10% of my new liquid investments. The way I see it is this limit is for household accounts, which is how I am taking it. And let’s face it, while it is in the prospectus it is there for legal reasons and it is not something that is strictly enforced. If you wanted to go up to 20%, while that may be unadvisable, you will not be prevented from doing that. I view p2p lending as the more aggressive part of my overall portfolio and don’t really lump them in with bonds even though they are bond-like.


Ryan October 20, 2011 at 3:35 pm

You certainly are putting your money where your mouth is! I look forward to hearing about how easy you find it invest that money. That is, how easy it is for you to find the right number of loans at the per loan limit you set (if any).


Hank October 20, 2011 at 5:08 pm

It will be great to see the criteria that you will use to commit this new money into loans. I can’t wait to hear more about it.


Peter Renton October 21, 2011 at 5:37 am

@Ryan/@Hank, Thanks. Yes, I will be sharing my strategies for investing this money in upcoming posts. But I am not in a hurry, I expect it will take me close to 12 months to invest this money.


Michael October 21, 2011 at 9:46 am

How much do you plan to invest per note? Or do you plan to vary. For someone with a larger portfolio I think an interesting post would be to determine a good measurement for when you should exceed 25 per note.


Peter Renton October 21, 2011 at 12:23 pm

@Michael, I am still deciding on that. Right now I am investing up to $100 per note but I might up that to $200. I am going to give it a few more days to see how many loans I am finding. I would like to put $1,500 – $2,000 to work every week so I can have this new investment completed in three months or so.


Emily November 3, 2011 at 7:44 pm

The old saying not to put all your eggs in 1 basket is still as valid today as in the yester years. Anyway, I understand FXCM UK has a great fund management service for minimum deposits of $5,000 and above. Another firm which takes twice that deposit is TRADEXPERTS Capital though with seemingly higher returns year-to-date. GFT Markets is yet another good option for those seeking to paving the road to retirement. As for me, I’m only few years to go & I think I’ll be fine for the next 25 – 30 years :)


RAS March 4, 2012 at 6:00 pm

What are your thoughts re LC vs Prosper? Do the loan quantity or quality differ? Would you suggest we all use both and diversify?


Peter Renton March 4, 2012 at 11:06 pm

@RAS, I always recommend investors open an account at both companies because it provides better diversification of your p2p lending investment. Lending Club has, on average, has borrowers with better credit scores and with Prosper you can get access to higher risk borrowers that pay more interest. To give you an idea of what I mean the average interest rate on Lending Club during the first two months of 2012 was 13.3% but at Prosper it was 19.3%. Diversifying between the two platforms will allow to spread your risk among a broader cross section of borrower.


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