[Travesty]

^ Please report back with your results.

My passive investment lately has been RSD-A Royal Dutch Shell ~8%+ dividend bought in a few months ago around the bottom of oil. I wonder how a high dividend stock compared to something like this.

15% has my rubbing my hands together, seems like the risk will have to be high though for that kind of payoff.

[samsamsam]

(05-13-2016 12:13 AM)Travesty Wrote:  

^ Please report back with your results.

My passive investment lately has been RSD-A Royal Dutch Shell ~8%+ dividend bought in a few months ago around the bottom of oil. I wonder how a high dividend stock compared to something like this.

15% has my rubbing my hands together, seems like the risk will have to be high though for that kind of payoff.

I will, I find it very entertaining from a game sort of perspective.

I think stocks with dividends have the equity upside coupled with dividend increases over time. I think your stock choice (with patience) will pay off better than these debt items. Plus, the stock market is more liquid.

These debt instruments always face the early payoff risk along with reinvestment risk of trying to find a similar or better performing debt. Along with the default risk.

I applied for the secondary market thing - I guess you have to be accepted.

[DJ-Matt]

Update on my $500 experiment with LendingClub:

Using RVF criteria my account value is $540, so I've made $40 in 8 months. 16% interest rate if you don't include the late note. If you want this to be a passive income stream you'll probably need a 500k minimum bankroll to make it work.

1 note of my 22 is probably going to default, the guy has missed two payments and so far has only made a partial on the last payment. It's a high interest F grade loan so I'm not surprised. I'm now adding another criteria, no more sub 700 FICO scores.


To answer the above question, yes you can technically sell the notes and divest early, however you will most likely lose a lot of money this way, especially if you traffic in the high-interest notes, no one wants to buy those in the marketplace.

[samsamsam]

I got accepted into the secondary market.

I like it more mainly because I just like trying to beat the game.

Also, it isn't all bad debt. Some are just seasoned loans. I think guys got in early on some high rate debt, had it season and gonna dump it for a higher price, thus you get a lower rate.

But high rate debt is probably subject to prepayment, so it might just be for the less informed.

However, with the secondary market, you can start laddering your debt, so it isn't all 36 and 60 months down the road. But some bad debt can have massive POTENTIAL yields. Yield to maturities in the 1000% - but the dollar amounts are small like 2 bucks to buy

You would definitely need to automate, or you could spend hours looking for stuff to buy.

[DJ-Matt]

Hmmm I might want to view LCs buy/sell market maybe get some loans cheap...

Takes 4 days for the application

[samsamsam]

(05-13-2016 03:49 PM)DJ-Matt Wrote:  

Hmmm I might want to view LCs buy/sell market maybe get some loans cheap...

Takes 4 days for the application

I got it in less than 24 hours. I applied yesterday unless you get stuck in the application process over the weekend.


I also read somewhere that hedge funds actually invest in these notes. So you need to be quick in buying the best loans (regular and secondary).

[Cattle Rustler]

(05-13-2016 04:12 PM)samsamsam Wrote:  

(05-13-2016 03:49 PM)DJ-Matt Wrote:  

Hmmm I might want to view LCs buy/sell market maybe get some loans cheap...

Takes 4 days for the application

I got it in less than 24 hours. I applied yesterday unless you get stuck in the application process over the weekend.


I also read somewhere that hedge funds actually invest in these notes. So you need to be quick in buying the best loans (regular and secondary).

If I recall from the WSJ articles a couple of days ago, these guys get to set the loan terms they want and LC gives the loans to them. So they get dibs I guess...

[samsamsam]

My buddy mentioned something about some states are looking into usury laws. Maybe years later you will be asked to give some of the money back. Not saying it is likely, just something to think about it.

[samsamsam]

Interesting this is what the credit scores mean according to credit.com

Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699

I just downloaded all the notes in the secondary market - about 90 MB file.

For shits and giggles I am going to mess with the data.

I wish there was a way to see how these perform, to sort of test the screens.

[DJ-Matt]

Yep it was essentially 24 hours, took all weekend because I applied Friday afternoon. Pretty slim pickings so far, I'll check back often and see if they have defined posting times like regular LC. Biggest problem I see right now is almost none of the loans have a significant discount, most I saw was about 10%.

[samsamsam]

...

[Neo]

Just saw I got my first note that's in collections, only a few days late, but I guess Prosper acts quickly.

Strangely the borrower had a 700+ credit score, no delinquencies, and met my other filters. Will update on the status.

I also plan on posting ~monthly updates on this thread on how my investment is going with learnings.

[JayJuanGee]

(05-16-2016 02:09 AM)samsamsam Wrote:  

Interesting this is what the credit scores mean according to credit.com

Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699

I just downloaded all the notes in the secondary market - about 90 MB file.

For shits and giggles I am going to mess with the data.

I wish there was a way to see how these perform, to sort of test the screens.

Seems like a considerably risky way to get a potentially high return, and on average, some are going to default.... but I suppose that some guys may be able to create and look at the various criteria in order to balance out the risk in such a way to ensure returns of 6% or greater...?

I have loaned money and written up loan documents in person, and even then I am quite nervous, even knowing the person... but maybe online there are some ways to protect yourself including more screening tools and higher interest rates that would end up balancing out the defaults?

[booshala]

Started with LC in 2009, but got out in late 2013, early 2014 because I found that the institutional guys were buying up everything good as soon as they came out... correct me if I'm wrong, but in the past few years, I think they instituted some policies where they set aside a certain portion for individual investors. Otherwise wall street guys would have everything.

To echo Travesty's input, I've found it's much easier to invest in high yielding oil supermajors at 6, 7 and even 8% yields. Given that the dividends are tax advantaged compared to the interest earned from P2P loans and that they're backed by multi-billion dollar corporations is the icing on the cake. BP and Royal Dutch Shell are fantastic values right now in my book.

On a related note, a buddy of mine who runs his own fund is really bullish on LC stock in the $3 range after the big ouster of the founder. He's confident that the issues - while serious - aren't life threatening and represents a big "margin of safety" in the Graham model. I'm not as crazy about it as him, but he's a lot smarter than me and has a good record, so I might nibble away at some shares as a lotto ticket.

[samsamsam]

I agree getting into high yield oil companies at depressed prices is a good thing. Factor in future dividend growth and equity appreciation, it will be good long term.

For me this is just to fuck around with it. Sort of like testing out theories etc.

But I realized one thing I didn't take into account.

Anyone know how you get your tax info? Is it K-1s by state or what? That could be a pain in the ass doing taxes on a dollar of interest in some other state.

[Buakaw]

(05-19-2016 07:34 PM)samsamsam Wrote:  

I agree getting into high yield oil companies at depressed prices is a good thing. Factor in future dividend growth and equity appreciation, it will be good long term.

For me this is just to fuck around with it. Sort of like testing out theories etc.

But I realized one thing I didn't take into account.

Anyone know how you get your tax info? Is it K-1s by state or what? That could be a pain in the ass doing taxes on a dollar of interest in some other state.

I receive a 1099-OID from LendingClub where they report the interest income. They also give me a 1099-B where I believe they report the recoveries and losses from charged off loans.

The taxes are pretty straightforward IMO.

[samsamsam]

Thanks. i had looked at some other investments and the tax headache required a bigger investment to justify paying more to get my tax return done.

[Buakaw]

(05-20-2016 12:10 AM)samsamsam Wrote:  

Thanks. i had looked at some other investments and the tax headache required a bigger investment to justify paying more to get my tax return done.

No problems. It takes 5 minutes to do this in TurboTax. And I believe nowadays you can even automatically import the LendingClub forms into TurboTax

[DJ-Matt]

The CEO sent out an email about LCs recent "problems", your friend being bullish with the stock is probably going to make some good coin if LC doesn't fold, which doesn't seem likely considering the number of loans they're servicing right now.

Also the marketplace is currently flooded with loans now at at 10% or more discount, maybe because of this news?

https://www.google.com/finance?q=NYSE:LC

   

[Neo]

Monthly bump, just got my statement.

So I have 115 notes at $25 each, last month it said I earned ~$24 in interest. 1 note is in collections 15-30 days late. Might be my first loss. The one in collections I mentioned before, the person started paying again. It's calculating my return at 10.1%, I'm still not sure exactly how they are doing it. None of my returns are 'seasoned' yet as my portfolio is too young.

Will bump again in July.

[CleanSlate]

40 notes at $25 each, one is 15-30 days late. Come on, pay up you little sandbagger!

[samsamsam]

Stock is up a $1- thought about it. should woulda coulda

[booshala]

(06-06-2016 11:14 PM)samsamsam Wrote:  

Stock is up a $1- thought about it. should woulda coulda

Personally I'm going to reassess after a year and (hopefully) have the benefit of a long term cap gains tax rate if I do make some money off of it. Bought at $3.97, let's see where it gets to by 5/20/17.

[Vinny]

I am far away from finance world but what seems to be a downside of peer to peer lending or money landing altogether is the inflation. Even if you get 10% per year returns this is only 4% in the end if count in the inflation.

Correct me if I am wrong.

In this aspect real estate seems to make more sense as the value of housing is constantly slowly rising enough to counter balance the inflation aspect.

I think it is the same with stock if you choose the right one that appreciates. But I know nothing about stock (John Snow)

Anyways you smart dudes out there who have achieved good results in passive outcome, PM me I need to ask someone a lot of questions.

[Vinny]

I think it might be a good idea is to keep the income cash in short term peer-to-peer lending notes before you save up enough to make another bigger investment in RE for example, this way the money is not just sitting there.