Title: What is Your Minimum Acceptable Return
Post by: Rob L on January 12, 2018, 11:00:00 PM
Post by: Rob L on January 12, 2018, 11:00:00 PM
What is your minimum annual acceptable rate of return, below which investing in LC is unattractive?
Please vote in the poll above.
Please vote in the poll above.
Title: What is Your Minimum Acceptable Return
Post by: Lovinglifestyle on January 12, 2018, 11:00:00 PM
Post by: Lovinglifestyle on January 12, 2018, 11:00:00 PM
Absent the guaranteed return OF my money (per Anabio), I need 10% to compensate for the work and time involved plus not over 3K capital loss/yr.
Title: What is Your Minimum Acceptable Return
Post by: dbsb3233 on January 12, 2018, 11:00:00 PM
Post by: dbsb3233 on January 12, 2018, 11:00:00 PM
Whatever it is, I'm already well below it!
I use P2P lending as a "safer" hedge to pair with my stock market investments, so I'm OK with modest gains. I can live with 5% for that (2-3% after inflation), but of course hope for more. But I'm actually LOSING money in my non-IRA LC account (-2% last year). That's largely because I stopped reinvesting proceeds at the start of 2017 and am just draining the account as loan payments come in.
In my IRA, I'm still reinvesting proceeds, and running about +3.5% return. Not very happy with that either but I'll give it another year and see if it turns up.
I use P2P lending as a "safer" hedge to pair with my stock market investments, so I'm OK with modest gains. I can live with 5% for that (2-3% after inflation), but of course hope for more. But I'm actually LOSING money in my non-IRA LC account (-2% last year). That's largely because I stopped reinvesting proceeds at the start of 2017 and am just draining the account as loan payments come in.
In my IRA, I'm still reinvesting proceeds, and running about +3.5% return. Not very happy with that either but I'll give it another year and see if it turns up.
Title: What is Your Minimum Acceptable Return
Post by: Fred93 on January 12, 2018, 11:00:00 PM
Post by: Fred93 on January 12, 2018, 11:00:00 PM
Remember that the stock market has periods where you lose money also.
Title: What is Your Minimum Acceptable Return
Post by: jd on January 12, 2018, 11:00:00 PM
Post by: jd on January 12, 2018, 11:00:00 PM
8% plus is always a nice choice.
I'm currently at 12.02% NAR. My account is young and not huge (over 100 notes). When I get to the six month point I'll post some of the details.
I'm currently at 12.02% NAR. My account is young and not huge (over 100 notes). When I get to the six month point I'll post some of the details.
Title: What is Your Minimum Acceptable Return
Post by: apc3161 on January 13, 2018, 11:00:00 PM
Post by: apc3161 on January 13, 2018, 11:00:00 PM
Around ~8% on average (i.e. 10%+ in good years)
Thought process:
1) Unfavorable tax situation (interest is taxed as regular income, losses are capital losses)
2) High yield bond index funds yield ~6%. I consider p2p riskier and as such need higher returns.
3) It's more work than an index fund. Not as easy to just "set and forget".
Of note, LC advertises 3-5%, as such they must think/hope that is okay for investors. I believe they are wrong and this will be proved, and investors will really start to pull money from their platform if they don't make it more investor friendly (at the expense of borrowers and shareholders)
Thought process:
1) Unfavorable tax situation (interest is taxed as regular income, losses are capital losses)
2) High yield bond index funds yield ~6%. I consider p2p riskier and as such need higher returns.
3) It's more work than an index fund. Not as easy to just "set and forget".
Of note, LC advertises 3-5%, as such they must think/hope that is okay for investors. I believe they are wrong and this will be proved, and investors will really start to pull money from their platform if they don't make it more investor friendly (at the expense of borrowers and shareholders)
Title: What is Your Minimum Acceptable Return
Post by: TravelingPennies on January 14, 2018, 11:00:00 PM
Post by: TravelingPennies on January 14, 2018, 11:00:00 PM
Title: What is Your Minimum Acceptable Return
Post by: Edward Reid on January 19, 2018, 11:00:00 PM
Post by: Edward Reid on January 19, 2018, 11:00:00 PM
No single number, because it's a trade-off between risk and return. I've picked a risk profile (accurately so far, but only so far) and I'm on about 8% ANAR with about 18 months average age. I'd be happy with a 4% return on that, because I think that would be better than I could get with other investments with similar risk. If I needed more safety, I'd be happy with a lower return. If it were pure play money, I wouldn't be happy with any level of return, because it wouldn't be as exciting as betting on horses.
Edward
Edward
Title: What is Your Minimum Acceptable Return
Post by: JohnnyP on January 19, 2018, 11:00:00 PM
Post by: JohnnyP on January 19, 2018, 11:00:00 PM
First, need to consider the time horizon. I figure on a 10 year time horizon for a couple reasons. One, these are minimum 3 year investments. This is not a short-term investment. Two, it is impossible to predict short term returns for stocks. It is more reasonable to predict a range in the longer term. I love Vanguards yearly prediction for 10 year returns. They do a great job. You can see it here:
https://personal.vanguard.com/pdf/ISGVEMO.pdf
In it, they estimate a 10-year return of 5.2% for global stocks and 2.6% for US bonds (not adjusted for inflation which is predicted to be 1.7%). If you want to understand why the low stock prediction, you will need to read the report. There are very good reasons for it.
I believe an LC portfolio of mostly B and C loans is less risky than global stocks. So I am happy with anything over about 4.2%. I believe this is achievable, so I am happy to invest in LendingClub notes.
https://personal.vanguard.com/pdf/ISGVEMO.pdf
In it, they estimate a 10-year return of 5.2% for global stocks and 2.6% for US bonds (not adjusted for inflation which is predicted to be 1.7%). If you want to understand why the low stock prediction, you will need to read the report. There are very good reasons for it.
I believe an LC portfolio of mostly B and C loans is less risky than global stocks. So I am happy with anything over about 4.2%. I believe this is achievable, so I am happy to invest in LendingClub notes.
Title: What is Your Minimum Acceptable Return
Post by: rawraw on January 20, 2018, 11:00:00 PM
Post by: rawraw on January 20, 2018, 11:00:00 PM
Title: What is Your Minimum Acceptable Return
Post by: Jadedfalcons on February 02, 2018, 11:00:00 PM
Post by: Jadedfalcons on February 02, 2018, 11:00:00 PM
Title: What is Your Minimum Acceptable Return
Post by: TravelingPennies on February 10, 2018, 11:00:00 PM
Post by: TravelingPennies on February 10, 2018, 11:00:00 PM
Hey, the voting closes tomorrow. The more the merrier.
It's anonymous and there's no requirement to post any why's or wherefore's of your vote.
Just punch a button; how hard is that?
It's anonymous and there's no requirement to post any why's or wherefore's of your vote.
Just punch a button; how hard is that?
Title: What is Your Minimum Acceptable Return
Post by: TravelingPennies on February 11, 2018, 11:00:00 PM
Post by: TravelingPennies on February 11, 2018, 11:00:00 PM
The votes are in and speak for themselves so take a look.
My vote was 6% (and always has been).
Simply 3% for the risk premium of dealing with a "new thing" (LC) and 3% minimal return (within an IRA).
My how times have changed.
IMHO most who participated will ultimately be disappointed with their returns, but I certainly hope not! Time will tell.
Thanks to all that voted !!!
PS: Gee, I wonder if LC will see this ??
My vote was 6% (and always has been).
Simply 3% for the risk premium of dealing with a "new thing" (LC) and 3% minimal return (within an IRA).
My how times have changed.
IMHO most who participated will ultimately be disappointed with their returns, but I certainly hope not! Time will tell.
Thanks to all that voted !!!
PS: Gee, I wonder if LC will see this ??