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| PLW recommends Lending Club |
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New investors who sign up via this link
earn a $25 bonus from Lending Club |
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Everybody is either a borrower or an investor, and many are both! |
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| Yes! I would like to receive a quarterly analysis of peer lending site performance |
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About PeerLendingWealth.com |
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Peer Lending Wealth was created to help people understand the power of peer lending, and to provide a crystal clear road map to this new category that has a already received a quantity of poorly written books and blogs. We deal with far more information and detail than most web sites, but for many people this is the critical due diligence they need to make an informed decision. |
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Company Mission |
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To provide people with the strategy, insights and road map to benefit from the low risk and high returns available through the empowerment and control of intelligent peer lending. |
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The Author |
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My name is Scott Langmack and I created the strategies explained in this site over the course of investing hundreds of thousands of dollars of my own money in peer lending via Lending Club. With a background in strategic planning, marketing, analysis and management from Microsoft, PepsiCo and Clorox, I became fascinated with peer lending models and the utter simplicity of leveraging the bank model via the internet. This classic industry disintermediation play was initially executed very poorly by the early players in the industry. That followed with a combination of fundamental misunderstandings of the opportunity, and from what I could see no best practice available for people to follow. |
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After making over 1,400 loans with over one half million dollars, I refined the strategies in this site through statistical and analytic rigor, and simple empirical learning. My portfolio that is based on my evolved best practices is earning over 13% return, and based on the delinquency trends I expect that I will maintain over 12% return for the life of the loan. Even my early experimental portfolios are still earning over 11% returns. I would submit that all those people who are writing about peer lending are missing one thing - the only thing that really matters: They have not perfected a best practice methodology and put their savings to work. |
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I have consulted financial experts from the credit card industry, banking, and the peer lending industry over many months to validate and refine the theories presented. I am always, however, interested in new data and creative concepts, so if you have information that can make this process more robust, please feel free to contact me at info@peerlendingwealth.com. |
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The Macro View |
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Every few years technology opens a new door of opportunity. eBay changed the way we find deals. The internet made shopping choices fast and easy to select. Google advanced our ability to get fast answers. None of these technologies were confusing, they just used the internet to bring information, people and money together in a new way. Similarly, Lending Club has not done anything other than take a proven and successful business model, the banking model, and provided everyone with the scale and diversification that banks have enjoyed for years. |
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Actual Returns |
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As of October 1, 2009, I have three different types of portfolios on Lending Club. |
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My "best practices" portfolio targets a 12% return, and to do so I have selected 678 loans with an average stated interest rate of 13.68 percent. To date there are a total of 19 loans fully paid off, and 25 loans that are late, and 4 which have defaulted. Of all the delinquent loans, Lending Club typically gets 70%-80% of those back on track, so I am looking at an expected charge-off rate of approximately 8-10 loans, and possibly as much as 30 loans charged-off over three years. This equates to about 1.5% of my investment per year, and hence my expected return after Lending Club fees and a few charge-offs from non-recoverable loans should be 11.5% -12%. |
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My IRA targets a higher interest rate and accepts the risk of a higher default rate, as I am targeting a 12.5%-13% return. In this case, I have 257 notes averaging 14.9% interest. This is a newer account with less payment history. The risk I take in this case is that the defaults will be greater than the higher average interest rate, and it could end up yielding as little as 10%-11%. Or, it could yield as much as 14%. I don't like risk, but this range is not risk, its just a matter of better or best. |
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My third category includes a range of smaller portfolios of business targeted loans, loans selected by lending match, low risk/low interest loans, and many others. All of these portfolios are earning between 8% and 14%, as planned, and the Lending Club credit selection and management has proven effective. |
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 2009 Rosso Cavallo, inc. All rights reserved. The peerlendingwealth.com site, and its parent company, Rosso Cavallo, Inc. make no warranties, expressed or implied. Financial investing involves risk by nature and you need to evaluate your options with your own financial advisors. Questions or comments can be addressed to info@peerlendingwealth.com |
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