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Based on what I understand, traditionally we are supposed to put 70% money in stocks and 30% money in bonds (based on individual age, I am 33 right now).

I have been experimenting on P2P lending and robo investing and I think there is a space for both of them within our financial plan. Here is my break down

20% p2p - ( I have been getting 8-9% return a year from Lending Club) 20% Bonds (min return) 20% RoboInvesting (wealthfront - about 5% return in 6 month) 40% stocks based on personal research in good companies for long term

Does the 20% in p2p and 20% in robo investment seems ok to you ?

Chris W. Rea
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Ved
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5 Answers5

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P2P lending is basically a debt product with (much) higher risk, I doubt that there's any regulation or government backing in it. The money lent to borrowers are not collateralized or securitized.

JoeTaxpayer
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Tom Sun
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It's complicated. Really, there's no solid answer for your question. Everybody's risk tolerance and time horizon is going to be different. Those who can take on more risk can take on lower-grade C-G loans at Lending Club. Those with less risk tolerance should emphasize As and Bs.

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Having 20% of your portfolio in P2P lending sounds really aggressive to me. When we have another recession, a lot of those loans are going to be bad and having a big chunk of 20% of your portfolio vanish could sting pretty good. I wouldn't go into it with more than the sum you are willing to lose and not be too upset.

zeta-band
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I am currently running 12%. This is including IRA, 401k, HSA, and tax accounts. My LC is not a tax sheltered.The share used to be around 25% but i have been very aggressively putting away alot more into 401k/HSA.

My current NAT returns on LC are 14.3%, but not a single loan has seasoned, i am nearing my first full year, and i have had 3 defaults in 150~ loans. My % across grades: A-0 B-6 C-30 D-31 E-20 F-12 G-1 Also to note, i use a very filter and only pick the "best" notes based on my own personally back testing.

My 5 year average for stocks and such is around 11%, and YTD is 14%. Which is matching my LC rate. I am not sure which one will hurt more during the next bear markets, LC, or long term investments. Only time will tell.

I suppose I plan on keeping my LC between 10-15% of my total investments. I will see how it goes as time goes on and my account gets more seasoned.

ChrisB
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Depends on the level of risk in the specific p2p provider. I've looked at lendinvest which secures loans against property. You can select loans based on loan-to-value ratio etc. Even if a recession happens, if the LTV is around 50% it would have to be a pretty awful recession for you to lose any money once they recover, although there will be a delay while you wait for the recovery to happen. I would thus consider this lower risk than other p2p options, so I'd be willing to put more money into it.

At the end of the day as others have said there's no objective answer. This is just one factor to consider which I don't think has been pointed out yet on this discussion

gnoodle
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