I haven't looked into LendingClub too much, so maybe I have an incorrect understanding of the format, but I was under the impression that you choose the individual loans you are funding. That would mean it's your funds going to one individual borrower. If that individual doesn't pay, you're out your money. Is that incorrect?
What you're saying makes it sound like you maybe choose the "B" class and deposit your money. Then Lending Club funds a bunch of "B" loans with your funds and funds from other people who chose "B" funds. Then they somehow aggregate all of the revenue from those funded "B" loans and distribute it to those who invested.
Is either of those models correct? If not, what is?
If the second model above is correct, it sounds less risky than I thought, but still quite a bit riskier than a broad index fund. At the root of all of this is still a bunch of borrowers who came to Lending Club. Why did they do that? I'm assuming because no one else will lend to them. An index fund backed by a bunch of individuals who can't get a "real" loan doesn't strike me as less-risky than an index fund backed by the 500 companies in the S&P 500 index.
Re-reading your posts, I think I caught what I missed. You're already heavier than you are comfortable with in domestic stocks. So you're not necessarily comparing LendingClub to S&P500 you're comparing LendingCLub to EVEN MORE S&P500? If that's the case, something I think gets overlooked a lot in financial advice is the benefit of rebalancing. Maybe you just need to rebalance?
If you're getting outside of your asset allocation comfort zone because stocks are doing so well, harvesting those gains and moving them to a bond fund (or putting all of your liquidated ESPP funds into a bond fund) might bring you back to your comfort zone. It might even scratch the "SELL IT ALL" itch.
If you're worried about overinvestment in the US market, maybe adding an international component to your asset allocation would help. I decided to do that two years ago, and I've been trying to drag myself into a better balance by piling cash into Vanguard's Total International Stock Index Fund (VGTSX/VTIAX) in my taxable account. It was tough sledding for the first year because international wasn't performing well, but it's turned around now and the past year I've seen 14.9% returns.
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