Financial Independence

[liuv]

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.

[zlordsahan]

You do not lend to individuals.

When someone takes out a loan from LendingClub, that loan amount is split in N notes @ x% interest each. Then these chunks are thrown into the x% notes bucket. As an investor, you invest some amount of money and you "buy" so many notes from the 15% bucket, 8%, 10% buckets, etc... You do get to learn about each individual loan that these notes belong to before buying them but LendingClub has already done the due diligence. At the end of the day, your money is diversified across multiple loans and your risk varies with the ratio of high rate notes that you selected.

I just transferred some money to LendignClub and have not actually done any investing yet so I may be wrong on details, but I believe that is the general idea.

And yes, I do need to rebalance my asset allocation in stocks. But that is a hard and time consuming task that I'm avoiding. It is mostly in my retirement accounts, so they're long term horizon anyway and balance is not critical.
What I was looking for was something to do with the large cash chunk I got after our ESPP plan was liquidated. Some of that money will go to buy a Tesla 3 later this year or early next year (still no confirmation on dates) so I know I don't want to freeze the whole thing for a long time. I was just looking for some interesting new ways to experiment with at a moderate to low risk.

It turns out Propser doesn't serve customers from Texas. YieldStreet is only accepting "registered investors" at this time. I opened accounts with LendingClub, WealthFront, and WealthSimple all of which seems to offer interesting options but haven't decided how much money to invest in each yet.

I will keep you posted on my experience

[Macheath]

While we're on the topic of investment... I need to take a look at my fund allocation this weekend.

Here's before-and-after the Great Rebalancing of 2017:

78.27% stocks (66.89% US, 11.38% Int'l)	79.87% stocks (67.66% US, 12.21% Int'l)	+1.6%
14.65% bonds (13.51% US, 1.14% Int'l)	16.56% bonds (15.2% US, 1.36% Int'l)	+1.91%
4.08% cash	1.07% cash	-3.01%
3.00% alternatives	2.50% alternatives	-0.5%

15% bonds isn't the worst thing in the world, but I'm 38 now. "Age minus 10 in bonds" would put me at 28%. Maybe I can find a happy medium.

uhhh not quite there yet.

Turns out I'm a giant pussy. The Great Rebalancing will still need to take place.

[Macheath]

I was looking through this thread to find my old "financial autobiography" post, since this is the last day of Me Fiscal Year 2017 and it's almost time to update the charts. Happened across this gem:

I know most of you don't do individual stocks, and there's plenty of other places on the internet to get random ass stock picks that will probably lose money, but I did hear about one that struck me as very interesting.

MNGA is the stock for the company Magne Gas that makes an alternative fuel to acetylene for cutting metal. They create the gas from liquid shit basically (chickens, hogs, humans) and their fuel apparently works better and faster than the industry standard fuels. It's also apparently safer as it's not as combustible on it's own. They're working to sign contracts with the Navy currently and their stock is going crazy over the last week. Pretty cool company and pretty exciting upside on the stock.

http://magnegas.com/

I'm sure you didn't buy and hold MNGA, but interesting to note that on 5/22/2015 (date of this post) Magne Gas was at $223.50, and today it's at $0.26.

[Drewbie]

I don't have it anymore. Sold it quite some time ago. The $223.50 should be because of many, many reverse splits though.

[Macheath]

I was looking through this thread to find my old "financial autobiography" post, since this is the last day of Me Fiscal Year 2017 and it's almost time to update the charts.

Well, three years on from that old post, I have good news and bad news.

Good news: what looked like a huge spike back in 2015 has been flattened out and marginalized by a continued upward climb!

Old:	New:
networth-old.png	networth-new.png

The red in the new chart is retirement investments, the blue layer is home equity. I separated them out to make sure I wasn't patting myself on the back too much for fake Zillow numbers.

Bad news: my obsession with going into semi-retirement some day in my 40s has turned into something that feels more like reaching for the brass ring. Saving money for the future when you don't need to think about that future too deeply is a positive experience. As you start taking an eventual End Date into consideration, your math gets thrown askew. What's a safe withdrawal rate? How much income will I need? Have I considered health insurance? Is the next big market crash going to completely torpedo me right around the time I'm starting to seriously consider leaving the rat race (for a while, anyway)? Is $1M enough? Is $2M enough? When will I hit any of those milestones, anyway?

Thinking about money = anxiety. So why not just work, live your life, and take things as they come? Because I'm tired of work. I want some time off. But if I take time off, I'm interrupting my career, and damaging the trajectory of that chart up there, potentially a lot.

But maybe I'll just take some time off, and deal with it.

[Drewbie]

So far, we have decided to leave each other's retirements alone. This is a big positive for me since I've been in the job force a few more years than her so my resulting retirement account balances are higher than hers. The only thing she's asked for, monetarily, is half the equity in the house. The problem is, I've got a rate I can't match now so refinancing to take enough out to pay her then going back and listing only me would not only potentially put me back over 80% loan-to-value, but likely increase my rate and make the new loan far more costly.

Trying to find options that will cost me less to pay her without having to touch the mortgage. Either way, it's new debt. Any emergency fund is already getting split up so there's nothing to draw from there.

I was on track to retire comfortably at 58, with a trajectory that pulled that to early 50's. Now, well, my only hope is a rich widow with bad vision.

[Macheath]

That sucks. What's your LTV right now? Could you take out a HEL/HELOC as a second mortgage (rather than refinancing) for the portion your wife wants to cash out? You'd still have some high-interest debt to pay off, but at least the bulk of your loan would remain in its original form.

EDIT: I guess if you want her name off the mortgage, that pretty much locks you into a new loan.

EDIT: Quitclaim deed!

[Drewbie]

Yea, I know I can transfer title without a refinance, and I think a HEL/HELOC is the best way to go, just sucks to take on more debt. Still, should be able to handle it.

[Macheath]

You're not really taking on more debt; you'll still be in the green with positive equity overall. You're just losing some of your wife's cash. It's better to do it this way than having her demand 50% of your 401k, look at the positive.