Avoid LendingClub

Summary: Don’t ever put money into LendingClub. You can invest in seconds but will spend years of your life trying to get it out, and the returns are unimpressive.

The Beginning

LendingClub presents an attractive proposition: you can with just a few clicks purchase a risk-diversified basket of personal debts. This gives you steady, predictable returns that are putatively hedged against the movements of the stock market. And with just another click, you can take payments against the notes and automatically reinvest them in a risk-diversified fashion.

Given the above, I thought it was a reasonable asset class to consider as part of my portfolio. I created my account in June of 2009 and started investing. By early 2012 my annualized returns were over 9%. I was psyched. I doubled down and increased my purchasing of notes in mid-2014. In late 2014, I was offered a chance to participate in Lending Club’s IPO as part of their Directed Share Program. I was a believer.