Author Topic: Reinvestment amount in relation to total notes  (Read 6544 times)

brother7

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Reinvestment amount in relation to total notes
« on: April 28, 2015, 06:28:23 AM »
To those who reinvest their LC payments into new notes, what increment do you choose?

I've been reinvesting in $25 increments. My active note count is approaching 1000. I recall that the guideline for a diversified portfolio to manage risk is 200 notes and that's supported by LendingMemo's article "When 200 Ainít Enough: Diversification & Risk in P2P Lending", even for a portfolio of E-grade notes.

I'm starting to think that I don't need 1000s of notes and am contemplating increasing the reinvestment increment to slow the growth of the active note count.

Thoughts?

brycemason

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Re: Reinvestment amount in relation to total notes
« Reply #1 on: April 28, 2015, 09:05:26 AM »
One advantage is that it's fewer entries on your tax return.

ktrdsl23

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Re: Reinvestment amount in relation to total notes
« Reply #2 on: April 28, 2015, 10:13:09 AM »
One advantage is that it's fewer entries on your tax return.

What needs to be reported on the tax return?  Do you have to list every note you own or just the ones that are charged off?

lascott

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Re: Reinvestment amount in relation to total notes
« Reply #3 on: April 28, 2015, 11:26:38 AM »
I'm doing $50 incr but I use two services. Oddly they don't overlap much in the notes I buy but when they do then I invest $100/loan via 2 notes.

I believe you are only listing charge-offs and that is via Form 8949. I sent those in physically via Form 8453 but I *think* there is a way to do an attachment in TurboTax per some comments last month.

See this related thread regarding diversification. Bryce mentioned CI in one of them: http://www.lendacademy.com/forum/index.php?topic=3069.0
« Last Edit: April 28, 2015, 11:28:53 AM by lascott »
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AnilG

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Re: Reinvestment amount in relation to total notes
« Reply #4 on: April 28, 2015, 12:26:43 PM »
Why do you think that you don't need 1000s of notes? Why is slowing the growth of active note count important to you? Does it matter whether you invest in 500, 1,000 or 5,000 notes if these notes meet your criteria? As others mentioned, reduced tax paperwork is one benefit. Smaller denomination notes are easier to sell on secondary market. What are the other benefits of restricting the note count?

To those who reinvest their LC payments into new notes, what increment do you choose?

I've been reinvesting in $25 increments. My active note count is approaching 1000. I recall that the guideline for a diversified portfolio to manage risk is 200 notes and that's supported by LendingMemo's article "When 200 Ainít Enough: Diversification & Risk in P2P Lending", even for a portfolio of E-grade notes.

I'm starting to think that I don't need 1000s of notes and am contemplating increasing the reinvestment increment to slow the growth of the active note count.

Thoughts?
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brother7

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Re: Reinvestment amount in relation to total notes
« Reply #5 on: April 28, 2015, 12:49:39 PM »
I first started thinking about all of this while preparing my 2014 federal tax return, my first return with a LC 1099. I used Turbotax and manually entered each Form 1099-B entry into Form 8949. I prefer to e-file over paper file and can already see that transcribing Form 1099-B into Turbotax will become even more time consuming as my account value and active note count increase.
The idea then occurred to me of increasing the reinvestment increment to keep the active note count down which got me thinking about how this might affect diversification.

Perhaps I'm wrong to address both issues of 1) tax reporting simplification and 2) diversification in the same forum post. But that's how my thinking evolved.

Why do you think that you don't need 1000s of notes? Why is slowing the growth of active note count important to you? Does it matter whether you invest in 500, 1,000 or 5,000 notes if these notes meet your criteria? As others mentioned, reduced tax paperwork is one benefit. Smaller denomination notes are easier to sell on secondary market. What are the other benefits of restricting the note count?


To those who reinvest their LC payments into new notes, what increment do you choose?

I've been reinvesting in $25 increments. My active note count is approaching 1000. I recall that the guideline for a diversified portfolio to manage risk is 200 notes and that's supported by LendingMemo's article "When 200 Ainít Enough: Diversification & Risk in P2P Lending", even for a portfolio of E-grade notes.

I'm starting to think that I don't need 1000s of notes and am contemplating increasing the reinvestment increment to slow the growth of the active note count.

Thoughts?

lascott

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Re: Reinvestment amount in relation to total notes
« Reply #6 on: April 28, 2015, 03:16:41 PM »
...
See this related thread regarding diversification. Bryce mentioned CI in one of them: http://www.lendacademy.com/forum/index.php?topic=3069.0
Quote
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rawraw

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Re: Reinvestment amount in relation to total notes
« Reply #7 on: April 28, 2015, 09:43:09 PM »
You can e-file totals and mail the list to the IRS.  Or get Turbotax software that imports it

RaymondG

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Re: Reinvestment amount in relation to total notes
« Reply #8 on: April 28, 2015, 11:12:07 PM »
I have over 1000 notes in account. I e-file totals (long term, short term) for items that LC reported to IRS, and input every item that were not reported to IRS by LC (i.e. the charge-offs). I did not mail the list for aggregated items though it would be better to do so.