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**Investors - LC / Re: Average Age Of Portfolio**

« **on:**November 04, 2014, 01:11:13 PM »

Average age is now 20.1 months. Where will it eventually settle?

Great question and I one I have been trying to determine this as well. I got a response from LC that said 9 months would be the eventual "average age of notes" when constantly reinvesting cash flow (no additions or withdrawals). I know that is wrong since your average age is now 20.1 months.

Another member theorized the average age would eventually become 1/2 the age of your average note term.

However, in your case that should have been 18 months, yet you are now over 20 months.

You can manually track the ratio of Change in LC Avg Age/Calendar Months. For a young portfolio, this ratio will initially be very close to 1:1 (ex. for every calendar month that passes, the reported LC Avg Age will increase by 1.0). As your portfolio ages, this ratio will gradually decrease and approach zero and you will have reached the steady state Average Age of Portfolio.

Since the time I stopped making deposits to my account, I take screen shots of my LC account every time the report LC "Average Age of Portfolio" changes. Using these shots, I have created the following table:

The last column "LC Avg Age Chg/Elapsed Months" shows the ratio getting smaller over time as expected. Thus, for each calendar month which passes, my avg age will only increase by 0.677 months. This ratio is continuing to decrease. Using my data, I project my steady state average age will be 11.3.

My projection seems a bit optimistic. I looked at Bryce Mason's reported data and his ratio is down to 0.118 so he is nearing steady state of average age of portfolio. His average age of portfolio is now 11.8 months. Using the 0.118, his average age of portfolio will only increase by 0.118 for each calendar month that passes. His ratio appears to be decreasing at a decreasing rate as it approaches steady state.

Please take a screen shot or write down your current LC "Average Age of Portfolio" under the "Understading your Returns" and record the date. Then next month repeat and let me know your ratio. I would hope your ratio is much smaller than 0.118 and I hope you are very, very close to steady state.

Do you have any sales of notes? Have you made any withdrawals? Do you auto reinvest? These are factors which may skew your avg age.