Can someone offer some Investor 101 for a newbie?

[fliphusker]

Another newbie here. New to LC, but not new to investing. No debt either. Starting with 5K invested in LC, then will see how it goes and probably invest a lot more.

I'm trying to choose between setting a filter and using it to invest automatically and using the same filter to pick $25 notes manually. My understanding is that for manual investments, I have to log on when new loans are posted and try to pick the good ones before other people do. The alternative is to set the same filter and let LC pick them automatically. Is the automatic option better in terms of timing to get the best notes? With automatic investment, will LC pick the notes right after release and before the manual investors can pick them? How does the platform decide which investors pick the automatic loans first? For example, if there is a 2.5K loan and it meets the criteria of 1000 automatic investors' filters, how does LC pick the ones who will invest in this loan?

All good questions to which I have no answers.  I can give you my experience starting from the same position as you.

I started 2 years ago with a few k in a LC account.  It wasn't worth a lot of my time to optimize the crap out of it.  So I went with Automated Investing with LC, a simple filter, and a conservative investment mix.  Sometimes I would have $$$ sitting idle in the account and LC would not have bought a note for me for a few days.  I would log in and manually pick up notes that fit my criteria.  That was maybe 2x a month.

The allocation was about 85-90% A/B/C, skewed B/C, with the rest sprinkled in D/E. 

The filters were as simple as FICO>=705, Status=Approved, Deliquencies = 0, Term=36 Months.

I used this for about 2 years when this Jan I started to use statistical models to pick my loans.  If you look at the "Returns" thread, you will see I met the goal of a decent return with low risk (about an 8% return on an average loan rate of about 10%).   

If you want to amp up the risk, I suggest one of the 3rd party tools like LendingRobot.  You do have to be careful picking the high risk notes.  They've all done the research for you.

Good luck to you.

Thanks... I'm considering using Lending Robot, saw your reply in the other thread as well.

One thing I'm not sure about, though... I'd like to learn how to use Lending Club by starting out with 5K and then, if all goes well, potentially rolling over a big part of my 401K to a Lending Club IRA (when i change jobs). I don't know if i'll be using Lending Robot to manage large amounts because of the fee. Given that, maybe it makes sense to try to self manage this 5k instead of using Lending Robot, just to learn the ropes?

LR I am sure is quite good, just read about the auto with the filtering.  I thought I had the filtering setup properly, but it was setup poorly on my part.  Absolutely nothing against LR there, as my fault for not learning more about it. 

[dompazz]

LR I am sure is quite good, just read about the auto with the filtering.  I thought I had the filtering setup properly, but it was setup poorly on my part.  Absolutely nothing against LR there, as my fault for not learning more about it.

My biggest beef with LR is that I cannot set a target allocation.  Given that they have started writing about allocation, I'm hoping that's coming.

As it is now, it is set up to swing for the fences.  Not a great fit for a taxable account.

[fliphusker]

LR I am sure is quite good, just read about the auto with the filtering.  I thought I had the filtering setup properly, but it was setup poorly on my part.  Absolutely nothing against LR there, as my fault for not learning more about it.

My biggest beef with LR is that I cannot set a target allocation.  Given that they have started writing about allocation, I'm hoping that's coming.

As it is now, it is set up to swing for the fences.  Not a great fit for a taxable account.

What do you mean target allocation?

[lascott]

LR I am sure is quite good, just read about the auto with the filtering.  I thought I had the filtering setup properly, but it was setup poorly on my part.  Absolutely nothing against LR there, as my fault for not learning more about it.

My biggest beef with LR is that I cannot set a target allocation.  Given that they have started writing about allocation, I'm hoping that's coming.

As it is now, it is set up to swing for the fences.  Not a great fit for a taxable account.

What do you mean target allocation?

I'd venture to guess he/she means that LR lets you control a percentage for each of the grades (B-20%, C-50%, D-20%, E-10%) vs target return percentage amount (7.6%).

Image: http://i.imgur.com/QeiEjzX.png

[fliphusker]

Aha, gotcha.  Funny thing, was just messing around with the LC auto investing. 
2 Quick questions regarding that.
Where to set cash reserve?  I want to test my filters to make sure I do not get a bunch of notes I do not want.  (Again)
When you set percentage of each grade with auto investing at LC, it takes into account what your currently investing in?  A-3 B-7 C-25 D-20 E-20 F-20 G-5% for an example.  If you have already hit the percentages at a certain grade, it will pass on the notes that meet your filtering until the other target grades catch up?