Author Topic: How much is too much?  (Read 3438 times)

we2ding

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How much is too much?
« on: December 11, 2016, 09:00:23 AM »
I am still relatively new to Lending Club.  I have about 120 notes right now. I have some more money coming at the beginning of the year I need to invest.  I was just wondering how much is too much?
Do most of you have:

A) Less than $5000.00
B) more than $10,000
C) $20,000 plus


just curious......

jz451

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Re: How much is too much?
« Reply #1 on: December 11, 2016, 01:48:38 PM »
I've been investing since March and my account is on the small side at $1600. I plan to increase it once I get a stable income since I'm a recent college grad.

Fred93

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Re: How much is too much?
« Reply #2 on: December 11, 2016, 04:37:44 PM »
I have some more money coming at the beginning of the year I need to invest.  I was just wondering how much is too much?

There is no answer to your question as stated.  The reasonable upper limit has more to do with your financial situation than it has to do with LC.  Diversification, etc.

SLCPaladin

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Re: How much is too much?
« Reply #3 on: December 11, 2016, 09:42:05 PM »
I have some more money coming at the beginning of the year I need to invest.  I was just wondering how much is too much?

There is no answer to your question as stated.  The reasonable upper limit has more to do with your financial situation than it has to do with LC.  Diversification, etc.

C, but I agree 100% with Fred93. Better to think about how much your LC investment represents of your entire net worth or investments than strictly in dollar amounts. $20k might be a lot, or a little, depending on one's total net worth. The absolute amount is less important than the percentage.

GS

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Re: How much is too much?
« Reply #4 on: December 11, 2016, 10:00:48 PM »
For me, it is not a dollar amount so much as it is a percentage of your portfolio.  I'd say 5-15% of your investments .... I'm currently at about 8% ... Like Fred said, diversify.

fliphusker

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Re: How much is too much?
« Reply #5 on: December 11, 2016, 10:20:39 PM »
I personally do not think you should spend a dime into P2P, until you decide the level of your exposure.  I got into LC based on an article I read and salivated.  Reality set in.  I am doing fine but definitely not what I thought I could get.  I have also changed my strategy from the beginning though as well.
Fred who I respect more than anyone else will tell ya, take your time, no reason to hurry into anything. 
I have some more money coming at the beginning of the year I need to invest.  I was just wondering how much is too much?

There is no answer to your question as stated.  The reasonable upper limit has more to do with your financial situation than it has to do with LC.  Diversification, etc.

nonattender

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Re: How much is too much?
« Reply #6 on: December 11, 2016, 10:25:23 PM »
There's an old concept called "the sleeping point".  That's the point for which you're looking - and it's different for everyone.

Go read this:  https://www.amazon.com/Speculation-Fine-Art-Thoughts-Life/dp/1607962659
A little nonsense now and then is relished by the wisest men.

mo

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Re: How much is too much?
« Reply #7 on: December 17, 2016, 09:59:23 PM »
I am still relatively new to Lending Club.  I have about 120 notes right now. I have some more money coming at the beginning of the year I need to invest.  I was just wondering how much is too much?

I agree with the others that a lot of it revolves around your personnel financial situation.  Don't put all your eggs in the LendingClub basket.

That being said you should also be aware that investing too little or having too much invested in a single loan relative to your total LC portfoilio can increase your risk of bad or even negative returns.

You should check out the LC stats page that shows investor returns by number of notes...

https://www.lendingclub.com/info/statistics-performance.action

Assuming your are only investing $25 in each note you probably have enough diversity at 120 notes to not run into problems but the more notes you have the better chance you will get a return closer to the expected average.

rawraw

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Re: How much is too much?
« Reply #8 on: December 18, 2016, 09:53:17 AM »
Being one of the younger posters on this board, I tend to view this question differently than the wise elders we have here.  If you are like me, you didn't graduate into any meaningful family wealth.  And assume you are a recent college graduate, what does percentage of net worth mean?  You have nothing!  You could even have negative networth.  What does percentage of investments mean?  You may have $2k to your name!  I think these rules are good and increase in relevance as you age (I pay more attention to them now several years after college vs. when I started in college).

One thing you find in investing is concentrated bets create wealth, diversified bets maintain wealth.  What are you comfortable losing?  Maybe $10K represented half of my networth right after college, but would losing $10K really impact my future?  No, because unlike our wise elders I have my entire career to earn back $10K.  That's just a bonus check, right?

So while I agree with the spirit of the rules above, I disagree with their application regardless of age.  You have lots of times to learn and recover from mistakes after college.  Not as much when you are nearing retirement.  So I'd take this into account when thinking about how to approach the question

« Last Edit: December 18, 2016, 09:55:42 AM by rawraw »

SLCPaladin

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Re: How much is too much?
« Reply #9 on: December 18, 2016, 10:21:10 PM »
Being one of the younger posters on this board, I tend to view this question differently than the wise elders we have here.  If you are like me, you didn't graduate into any meaningful family wealth.  And assume you are a recent college graduate, what does percentage of net worth mean?  You have nothing!  You could even have negative networth.  What does percentage of investments mean?  You may have $2k to your name!  I think these rules are good and increase in relevance as you age (I pay more attention to them now several years after college vs. when I started in college).

One thing you find in investing is concentrated bets create wealth, diversified bets maintain wealth.  What are you comfortable losing?  Maybe $10K represented half of my networth right after college, but would losing $10K really impact my future?  No, because unlike our wise elders I have my entire career to earn back $10K.  That's just a bonus check, right?

So while I agree with the spirit of the rules above, I disagree with their application regardless of age.  You have lots of times to learn and recover from mistakes after college.  Not as much when you are nearing retirement.  So I'd take this into account when thinking about how to approach the question

This is a very interesting thought. I'm also probably one of the younger investors here, though certainly not right out of college.  I take to a different tack. While it is true that a younger investor has the advantage of time, the concept of time is a double-edged sword. Most of the financial wisdom I've come across goes to great lengths to stress that the time in the market is crucially important, perhaps more so than the percentage return. This is due to the sheer power of compound interest. Those who start accumulating and investing early stand to build a much larger nest age than those who start later, even if those who start later have a higher ROI. Much like fees compounded over time can seriously erode one's investment, an early loss on can result in an outsized loss down the road.

My personal view is that a lot of how conservative or assertive one is should depend, at least in part, on how difficult/easy it is to replace lost funds. The harder the money was to come by, the more conservative the investing approach should be.

Edward Reid

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Re: How much is too much?
« Reply #10 on: January 04, 2017, 01:28:27 PM »
Excellent points and thoughts from both rawraw and SLCPaladin ... listen to them.

Edward