I've been investing with Lending Club for a long time, probably five or six years now. It was fun at first when every loan came with a story, now they are almost anonymous. The returns are also not very good for the level of risk, in my opinion. After several defaults my returns are similar to a junk bond index fund, ticker JNK, for example. My LC account is still active, but I'm not putting any more money into it.
Now I just invest in a Vanguard Stock ETF, ticker VTI, and some other Index ETFs. It is brainless investing, but I keep myself occupied by playing with a small stake in several cryptos.
I admire your ambition to retire at 40.
I have noticed an increase in defaults the last few months, but I've never had a month where I lost any money - the interest on other loans covered the loss - but I can't say the same for the stock market. Maybe I'm just no good at investing in stocks.
I just checked my LC account; it earned 4.00% averaged over six years. JNK earned about 5% or a little more in the same period with lower risk.
Hope you have better luck.
Month to month loses in the market don't bother me at all. I'm looking at 5 to 30 years.
So I guess that's another topic - what do you want from your investments? We want to be able to withdrawal funds on a monthly basis to live off of ideally without having to touch our principle. I think LC is better for that. Unless you have high dividend paying stocks?
It depends on your time frame if you have already built your nest egg and are trying to live off of it without draining the account, then generating income would be a key decision. I'm still many years from retirement, so I'm more interested in growth than income.
Generally speaking: more bonds = more income and more stocks = more growth.
That is why I compared LC to high yield bonds (JNK is a bond fund), both provide income with little growth. Unfortunately, LC provides less income than JNK with a higher risk.
Young people who are not on the cusp of retiring are usually advised to keep a portfolio that is tilted heavily toward growth and light on the bonds.