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Old 10-14-2010, 02:46 PM
Mama Zappa is offline
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Join Date: Feb 2003
Posts: 12,412
Originally Posted by lindsaybluth View Post
Any reason not to have just class A stuff? Or would that barely pull a profit in, I suppose.

Chessic, that's all very interesting stuff, thank you! I won't be investing till I have that 6 mo cash stash, but it's all very informative. Aside from my IRA, I own a few hundred shares of Apple, so I have a ways to go at diversification. Much better listening to a wise doper than LC's website testimonials .
If you're well-enough diversified, the more risky classes can be profitable, I'd guess. But as CS mentions, older loans are far more likely to go bad, and the risk seems to be high enough to possibly wipe out profits even with a broad base of loans.

I initially did mostly B and C class loans; I have one D class and I'm sticking with A at the moment (with my one loan a month) but if I have more cash, I might adopt a scheme similar to what someone above (drachillix?): For every 4 As, fund 2 Bs and 1 C etc.

Even by LCs figures, the return plummets when you get into the riskier classes. Book interest rate soars, but returns drop. Something ain't right in the screening or pricing or whatever; I'd expect to have at least somewhat higher returns as you move down the ladder, even with higher risk. Otherwise who's going to bother?

Last edited by Mama Zappa; 10-14-2010 at 02:50 PM.