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I'm just starting with tracking Lending Club investments in Quicken and I am looking for some feedback on the approach that I want to take. I would prefer to hear the problem now rather later when I would have to redo the work. I don't want to track taxes in Quicken so I'm not care if the tax aspect is correct.

I plan to track the loans in the following way. Assume a $2500 cash investment.

$2500 = 100 notes x $25/note.

I will create a security called "Lending Club". Whenever I invest in a note, I buy 1 Lending Club security.

So, after I buy 100 notes I will have 100 Lending Club shares.

For simplicity, let's assume a 5% interest (after all fees & stuff), all loans are 60 months and there are no defaults.

After the first month (or some time interval) I get back:
Principal: $41.66 ($2500 / 60 months)
Interest: $10.41 ($2500 * 5% / 12 months)

For principal I sell $41.66 worth of shares (1.66 shares). 
This leaves me with 98.34 shares (100-1.66). 
The interest I record and dividend income.
Now I have $52.07 cash (principal + interest).

After I reinvest the cash, I buy 2.0828 shares ($52.07/$25 per share).
This leaves me with 100.4228 Lending Club shares and no cash.

After that, I repeat the process for the following month.

Do you see any issues with this approach? I read some articles about this on the Internet and some suggested having the Lending Club share with a value of $1, I don't really understand why...

PS: For defaults, I plan to sell the note and then record the loss as an expense.

  • Why would you try to sell defaulted loan, if you can deduct it as loss without going through the trouble of selling it? (and why would anyone buy it?) Discharged loans are reported to you by Lending Club, and you deduct them as capital loss on your taxes. – littleadv Feb 24 '14 at 1:33
  • I was thinking of doing the same for tracking my LC account. – FossilizedCarlos Mar 3 '14 at 2:24

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