How It Works
You have complete control over the strategy we use to invest on your behalf.
To keep things simple for users who may not be familiar with Lending Club's loan grade system, we offer two targeted strategy choices. This allows for more seamless trading between users, which in turn powers our Liquid Match model.
Conservative Strategy: Ideal for users who want to minimize risk while protecting their investment and targeting consistent, average returns.
Balanced Strategy: Caters to users who are willing to take on a little more risk in exchange for a higher yield.
Select the strategy that aligns best with your personal risk tolerance and investment goals, or create your own. And because your financial goals may change, we give you the flexibility to edit your strategy settings at any time.
DAILY AVERAGE NAR
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*Net Annualized Return (NAR) is based on actual payments received each month net of service fees, actual charge offs, and recoveries and is reported daily via Lending Club. Liquid P2P's target ranges are based on back testing, machine learning, and predictive analytics. User acknowledges past performance is no guarantee of future results.
Liquid P2P uses machine-learning algorithms to cherry-pick only the best quality loans to match your investment strategy
Algorithm investing gives you the potential for higher returns while also protecting you from the possibility of investing in low quality loans if Lending Club ever adjusts their loan grade standards.
Back-tested using historical data and predictive analysis, our proprietary algorithms are written and trained to outperform the market.*
*Past performance is not a guarantee of furture results.
Unlike stocks, P2P loan investments are self-liquidating. Borrowers make payments over time, and the loans you're invested in become smaller and smaller until they reach zero at full maturity.
As loan payments are made, cash builds in your account. This idle cash earns no interest and can have a negative effect on your overall return. To avoid "cash drag," you must invest in new loans to replace the ones being paid off. For a well-diversified portfolio, this is constant process.
You have the flexibility to control how we reinvest your available cash:
- Full Reinvesting
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All user accounts are set to "full reinvesting" as a default. This means we will continuously reinvest your available funds to reduce cash drag and keep your money working for you.
- Constant Account Value
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You also have the option to set a Constant Account Value. Once you set an amount, our automated system will reinvest accordingly to maintain that account value. You can select to receive payment of excess dividends on a weekly or monthly basis.
- Pause Investing
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You can pause automated investing at any time. While paused, payments that accrue in your account will not be reinvested and your available cash will remain idle.
Diversification is the key to managing risk in P2P lending. Spreading your investment across many different loans limits the impact of any single default on your overall return.
Lending Club leaves diversification up to the individual investor but suggests holding at least 100 notes to achieve a positive return. Other industry experts recommend a 200-note threshold to achieve full diversification.
Liquid P2P raises the bar by automating diversification up to a 400-note threshold and purchasing notes only in $25 increments (the smallest denomination available.)
This means investments of $10,000 and greater will be diversified across at least 400 different loans, limiting your loss to just 0.25% of your account value when a single loan defaults.
Here is an example of how diversification would look for different investment amounts:
- Amount: $2,500
- 100 different loans
in $25 note increments
- Amount: $5,000
- 200 different loans
in $25 note increments
- Amount: $10,000
- 400 different loans
in $25 note increments
- Amount: > $10,000
- After minimum of 400 different loans,
we may purchase (2 or more) $25 notes in some loans
When you enter into a loan agreement as the lender, you're committing for the defined term of the loan, usually 36 or 60 months. But what happens when a large unexpected expense arises? Life can be unpredictable, and you may need to access your funds early by liquidating part or all of your invested principal.
The Folio Note Trading Platform is a secondary marketplace where you can buy and sell previously-issued Lending Club notes. Investors register for Folio through their Lending Club account, and Liquid P2P verifies your registration and API access during our sign-up process.
The supply of notes on the secondary market can far outweigh buyer demand, which makes manually selling your notes a time-consuming, challenging, and unpredictable process.
Liquid P2P not only automates secondary market trading for you, we also offer accelerated withdrawal options powered by our patent-pending Liquid Match model and backed by our Liquid Reserve Pool.
We give you three withdrawal options to choose from and customize to meet your needs, each with a different liquidation method, time frame, and cost.
For all active withdrawal requests, we initiate transfers to your bank account on a weekly basis. Once your requested withdrawal amount is met, automated reinvesting automatically resumes.
Weekly bank transfers
Monitor progress from your dashboard
Cancel request or change withdrawal type/amount
Method: No liquidation involved. We simply pause reinvesting to allow incoming payments to accrue. You receive weekly bank transfers until amount is met, then reinvesting automatically resumes.
Timeline: Varies, slowest method
Fees: None
Method: Pause reinvesting and automate liquidation using our Liquid Match model. As your cash balance builds from incoming payments and liquidation of notes, we initiate weekly bank transfers. Reinvesting automatically resumes when requested amount is met.
Timeline: Accelerated
Fees: 1% Folio fee, 1% Liquid Match fee
Method: Control timeline by setting an end date for Liquid Match, which can be changed as you monitor progress. After end date, eligible notes are adjusted to a fair price and liquidated through the Liquid Reserve Pool at a 1.5% discount to reach requested withdrawal amount
Timeline: Custom
Fees: 1% Folio fee, 2% Liquid Match +Plus fee
Liquid P2P will apply the following fees, adjustments, and discounts depending on the automated liquidation method user selects. These costs are separate from any outside fees charged by Lending Club and Folio Investing.
- Liquid Match Fee
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1% on any note sold through a standard Liquid Match transaction. Billed on your monthly statement when applicable.
- Liquid Match +Plus Fee
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2% on any note sold through the Liquid Reserve Pool. Billed on your monthly statement when applicable.
- Fair Price Adjustment
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When notes are traded between users, we calculate a fair price to ensure both sides of the transaction get the same yield to maturity. If interest rates have gone up, this adjustment (which usually amounts to a few cents) contributes to the overall cost of liquidation.
- Reserve Discount
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As an incentive for users to contribute funds to the Liquid Reserve Pool, we discount any notes liquidated through the reserve by 1.5%. When applicable, this discount contributes to the overall cost of liquidation.
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Invest buyer's remaining available cash
If buyer has remaining available cash after all Liquid Match possibilities are identified, we then:
Check the secondary market (Folio) at large for notes offered at a fair price or below that also meet Liquid Match standards
Purchase newly-issued $25 notes from the primary market (Lending Club) on behalf of buyer