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How we calculate returns
The return we present is your actual annualised return to date as a percentage of your investments made with LendingCrowd after all fees and bad debts have been deducted. It doesn’t take tax into account because this is a matter unique to you. Your actual rate of return will not be shown in your account until you have been investing with LendingCrowd for 3 months.
Your annualised rate of return represents the equivalent annual interest had you invested your money in a cash savings account paying the same rate. For those familiar with Excel spreadsheets, we calculate it in a similar way to the XIRR function. The calculation uses daily cashflows of positive and negative historic transactions plus a final transaction representing the current value of your portfolio and accrued interest.
We use the information shown below during the lifetime of your investment with LendingCrowd to calculate your percentage return.
Daily historic cashflows
These represent the cash in and out of your account, including:
- amounts lent to businesses – these are registered from the day you bid at auction or the date you buy a loan on the Loan Market
- any amounts received in repayments, including interest and capital
- any proceeds from the sale of your loan parts, after fees
- any recovery amounts you’ve received – this includes the outstanding capital and interest due to you from a bad debt
- any other fees that you’ve paid us
The ‘Actual Rate of Return’ shown for each of your individual accounts in the MY ACCOUNTS section of the website excludes any promotional earnings.
The ‘Total Rate of Return’ shown in your accounts summary within the MY ACCOUNTS section includes promotional earnings across all of your accounts. Promotional earnings that have a lock-in period will be accrued on a daily basis over that lock-in period. This is to make sure that your returns not artificially inflated by applying the promotional earnings at the beginning of the lock-in period.
Note: these cashflows don’t include cash deposits and withdrawals, as we treat the moment of investment as the point at which you invest money in a loan – not when you deposit money.
Current value of your loan holdings
This reflects the outstanding capital you’ve lent to businesses, minus any bad debts you’ve incurred.
This is the amount of interest you’ve earned up until today that has not yet been paid to you.
Points to remember
We think this method is the best way to show your actual investment performance with LendingCrowd, but please remember:
- Your returns don’t consider any reduction in earnings due to tax
- We don’t include any cash amounts not yet lent to businesses
- We assume there will be no recoveries from loans that are declared a capital loss. This is pessimistic
- We assume that overdue loans will be fully paid. This is optimistic
- We model your current holdings as though they become fully paid today – we don’t consider the future repayment cycle of your holdings
- Past returns are not necessarily a guide to future returns. Your eventual returns may be higher or lower than those you see today