Key Points

  • My net investable assets increased to $1,129,692.
  • The IRR for the trailing 12 months (TTM) decreased to 6.51%.
  • Forecasting litigation outcomes with much precision is impossible.

Asset Allocation

Net Investable Assets: $1,129,692

Account 2017Q4 2018Q4 Change
Cash $34,021 $25,261 $8,760
Brokerage $90,258 $145,891 $55,633
Lending Club $31,977 $13,139 $18,838
Direct Lending Income Fund $134,614 $0 $134,614
Groundfloor $27,040 $26,836 $204
LexShares $407,500 $805,000 $397,500
YieldStreet $250,178 $504,065 $253,887
Debt ($81,039) ($390,501) $309,461
Total $894,549 $1,129,692 $235,144

The increase was $235,144 which was slightly more than forecast. My RSUs made up approximately a third of my total annual salary. My company stock has appreciated over 50% last year, making the RSUs worth an additional $40,000. The stock market plunged into correction territory, trading more than 15% below an all-time high. Depending on the value of the stock at the time of vesting, my total compensation might be lower this year.

Lending Club IRAs and one of my Groundfloor IRA are finally closed. All my retirement assets in self-directed IRAs are being consolidated into Merrill Edge IRAs (the balance still shows in the respective crowdfunding platform until transfers complete). I have over $110,000 in a self-directed brokerage account inside Traditional 401(k), $50,000 in Merrill Edge Roth IRAs, and $13,000 in an HSA. The money contributed to retirement savings accounts will be used for short-term trading.

Internal Rate of Return (IRR): 6.51%

Account Allocation IRR (TTM) IRR (TOT)
Lending Club 0.97% 5.65% 5.05%
Direct Lending Income Fund 0% 4.29% 10.03%
Groundfloor 1.99% (0.76%) 2.11%
iFunding 0% n/a 15.36%
LexShares 59.67% 1.12% 10.04%
YieldStreet 37.36% 13.43% 13.39%
Total 100% 6.51% 9.71%

The heavy concentration in litigation finance asset has been a source of performance drag in my portfolio. Litigation outcomes are inherently unpredictable and returns typically come from investments made years ago. Investing is a long-term game. I stay the course and keep my asset allocation aligned with my long-term financial goals.

Investment Strategy 2019

IRA clean up and consolidation have almost completed. I will reinvest proceeds from equity investments in the same asset class to maintain proper asset allocation while I pay off $390,501 of debt to decrease my total financial leverage. My goal for this year is to earn more passive income than my salary from a full-time job.

Roth IRA Consolidation

I have been consolidating my retirement accounts to Merrill Edge investing accounts. It took me 2 years to finally empty and close out Lending Club IRAs. I still hold one loan with Groundfloor. The loan went into default in May and Groundfloor is still going through a quasi-judicial foreclosure process (State of Maryland). The foreclosure auction took place in early December, but they have to wait another 4 months for the court to ratify the sale.

Litigation Finance Overweight

There is no change on my asset allocation. I have a good amount of my portfolio tied up in litigation finance investments. It takes some time from building a portfolio until payouts occur. I will continue investing money on the LexShares platform for further diversification and long-term capital appreciation.

Deleverage

Leverage has been my primary investment strategy over years. I use credit card debt to invest in high-yield fixed-income assets. I plan to pay off all my debts to reduce the use of financial leverage.