Investment Strategy Overview
My initial investment strategy involved leveraging credit card balance transfers to fund investments in Lending Club. After deploying over $100,000 across multiple investments over a year, I identified several critical limitations that made this platform suboptimal for my strategy:
- Cash Drag: Significant delays between funding and loan allocation
- Tax Inefficiency: Unfavorable tax treatment of returns
- Liquidity Constraints: Limited ability to access funds when needed
For investments exceeding $100,000, I determined that a fund-based approach would maximize returns while addressing these limitations. I selected the Direct Lending Income Fund (DLI) based on its historical performance track record. The strategy targets a 12% annual return with a 3% borrowing cost, theoretically generating a 9% net profit margin.
Balance Transfer Summary: $219,497 Total
I executed balance transfers across 13 different credit cards, strategically timing promotions to minimize costs while maximizing available capital.
| Date | Card | Terms | Amount | Balance |
|---|---|---|---|---|
| 03/02/2015 | Citi Diamond Preferred | 6m/0%/3% | $19,000 | $19,570 |
| 03/02/2015 | Citi Dividend Platinum Select | 6m/0%/3% | $16,000 | $16,480 |
| 04/02/2015 | Citi Double Cash | 15m/0%/3% | $6,398 | $6,590 |
| 04/13/2015 | U.S. Bank FlexPerks | 12m/0%/4% | $15,500 | $16,120 |
| 04/14/2015 | Chase Slate | 12m/0%/0% | $14,952 | $14,952 |
| 04/15/2015 | Citi ThankYou Preferred | 12m/0%/5% | $19,000 | $19,950 |
| 04/17/2015 | Chase Slate | 12m/0%/0% | $14,947 | $14,947 |
| 04/20/2015 | Discover More | 12m/0%/5% | $15,500 | $16,275 |
| 05/09/2015 | Discover More | 12m/0%/5% | $16,000 | $16,800 |
| 05/11/2015 | Citi ThankYou Preferred | 15m/0%/4% | $24,000 | $24,960 |
| 05/28/2015 | BankAmericard Cash Rewards | 15m/0%/3% | $19,400 | $19,982 |
| 05/28/2015 | BankAmericard Cash Rewards | 15m/0%/3% | $19,400 | $19,982 |
| 05/28/2015 | BankAmericard Platinum Plus | 15m/0%/3% | $19,400 | $19,982 |
| Portfolio Summary | 12.25 months, 0% APR, 3.23% average fee | $219,497 | $226,590 | |
Key Metrics: Total capital deployed: $219,497 across 13 credit cards. Total borrowing cost: $7,093 (3.23% average fee) for a 12.25-month interest-free period.
Investment Performance: 8.18% Net ROI
The strategy delivered strong returns while maintaining manageable risk through diversification across multiple credit sources.
| Component | Net Profit/Loss | Return Rate |
|---|---|---|
| DLI Fund Investment Returns | $25,044 | 11.17% |
| Balance Transfer Fees | ($7,093) | (3.23%) |
| Net Return on Investment | $17,951 | 8.18% |
Performance Summary: The Direct Lending Income Fund generated an estimated 11.17% return over the 12-month period. After accounting for the $7,093 in balance transfer fees, the strategy achieved a net return on investment of 8.18%, representing $17,951 in profit on the deployed capital.
