Key Points
- My net investable assets increased to $894,456.
- The IRR for trailing 12 months (TTM) increased to 15.24%.
- I put all eggs in the right basket. No diversification needed.
Asset Allocation
Net Investable Assets: $894,456
| Account | 2016Q4 | 2017Q4 | Change |
|---|---|---|---|
| Cash | $31,248 | $33,928 | $2,680 |
| Brokerage | $38,839 | $90,258 | $51,419 |
| LendingClub | $43,878 | $31,977 | ($11,901) |
| Direct Lending Income Fund | $792,181 | $134,614 | ($657,567) |
| Groundfloor | $5,190 | $27,040 | $21,850 |
| iFunding | $100,000 | $0 | ($100,000) |
| LexShares | $0 | $407,500 | $407,500 |
| YieldStreet | $0 | $250,178 | $250,178 |
| Debt | ($360,996) | ($81,039) | $279,957 |
| Total | $651,747 | $894,456 | $242,709 |
The increase was over 100k more than forecast. This was primarily driven by the litigation finance investments. Overall investment return was lower due to a lumpy return of litigation portfolio and large cash drag. I had over $300,000 sitting in my bank for 3 months while waiting to gain access to new LexShares offerings. In December, I finally gave up on LexShares and invested all remaining cash in YieldStreet. I will continue doing credit card balance transfers for the next few years.
Internal Rate of Return (IRR): 15.24%
| Account | Allocation | IRR (TTM) | IRR (TOT) |
|---|---|---|---|
| LendingClub | 3.76% | (1.85%) | 5.04% |
| Direct Lending Income Fund | 15.81% | 9.06% | 10.12% |
| Groundfloor | 3.18% | 4.17% | 5.15% |
| iFunding | 0% | 26.38% | 15.36% |
| LexShares | 47.87% | 33.11% | |
| YieldStreet | 29.39% | 9.05% | |
| Total | 100% | 15.24% | 11.04% |
My IRR skyrocket due to a high return on LexShares. I am bullish on litigation finance and bearish on hard money loans. This is a reward for taking risks in this new asset class. I will transfer all remaining funds from DLI Fund to YieldStreet. Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.” The return on hard money loans has been in steady decline due to an excess supply of money as more entrants are flooding the market. The risks and rewards are no longer in favor of investors.
Investment Strategy 2018
Adopting an aggressive investment strategy that emphasizes capital appreciation as a primary investment objective, rather than capital preservation or income generation, is a key component of growing wealth faster. I have decided on an asset allocation with a substantial weighting in legal investments.
No More Backdoor Roth IRA
Managing multiple IRAs is too much of a hassle. I will empty Groundfloor and LendingClub IRAs this year, and consolidate all funds to Merrill Edge IRAs.
Litigation Finance Overweight
My portfolio will be heavily concentrated in litigation finance. I am building a portfolio of $1 million with an asset allocation of 50% LexShares and 50% YieldStreet. Taking risks comes with great rewards. Only time will tell if I made the right decision.
Credit Card Arbitrage
I will balance transfer only up to half of total available credit, and keep the other half as an emergency line of credit. I borrow more as needed basis when I have liquidity issues.
401(k) Contribution Only Up To The Match
No change. I will contribute only up to $8,000 to max out an employer match.
