Capping off a wild few years in the stock market, the Dow Jones ended up 5% last year and the S&P ended down 0.0032%.
That’s not much of a return, especially considering last year’s rate of inflation was 3%.
While I haven’t completely given up on the stock market, I have begun to diversify my investments the last few years, including some investments that might be referred to as…um…”alternative.”
The two most popular peer-to-peer lending sites are LendingClub and Prosper. Both offer good rates of return, but I like the oddity of some of the listings on LendingClub.
Help a Couple Adopt…
I’ve always been under the impression that peer-to-peer loans are for debt consolidation, but check out some of the listings on the LendingClub site right now…
Adoption Loan – This couple is asking for a $15,000 loan to help with their adoption costs. The terms are a 17.45% interest rate and the loan is to be paid back completely in 5 years.
Business Loan – This business owner is asking for $15,000 to launch a website to help veterans find work. The loan also carries a 17.45% interest rate over 5 years.
Wedding Loan – This couple is looking for a $11,000 loan to pay for their wedding. It’s a 3 year loan at 19.49%.
Helping a couple adopt a baby or throw a wedding is certainly a lot more exciting than the required reading of mutual fund prospectuses and earnings report that come with more traditional types of investments. It’s also kind of cool to think about your money having a direct impact on someone’s life. In other words, a 17% return and you get the warm fuzzes.
A Few Things to Consider…
– You can lend money to individual borrowers OR you can invest in a LendingClub fund which will automatically invest your money in a set of diversified loans based off of your specifications
– Be aware of the risks. Since you’re the creditor in this circumstance, you might lose out on your investment completely if the borrower becomes delinquent. Propser reports that this happens less than 4% of the time, but it’s still best to protect yourself by diversifying and only investing small amounts in each individual loan.
So… Wanna give it try? Sign up for LendigClub here. 🙂
Your Turn: Have you participated in an online peer-to-peer loan? Would you ever consider it?
Disclosure: A toast to savings! Thanks for allowing us to place affiliate links in this post.