Since savings accounts and certificates of deposit have average interest rates of less than 1% right now, it is tempting to look at other places to put your cash in order to get a better rate of return. One possible place to invest your money for a better return is Lending Club Investing. The median rate of return at Lending Club for loans between 12 to 18 months old is 7.7%. Of course, there is also much more risk investing in peer to peer loans than there is just stashing your money in an FDIC insured savings account.
I have invested with Lending Club in the past and was very pleased with my results. My returns were about 10%, which is better than average and probably was a result of being lucky. You shouldn’t expect to get similar returns, but getting better returns than a savings account is very likely. If you do invest with Lending Club you should make sure to spread out your loans. You can invest as little as $25 in a loan. That is how I made my investments. I broke up my investments to $25 a loan so that even if a particular loan went bad the most I would lose in that loan is $25. I did have some loans go bad and if you invest in very many loans you will likely have some loans default as well. If you are diversified enough with your loans though, you should still have a good rate of return even if you have some loans default. On the Lending Club site they show that having 100 loans or more greatly reduces risks in your returns.
If you have $5000 or more to invest you can use PRIME to invest for you. Picking loans can take quite a bit of time, but using PRIME makes the process automatic. You just set your investment criteria and it will do the investing for you.
If you would like to learn more about Lending Club Investing you can just click one of the affiliate links in this post or the one below.