One cool alternative investment channel is peer-to-peer loans. You can buy fractional ownership of unsecured notes, and earn a healthy return for doing so.
The most common reasons people are borrowing money are for debt consolidation, home remodeling, or to start a business.
My experiment in peer-to-peer lending began with Prosper.com, and I now have over 5 years of performance history and double-digit returns.
Know your net worth. Your net worth is the sum of all your assets (cash, savings, mutual funds, equity in your home, etc.) minus your liabilities (student loans, credit card debt, mortgages, etc.).
One tool I like to help calculate your net worth is Personal Capital. It’s free!
I began by allocating only a very small percentage of my net worth to peer-to-peer investing. Don’t make any bets you can’t afford to lose.
Know your objective. What’s the goal of your investment? A goal of accumulating wealth to retire in 30 years is very different than a goal of earning $1000 a month in positive cash flow.
My Prosper loans spin off cash every month, so I consider it a good cash flow investment.
With two years of Prosper.com lending under my belt, I wanted to take a deeper dive into the 50+ loans that have defaulted on me during that time. Prosper does NOT make it easy to access or analyze this information on an aggregate level, so it turned into a pretty tedious data-entry project. (Which I … Read more
