My successful investment idea

[thorvald8]

Hey everyone, so for past 2 years or so I have invested in lending club. It's not my main source of investing but at this point it's beating all of my other investments to date. I currently have about $2,500 invested at an overall interest rate of 15.19%. I know like many of you that I was hesitant at first to invest in people to people lending but my default rate has been zero and I'm getting great returns. Things to keep in mind that I would recommend:

1. This should not be your primary investing strategy as lending club is still fairly new. However, this should help diversify someone's funds who are willing to take a bit more risk.

2. There are some things I look for in notes which have been successful at having no defaults (92 notes): no history of delinquencies ever, stable job with at least 5 years on the job, verified income. The most important thing I would recommend though is that you look at how the person answers their questions. Do they really take the time to answer the burrower's questions? Does the person's answers add up? If so, then sometimes I'm willing to lend and ignore some of the other things I mentioned above.

3. Avoid having stagnant funds in your account. Whenever you have available cash in your lending club account make sure to re-invest it.

4. Interests rates vary based on the grade of the loan, for example, an A grade loan will generally have people in the 700+ credit score range while a G grade loan will have people with a credit score in the upper 500 or low 600's I believe.

5. As people pay down the principal, your return will reduce. This is a loan so as people pay down your overall return will go down as they pay their balance down. It's something to keep in mind because many people think they will just invest and the interest and balance will just compound the same way as an IRA.

Hope this helps!

[4jacks]

Thanks for the post, I've read up a little on Peer to Peer lending and I think when I start to really invest, I will definitely use some peer to peer lending sites.

[Troy]

So, you're charging others an average interest rate of 15+%? If so, be careful: Proverbs 28:8.