I’m always on the look out for interesting investment opportunities, and I may have found it with P2P lending. This venue is still fairly new, and not for the feint of heart, but the interest rates could make some drool. When banks are offering a pathetic rates for a CD this cash cow is boasting 8 – 18% variably.

This may or not be for you! Expect to do a lot of homework before diving in, but here’s my investigation so far. Lending Club gave out a $25 free offer for signing up for their service. So, I decided to do a little research into the world of peer to peer lending.

For those that are not in the know peer to peer lending is exactly what it says. Lending between one individual, and another. Instead of getting money from a traditional bank these people acquire loans from investors hoping to earn a better return on their money.

Which, leaves many questions like why would you need to do this instead of going to a bank? Lending Club claims to screen all their wishful lenders carefully. Some of these people are business owners, and others just looking to consolidate debt. If you have 5 credit cards at 22% each it would make sense to consolidate them into something where you’re only paying 8%.

My experiment has been running for a few months now, and so far my note has no late payments. I’m garnering a 14.22% interest rate which is paid out to you monthly by the way.

You don’t have to invest everything in one note either. You can stretch your money out to different people. This puts your money into their pot with other investors. Limiting your risk, and diversifying your peer to peer portfolio. This is exactly what banks do, but on a larger scale.

There are different terms available, but you can think of this investment like a riskier CD. You are set for a certain term in which that person pays back money owed to you. They will either pay you back, and you will make a strong return or they will default, and you will lose your investment. I said CD to get the point across that your money will be invested for a set period of time.

If you’re interested in the charitable side of things an organization called Kiva does something similar. You will not make any interest on this one just to be clear. Kiva offers ‘micro loans’ to needy entrepreneurs all over the world. Unlike a normal charity you will get your money back if they pay off their loan which most do. Infact, Kiva has an astonishing percentage of repayment from grateful people whom they helped get a leg up on their business.

I loaned $25 to a grandmother in Uganda to help increase inventory for a store she runs. Her loan has been paid back fully, and I can now send that money to somebody else to help them.

Overall, I’m fairly impressed with this opportunity, and I think I will be exploring it more in the future. If you want to get $25 for free to try their service you can click my referral link.

Originally posted 2010-08-04 23:40:34. Republished by Blog Post Promoter