Lending groups as an investment?

[artiegene]

Hey folks,

I'm new to the early retirement community and this is my first post so I apologize if this has been covered in the past.

Does anyone have experience using the online lending groups such as "Lending Club" or "Prosper" as a portion of your investment portfolio? If so, what percentage do you dedicate to this?

At the end of last year I wanted to find out how this worked so I put $250 into an account to kind of take it for a test drive. It seems pretty straight forward. Sigficant risk, due diligence, etc....but I want to bump up the ante.

Any thoughts on what is too much?

Thanks

 

[REWahoo]

http://www.early-retirement.org/forums/f28/peer-2-peer-p2p-lending-70235.html
http://www.early-retirement.org/forums/f27/is-prosper-com-a-good-investment-57975.html
http://www.early-retirement.org/forums/f28/p2p-lending-62201.html

Any thoughts on what is too much?

In my world, anything more than $1.

 

[kcowan]

I would let the $250 ride for a couple of years and then try to cash out.

 

[Backpacker]

I was intrigued by the concept a few years ago and looked at some of the offerings and the limited data provided and decided it was way too much risk based on limited and possibly inaccurate data. I am a money lender by day and a landlord by night so assessing risk and credit is in my DNA. Neat concept and may be fun to dabble with 250 bucks but certainly not any significant portion of my $ would ever go into this bucket!

 

[artiegene]

After doing it for almost a year I'm inclined to believe everyone is right. I think I will consider this to be a gambling loss (or maybe a win) but I won't add to it. Thanks.

 

[ghsebldr]

Try Kiva. I find it more as an investment in the small business person applying for the loan. I have invested around $400 (actually more like donated) and have now helped over 25 individuals grow their businesses.
You can pick the country or region you want your help to go to as well as the industry, I usually choose the agriculture industry, then pick the individual you want to help. I will probably never withdraw my original investment and as I get paid back I am able to offer help to others. It's a nice feeling when your original loan is paid back you get to re-loan it to someone else. After 6 years I haven't been stiffed on a loan yet.

 

[Senator]

I thought about it, but decided against it. I am well familiar with credit score, because of tenant screening, and if I was going to do it, I would make sure everyone has at least a 650 credit score.

But you are better off just investing in preferred dividend stocks if you want to go that route.

 

[kcowan]

Kiva for micro-financing

Try Kiva. I find it more as an investment in the small business person applying for the loan. I have invested around $400 (actually more like donated) and have now helped over 25 individuals grow their businesses.

You can pick the country or region you want your help to go to as well as the industry, I usually choose the agriculture industry, then pick the individual you want to help. I will probably never withdraw my original investment and as I get paid back I am able to offer help to others. It's a nice feeling when your original loan is paid back you get to re-loan it to someone else. After 6 years I haven't been stiffed on a loan yet.

I really like the concept. I looked at Kiva for investing in Mexico. I found that the bank charges for micro-financing were too high. Do you have any suggestions? Puerto Vallarta is my preferred investment location.

 

[eroscott]

I thought about it, but decided against it. I am well familiar with credit score, because of tenant screening, and if I was going to do it, I would make sure everyone has at least a 650 credit score.

I've seen the Lending Club min 660 number in various articles.

The minimum FICO credit score needed to get a loan for Lending Club is 660. For Prosper, the minimum credit score is 640.

90% of borrowers are supposedly rejected from Lending Club applications. It is not in their *long*term* interest to have borrowers default.https://www.google.com/webhp?#q=lending+club+reject+90%