The image of my rather short and stout college economics professor at the front of the lecture hall and bellowing out his mantra on wise investments, face turning three shades of red… it’s a vivid picture indelibly engraved in my memory. Funny looking little man that he was, he was also a financial genius and I’ve done well paying close heed to this, his favorite quipped response to requests for investment tips. “Diversify…Diversify…Diversify!”
‘Peer to peer lending’, it’s a growing platform in which individual borrowers are brought together with lenders to facilitate personal loans for everything from debt consolidation to wedding expenses and everything in between. All the while, cutting out the high fees and interest rates traditionally imposed and charged by the banking system as a whole. This system of alternative investing works well for all parties involve. Cutting out the “big banking” runaround and offering borrowers practical interest rates and a broad source of funding.
Pairing qualified borrowers and lenders together, this alternative platform allows those who partake in lending to invest wisely, help others get the funding they need and keep their investment portfolio’s sufficiently diversified and netting an average 9.3% return! (The Ole’ Prof. Would be proud!)
Often referred to as “ Social Lending” or “Peer to Peer Lending” Lending Club gives investors a low risk, high yield means to invest in offering personal loans. The lender is able to review loan application details and even ask questions of the loan applicants in order to enable wise investment decisions.
One of the great advantages to this type of lending system from the investors standpoint is that you can truly ‘diversify’ your investments. You are not required to post the entire amount requested. In fact, as an investor, you can choose to lend as little as $25 on the overall amount. This means that you can spread your investing out over multiple loans and thereby greatly reduce the overall risk. This way, should one of your ‘note’ borrowers default, you will only lose that portion which was invested in the particular loan…versus, the whole ‘shabang’ as is the case with most other investment platforms.
With so many advantages to the ‘usual way of doing things’, it’s easy to see why this program has become so popular. In an age of failing banking institutions and uncertain financial stability in what has become an ever worrisome economy, both borrowers and investors alike have finally found a little peace of mind with Lending Club!
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