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| PLW recommends Lending Club |
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New investors who sign up via this link
earn a $25 bonus from Lending Club |
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Tell Friends
Everybody is either a borrower or an investor, and many are both! |
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| Yes! I would like to receive a quarterly analysis of peer lending site performance |
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Maximize Investment Returns with Peer Lending, Earning High Interest Rates of 10% or more |
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By disintermediating the banks and credit card companies, you win |
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Peer Lending allows people to create wealth by compounding high annual interest rates year after year. With this new access to the bank profit model, the average people on the best sites are earning about 10%. People who study the methods in this site are earning even more. Our recommended site, Lending Club, allows you to customize your risk/return profile - you are in control of every allocation, and you have full transparency throughout the life of the investment. |
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| Risk/Return Investor Options |
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| a. |
Better Credit Borrowers Pay Less. The Peer Lending model pays a smaller expected return on borrowers who have the best credit. This is logical as the lender is taking less risk, and in theory getting a more predictable return. |
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| b. |
Maximizing Returns: The Peer Lending challenge and opportunity to maximize returns lies in the careful selection of borrowers who have interest rates above 12%. My personal philosophy is to focus on the people who have stable jobs, likely to survive the next two-five years of a tough economy. |
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| c. |
The Most Conservative: The best credit rated loans are around 8%~9%, so after fees and defaults, it's pretty hard to earn more than 8% on these loans, but it is also highly certain that you will not earn less than 6%. Many people are thrilled to earn 6%~7% with almost no risk, and for them this is ideal. On the other hand, I don't invest in loans below 11%, but that's my preference as I am targeting an overall average return of 12%. |
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| Suggestions for Your Loan Selection Criteria - Think Common Sense! |
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| At the end of the day this is pretty simple. Take into consideration the basic things you would normally want to know when lending anybody money. |
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| a. |
Business loans: The trouble I have with the business loans is that they tend to fall into two categories, both of which have long term viability challenges: |
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| i. |
Loans to existing businesses that need capital. In this case, people are leveraging their own credit in what appears to be a last ditch effort to keep their businesses afloat. The business may be strong and viable, and they may be a victim of tighter bank credit, but there is no way to tell. These are nervous for me. |
| ii. |
Loans to people who want to start a business, yet are currently working in a regular job. If these loans are small I don't have a big problem with them, as you can envision this person failing in his business effort but keeping his job and still paying off the loan. |
| iii. |
I suggest looking hard at business loans and realize that 90% of new businesses fail - ask yourself "how these people are going to pay their debts if the business fails?" |
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| b. |
Overall scale of loan |
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| i. |
The question about any loan has to do with the ability of the borrower to pay it back. My sense is that people will go to great lengths to prevent a $5K loan from running their credit, but if it's a $25K loan, they may just let it go and take the credit hit. |
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| It Is Easy to Get Started |
| a. |
Register at Lending Club by clicking on the link above |
| b. |
Transfer money by entering your bank account information and amount to transfer |
| c. |
Browse notes and allocate money to your preferred profiles |
| d. |
Allocate your purchased notes into portfolios so you can track the performance |
| e. |
Re-allocate money that has been paid back every week to two weeks |
| f. |
Sell your notes on the trading platform to get your cash back |
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5 Key Elements to Peer Lending Success |
| 1. |
Determine your target return and risk profile (conservative at 10-12%, or ultra conservative at 7-8%)
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| 2. |
Fund 100 or more loans (preferably 400 or more) |
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Consider carefully the employment in profiles selected - the higher the loan percentage rate, the higher the job scrutiny |
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Evaluate borrower use of funds and ability to repay |
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Revisit the site to reinvest re-paid money every two weeks |
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| Example of Steps to Take for an Ultra Conservative Investment Returning 7% to 8% |
| a. |
Register with Lending Club as an investor/lender and transfer a minimum of $2,500, but ideally $10,000 or more from your bank to your lending Club account. This is needed if you are going to try to get to 100 minimum notes or 400 notes that I try to follow becuase the minimum investment per loan is $25. |
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When your funds have arrived into your Lending Club account, you can begin. |
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Click on the "invest" tab. |
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Click on the "Browse notes" tab. |
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Select the "add more filters" button on the left, and make sure that you have at least "interest rate" and "length of employment", and others of your choice, Select close at the bottom right. |
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Adjust interest filter - for this investment strategy I check only the "A" notes, which will typically be between 7.9 and 8.9%. I sometimes include "B" notes if there are not many "A" notes available. |
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Adjust employment filter - I set minimum length of employment to 2-3 years, try several different lengths and develop a strategy towards length of employment. |
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Adjust other filters you may have, and select "update results" at the bottom of the filter section. |
| i. |
Review profiles and make your decisions on which profiles to invest with - enter the dollar amount per profile in the left and side of each profile and click "Add". |
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After selectiing several notes, continue to additional pages, and select "Add to Order" at the bottom or top of the page when done allocating. |
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Click "View Order" to see the summary of the notes selected before finalizing the order, and if it is what you want, select "continue". |
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Click "place order" to finalize the order. |
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Create a portfolio name for the order, or add the order to a previously created protfolio. Portfolios can be created to help you track different timeframes that your notes were purchased in, or different types of investment strategies. |
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You probably will not be able to find all the notes you want to buy at any given week, but come back weekly to review new notes, I also use the filter - "exclude loans already invested in" which ensures I don't re-invest in any one loan. |
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| Example of Steps to Take for a Conservative Investment Returning 10% to 12% |
| a. |
Register with Lending Club as an investor/lender and transfer a minimum of $2,500, but ideally $10,000 or more from your bank to your lending Club account. This is needed if you are going to try to get to 100 minimum notes or 400 notes that I try to follow becuase the minimum investment per loan is $25. |
| b. |
When your funds have arrived into your Lending Club account, you can begin. |
| c. |
Click on the "invest" tab. |
| d. |
Click on the "Browse notes" tab. |
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Select the "add more filters" button on the left, and make sure that you have at least "interest rate" and "length of employment", and others of your choice, Select close at the bottom right. |
| f. |
Adjust interest filter - I try to focus on notes above 12%, and try to get the average to 15%. |
| g. |
Adjust employment filter - I set minimum length of employment to 2-3 years, try several different lengths and develop a strategy towards length of employment. |
| h. |
Adjust other filters you may have, and select "update results" at the bottom of the filter section. |
| i. |
Review profiles and make your decisions on which profiles to invest with - enter the dollar amount per profile in the left and side of each profile and click "Add". |
| j. |
After selectiing several notes, continue to additional pages, and select "Add to Order" at the bottom or top of the page when done allocating. |
| k. |
Click "View Order" to see the summary of the notes selected before finalizing the order, and if it is what you want, select "continue". |
| l. |
Click "place order" to finalize the order. |
| m. |
Create a portfolio name for the order, or add the order to a previously created protfolio. Portfolios can be created to help you track different timeframes that your notes were purchased in, or different types of investment strategies. |
| n. |
You probably will not be able to find all the notes you want to buy at any given week, but come back weekly to review new notes, I also use the filter - "exclude loans already invested in" which ensures I don't re-invest in any one loan. |
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 2009 Rosso Cavallo, inc. All rights reserved. The peerlendingwealth.com site, and its parent company, Rosso Cavallo, Inc. make no warranties, expressed or implied. Financial investing involves risk by nature and you need to evaluate your options with your own financial advisors. Questions or comments can be addressed to info@peerlendingwealth.com |
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