Investing on LendingClub is extremely fun. They give you CSV data of all past and upcoming loans to play with and show you your Investor Percentile, which compares your return to other LendingClub lenders. I enjoy competing to get the highest return by predicting which loans will default based on past data. Currently I'm in the 92nd percentile of lenders.
On average how quick do you see a return from your investment (loan) on this site? How common are losses and what assurances does lendingclub give?
I'm just wondering if it'd be a good thing to sign up for and play around with, I've currently got a spare $30k sitting around not doing anything (except losing value I suppose).
Payments are made in equal amounts each month over a 3 or 5 year period.
Losses depend on the kinds of loans someone invests in, so this varies.
These are unsecured loans, so defaults are normal. My strategy is to try to limit myself to the minimum per-loan investment, which is $25 per loan. This way a given default won't significantly harm me (I'd only be out $25 per defaulted loan).
Of course, none of this is investment advice, read the prospectus, etc...
But by spreading risk, peer-to-peer loans tend to have lower interest rates than comparable bank loans, consumer-credit experts say.
That doesn't make sense. Banks make tons of loans, which by definition spreads out the risk of any individual loan going bad. In addition, sometimes they have insurance or other derivatives on their books.
I would say banks have their risk spread out a lot better than any individual investor, unless that individual is Paul Graham status of $$$.
I'm surprised they didn't mention www.Kiva.org, although the model is slightly different, we've also been pretty involved in small business loans in the U.S. and the numbers continue to grow. I had the pleasure of sitting in the other day on an investment committee discussing risk of small business loans via a new partner in New Orleans and the depth of detail of the risk assessment was striking. This is perhaps why we've managed to keep overall default rates fairly low, which makes me wonder if Prosper is really just figuring out the right risk strategy this time around.
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[ 2.4 ms ] story [ 26.4 ms ] threadI'm just wondering if it'd be a good thing to sign up for and play around with, I've currently got a spare $30k sitting around not doing anything (except losing value I suppose).
Losses depend on the kinds of loans someone invests in, so this varies.
These are unsecured loans, so defaults are normal. My strategy is to try to limit myself to the minimum per-loan investment, which is $25 per loan. This way a given default won't significantly harm me (I'd only be out $25 per defaulted loan).
Of course, none of this is investment advice, read the prospectus, etc...
That doesn't make sense. Banks make tons of loans, which by definition spreads out the risk of any individual loan going bad. In addition, sometimes they have insurance or other derivatives on their books.
I would say banks have their risk spread out a lot better than any individual investor, unless that individual is Paul Graham status of $$$.