In my previous articles on P2P lending, The Basics of Peer-to-Peer Investing and Peer to Peer Investing – Facts and Figures, I discuss getting started in P2P lending and some of the basic facts and figures pertaining to notes on Lending Club, a P2P platform.
After keeping a small (~$750) portfolio on Lending Club for about 18 months I’ve discovered some of the downsides of only having a small amounts invested on these platforms. Below I detail why I decided to cash out and end my P2P investing career for the time being. Continue reading
Investing in Social Lending
Peer-to-Peer investing (commonly P2P) is the practice of investing money in notes of loans for borrowers who are requesting a loan without going through a traditional financial intermediary and who are unknown to the investor. This type of investing typically takes place online through online platforms, among which Lending Club and Prosper are the industry leaders. Personally, I have only had experience using Lending Club and I love the platform. However, this article is not intended to review either platform so here are some reviews that may help you determine which platform best suits your needs,
Peer to Peer Investing – Facts and Figures
When I first began my career in peer to peer investing I longed to answer the question “what is a good note mix?” This led me to delve into the years of statistical data compiled (and available to everyone) on LendingClub, fill out a few spreadsheets, and create the following results.
The savvy investor can use the following results to help determine the optimal risk and reward of their peer to peer investing portfolio. The results highlight the likelihood of a charge-off, returns, adjusted returns, and things of that nature. Coupling these
Investing For Income
There are multiple ways to invest to provide your main source of income. My favorites are the stock market and real estate. Investing for income can provide a way to pay down debt, earn some extra cash, and support you in retirement.
This article will discuss investing for income in the stock market via stocks and bonds. In the stock market there are three forms of income; bond coupon payments, dividends and capital gains. Here are their formal definitions from Investopedia,
- Capital Gains – An increase in the value of a capital asset that gives it a higher worth than the purchase price.
- Dividend – a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.
- Coupon – the annual interest rate paid on a bond, expressed as a percentage of the face value.
When I first started investing asset allocation was one of my biggest dilemmas. Having no formal training or education in investing, I was completely lost when attempting to figure out a good asset mix. It wasn’t until I found this book on diversified portfolios that I finally received the answer I had been looking for.
In case you didn’t follow link, the book is The Intelligent Asset Allocator by William Bernstein. This book contains invaluable information on good asset allocations and how a good mix across classes of stocks and bonds, both foreign and domestic, can effect your portfolio. As I’ve matured as an investor, I have become less of an ‘Asset Allocator’ and tend to focus on a small selection of valuable equities rather than “buying the market”, as they say.
Nonetheless, diversification is key to many trading strategies thus we believe this information belongs on this site as it is aimed to educate rather than force our investment beliefs onto others.