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My Peer-To-Peer Lending Experiment Earns High Yields

Saturday, July 13, 2013 - 9:14 AM
by Craig Guillot

Four months into my peer-to-peer lending experiment, I'm netting a 9.49% annualized return on my money.

That's not bad for cash I previously had sitting in a savings account earning less than 1%.

My peer-to-peer lending experiment earns high yields | Interest.com
12
ShorebreakShorebreak2,371 posts since
Apr 6, 2010
Rep Points: 12,657
1. Saturday, July 13, 2013 - 12:27 PM
I had to laugh reading that article.  That guy is actually doing what I joked about doing recently.  It seems a waste to let junks of money sit at such low interest rates in banks when there are people out there who would be glad to use it for a period of time and give me a better interest rate. I just thought it would be too risky loaning to strangers.  I would be interested to read future articles on this activity and how it is working out for anyone involved in it.  People seem to be building up their own financial "communes" to help one another and I think it is a great idea if it can possibly work out for those doing the lending.  Thanks for sharing the article Shorebreak.
3
paoli2paoli21,142 posts since
Aug 10, 2011
Rep Points: 5,094
2. Saturday, July 13, 2013 - 1:21 PM
"Higher-risk loans are charged higher interest rates, so you can possibly earn a higher return by taking on more risk.

Frankle says investors can find balance and minimize the risk through diversification and by spreading their funds across many loans."

There are reasons that banks/credit unions exist (safe deposit/reasonable loans/etc.).  If the 9.49% return sounds too good to be true, it most likely is.  Only four months -- not sufficent to establish a statistics. 

I would not touch it at all.  Just me. (thanks for sharing though).
2
51hh51hh1,461 posts since
Jan 16, 2010
Rep Points: 6,351
3. Saturday, July 13, 2013 - 5:16 PM
Why not just get into payday lending as Wells Fargo has done? The return is so much more profitable:

Wells Fargo charges $7.50 for each $100 borrowed through direct deposit advance. Loans are repaid automatically, in full, out of the customer’s next direct deposit. Research from the Center for Responsible Lending demonstrates that the typical user of this type of product pays 365%/270% APR on a 10 day loan and remains indebted for 175 days out of the year.

Payday Lending – Wells Fargo (2013)
6
ShorebreakShorebreak2,371 posts since
Apr 6, 2010
Rep Points: 12,657
4. Saturday, July 13, 2013 - 8:17 PM
Banks can commit highway robbery and get away with it.  We can not.  They will get those debt-chasing people on your back if you do not pay up.  We can not (we will get sued and lose).  We may need to hire Mafia to get our money back:D  It is not that easy.

Lending club is a good example; most participating (on the lending side) are not making good return as far as I know. 

I will just stick with my RCAs and be able to sleep at night.
6
51hh51hh1,461 posts since
Jan 16, 2010
Rep Points: 6,351
5. Sunday, July 14, 2013 - 4:14 PM
Re: 51hh @ 4. Saturday, July 13, 2013 - 8:17 PM

Right on the mark! Excellent post.
5
ShorebreakShorebreak2,371 posts since
Apr 6, 2010
Rep Points: 12,657
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