LendingClub.com appears to be very beneficial to investors -- reportedly offering investors average returns between 9 and 12 %. Other investments simply will not yield this type of return in today's economy.
For the lenders (the investors) this is one way to invest any amount of money, beginning at $25, and earn an average of about 10% return. This is a good return in any economy. With interest rates down, it is especially appealing right now.
If this sounds interesting to you, read on to learn what you need to know to get started as an investor on LendingClub.com.
Most states allow anyone to invest and trade in loans on LendingClub. Currently, only Ohio, Maryland, Oregon, and Kansas prohibit all lending activities. Kentucky requires that you be an accredited investor (meaning a high net-worth investor in most cases). And states like Alabama, South Caroline, North Carolina, Tennessee, New Jersey, Pennsylvania, New Mexico, Michigan, Illinois, Missouri, North Dakota and Nebraska will only let you trade in the notes.
Sign up for an investor account (it’s free!) at LendingClub.com by providing an email address and a password. You’ll receive an automatically generated username, which is the only thing borrowers will see in regard to your information.
The next step is to load funds into your account starting with as little as $25. You load funds into your account through:
- Wire transfer, which takes one business day and has no fee (LendingClub.com covers your bank fees).
- Electronic Transfer (ACH) from your bank, which is free and takes 3 - 4 business days.
- Mail a check.
- Instant transfer through Paypal or by credit or debit card.
If you are interested in investing funds from your Individual Retirement Account (IRA), LendingClub also offers that option. Just follow the instruction on their website to get started.
Another bonus for investors: When you accept an invitation from a friend to open your account and begin investing, you'll earn $100 to start you off.
Once you've got money in your account, click “Browse Notes” and choose your investment opportunities. You'll see all the relevant information to help you make your decision, including:
- Borrower's FICO score (a range).
- Reason for borrowing (from debt consolidation to weddings or even green technology upgrades).
- The interest rate, which is your return on the loan
- .A letter grade between A and G which shows your risk. The higher the risk, the lower the letter, the greater the return. Grade “A” investments are low risk, but the return is on the low-end for peer-to-peer lending, around 7.42%.
- Amount the person is borrowing -- smaller loans are lower risk.
- Percentage of loan funded.
- Time left to borrow, or how long this loan will be live; this lets you know how long you have to make your decision on funding this loan or not.
- A sentence or two from the borrower explaining why they want the money or what makes them a good credit risk.
Planning on investing on LendingClub? Diversification is the key to a solid return. You can invest as little as $25 in any “note” (any loan.) If you have $5,000 to invest, you can invest in up to 200 different loans, which is the wisest course of action. If you have only $50, split it between two notes.
Highly diversified accounts can provide low risk and high returns for investors. And, as you can see, it is fairly easy to create a diversified portfolio quickly.
You can choose to re-invest your earnings, or cash out with an electronic transfer, wire transfer or have the funds deposited into Paypal.
Become and Investor!
Go to LendingClub's website to sign up as an investor, or just to learn more about their investment programs.