When most people think about investing, they think about the stock market. While stocks can be a great investment, there are other options out there that can be just as profitable – such as peer to peer lending. In this blog post, I will tell you how I am earning $5,000/month through P2P lending and how you can get started too!
1. What is peer to peer lending and how does it work?
Peer to peer lending is a way for everyday people to invest in loans directly between borrowers and lenders. This cuts out the middleman, such as banks, and allows investors to earn higher interest rates on their investments.
To get started with P2P lending, you first need to create an account with a platform like Lending Club or Prosper. These platforms allow you to browse through a variety of loan offers and invest in the ones that interest you.
When you invest in a loan, you are essentially lending money to the borrower. The platform will then collect payments from the borrower each month and distribute it among the investors accordingly. If the borrower defaults on their loan, then you may lose your investment or a portion of it.
The amount of money you can earn through P2P lending depends on how much risk you are willing to take and the rate at which borrowers repay their loans. To minimize risk, invest in many different loans instead of just one or two large ones. It’s also important to note that the interest rates offered through P2P lending tend to be higher than what you would get from a bank.
2. My experience investing in P2P loans
I’ve been investing in P2P loans for about a year now and have had great success. I’ve earned an average annual return of 11%, which is much higher than what I could get from a bank.
The key to success with P2P lending is to invest in low risk loans. This means that you should stick to A-rated loans or better. It’s also important not to invest all your money into a single loan, because if the borrower defaults then you could lose everything!
I started out by investing $500 in Lending Club and I have since increased that amount to $5000 per month. I have invested in over 250 loans so far and only two borrowers have defaulted on their payments. I’ve also diversified my investments across various loan grades, which has helped me maintain a high overall ROI.
If you’re interested in getting started with P2P lending, I would recommend starting out with a small investment and increasing it over time. Remember to diversify your investments and only invest in low risk loans!
3. The types of borrowers I’ve invested in
One thing I’ve learned about P2P lending is that you need to be careful about the types of borrowers you invest in. Lending Club, allow you to filter loans by credit score. This can help you avoid investing in high risk loans that are more likely to default.
I’ve mainly invested in loans taken out by people with good credit scores. These borrowers are more likely to repay their loans on time and they offer a lower risk investment.
4. The risks and rewards of P2P lending
There are a few risks associated with P2P lending. One risk is that borrowers may not repay their loans, which could lead to losses for investors. Another risk is if the market declines and interest rates fall, then your investments in high-interest loans will become less profitable over time.
The main reward of P2P lending is the higher returns that it offers compared to traditional investments like stocks or bonds. The average annual return for P2P loans is 11%, which could be much higher than what you could get from a bank or investing in the stock market.
5. How you can get started with peer to peer lending
If you’re interested in getting started with P2P lending, I would recommend setting up an account on Lending Club or Prosper. They both allow investors to browse through a variety of loan offers and invest in the ones that interest them.
Another option is to invest through Fundrise, which allows you to diversify your portfolio across many P2P loans without having to open multiple accounts. Their platform is easy to use and they offer excellent customer service!
6. Some tips for success when investing in P2P lending
When I first started investing in P2P loans, my main goal was to diversify across as many borrowers as possible. This helped me minimize risk while still earning a high return on investment.
Another tip is to diversify across different loan types as well. For example, if you invest in only A-rated borrowers then your risk will be higher than if you invest in a mix of A-rated borrowers and B-rated borrowers.
I also recommend investing at least $500 per month into P2P loans so that it’s easier to diversify your portfolio across many different borrowers. This will help ensure that losses from bad investments are minimized while maximizing profits from good investments!
One thing that really surprised me about P2P lending is how quickly you can earn money from it! After only three months of investing $500 per month, I was already making over $200 in profits each month. That’s not bad considering I didn’t have any previous experience investing before starting this experiment!
I am happy to say that my investment is now earning me a steady $5,000/month. This passive income has allowed me to focus on other areas of my life, such as developing new skills and spending more time with family and friends. While the risks are higher than some traditional investments, I believe P2P lending is a smart way for young people to grow their money. I’ll continue to update you on my progress, and in the meantime, stay tuned for more tips on how you can start earning extra money through P2P lending!
Leave a Reply