FTMDaily.com – What do Google, hedge funds, and venture capitalists have in common?
All of them are pouring money into a growing investment class known as peer-to-peer lending.
What is peer-to-peer lending? It is simply the act of borrowing and lending without a bank. Major online platforms have risen in recent years, like Prosper and LendingClub, that enable average people to either borrow or lend money.
In this chart below, provided by Prosper.com, the concept of peer-to-peer lending is visualized.
Borrowers are attracted to peer-to-peer lending by the interest rates they can receive that are lower than rates through traditional lenders, like banks. Investors are attracted by the relatively high rates of return. This has become especially true amid our current dismal interest rate environment.
Our latest podcast covered some of the pros and cons of peer-to-peer lending and included an interview with Thomas Cloud, Jr. (Thomas is the son our Precious Metals Advisor, Tom Cloud.) Thomas was the first financial advisor in America to connect with Prosper and to begin offering their loans to average investors through their IRAs and brokerage accounts. So obviously, he is quite an expert on the topic of peer-to-peer lending!
During a recent discussion, Thomas gave this simple explanation about investing in peer-to-peer loans:
“Peer to peer investing can provide you with amazing returns, assuming you are involved with the right groups and choose borrowers who are likely to pay off their loans. As a peer-to-peer investor, you are essentially lending money to others, and getting their monthly payments — exactly like a bank would do, just without the bank.”
Thanks to the Fed’s artificially low interest rates — which is really a war on savers, a gift to leveraged traders, and an encouraging boost to borrowers — it has become increasingly difficult to earn a decent rate of return. This is especially true for those investors who wish to avoid large amounts of risk.
The average peer-to-peer loans used by Thomas for his clients usually range from 36-60 months in length and can yield anywhere from 4%-10% per year.
If you are interested in learning more about how you can trade some “cash” for some steady “cash flow,” I encourage you to download our brand new webinar on the basics of Peer-to-Peer Investing. In addition to the 20 minute video, we will also send you our brand new free report on Peer-to-Peer investing.
Click here to download the 20 minute webinar and our free report.
To your financial success,
Jerry Robinson
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Broadcast Every Weekend – Hosted by Jerry Robinson
Topic: On this week’s episode, Jerry Robinson is joined by Thomas Cloud, Jr. for a discussion on peer to peer lending.
“A Daily Dose of Financial Wisdom from God’s Word”
“Now He who supplies seed to the sower and bread for food will supply and multiply your seed for sowing and increase the harvest of your righteousness.”
2 Corinthians 9:10
Disclaimer: Investing involves risk. Always do your own due diligence and consult a trusted financial professional before making any investing or financial decisions. Thomas Cloud, Jr. is a Certified Financial Planner (CFP) and is part of our Christian Advisor Referral. READ FULL DISCLAIMER.
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