Lesson 4: Peer to Peer Loans (P2P) – How Much Should You Invest?

In this video we will provide practical answers to the following questions. How much you should invest in peer loans, what type of account should you open and which company should use to invest in P2P loans.

This is video 4 of a 6 video p2p Lending Series.  Click here for the other free videos.

Open a Peer 2 Peer Lending Account and get started with as little as $25

Open a Peer 2 Peer Lending Account and get started with as little as $25

How much should you invest in peer loans?

  • The minimum investment required by Lending Club and Prosper is $25.
  • We recommend that you do not invest less that $2,500 in peer loans. This amount will enable you to diversify your investment between 100 loans, investing $25 in each. The more loans in which you invest, the less chance that you will have a negative or below average return.
  • We recommend that you do not invest more that 15% of the value of your portfolio. Peer loans are a risky investment, One should  not put all your eggs in one basket.  Also, I would not invest in high-yield bond funds if you want to invest in p2p. Both are very sensitive to the economy.

What type of peer loan account should you open?

  • Both Lending Club and Prosper offer regular and IRA accounts.
  • As interest income from peer loans is taxed at a higher rate than capital gains and has historically been taxed at a higher rate than dividends, an IRA account is ideal.

Why not start with a regular account and if you like it, open a retirement account. (If you plan to open both an IRA and regular account, you will need separate email addressed to open each account.

Which peer loan company should you use?

My Choice: Lending Club. Click on the link below to open an account.

Open a Peer 2 Peer Lending Account and get started with as little as $25

Both, Lending Club and Prosper are good choices. Lending Club is a much larger firm and in 2012 went over the $1 billion dollar in loans. Personally, I use Lending Club.  To use future videos, you will need to open an account.

Please note, you will not immediately be able to fund your account. You will first need to confirm your banking information. They will make a small deposit or withdrawal (under $1.00) and you will need to report the amounts..

The next videos will show you which types of peer loans to invest in!

This lesson is part of our Free Guide to Investing in Peer to Peer Loans.  To continue to the next lesson go here.

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