Peer-to-peer lending (prosper, lending club, etc)

I'm a near-NEET who knows and cares very little about money. However, I just came across $20,000 that I don't have an immediate use for (I don't need it to eat, anyway), and want to put it somewhere stress-free but earning a bit of interest. Bank accounts offer .01% interest, so pretty out of the question.

After the recent hubbub with Lending Club, is it a really good or really bad time to put some of the money into it? How would it compare to other companies like Prosper or Upstart? Without going too risky on any of those platforms I'd still have a way better return than keeping the money in the bank. What's the downside?

Also, p2p lending general.

You can lend me the money OP. I will pay off the loan with my monthly autismbux check. The money will be used to pay for advertising for a business that I'm building.

What do you say?

>pic lolsoironically related

I was serious but if you don't want the interest on my bad decisions suite yourself

Depends, do you think they'll still be around in 3-5 years?

lending club can give decent returns but they are extremely risky

>they are extremely risky

That's my question. I've done a bit of research and multiple reputable sources have said that a sufficiently diversified pool (i.e. at least 200 loans of $25 each) all but guarantees the expected returns. But now that there is a lot of turmoil with the company, is it any more (or less) risky?

It's not really any more risky. Take what you see in the stock market with a grain of salt. Prices plummet for literally any potentially negative thing happens in a company, but it usually bounces back when everyone who sold the stock on the low realizes it's climbing back up and buys in like idiots. Even if P2Ps happen to go bankrupt or something. the third party system it sells defunct notes to would just take over, and you still have ownership of the notes so it's not like they can just say "kek we're liquidating we own everyone now!"

As for the actual lending itself, I tested it out 2 years ago with ~$2.5k I had roughly 200 notes all worth $25 and one that was $100 because why not.

I have 7 that were charged off in that time, currently sitting at an 11.95% return - And this is all with a pretty aggressive portfolio. (very few As and Bs, a lot of Ds Es, some Fs and Gs)

I like it. As soon as I accumulate about as much as you have OP I'll do it some more.

Forgot to mention: The interest I received in that time is $518.53. So this isn't a get rich quick kind of scenario, although it's fantastic being able to check back a month later and seeing money you can either re-invest or bring back to your bank account. I'd imagine if you did it correctly with a large enough investment you could potentially pay off rent or something with the monthly payments received

>11.95% return

So why isn't everybody all over this like flies on shit considering their index fund gets them ~4% ?

because of risk

Good question. I honestly don't know. It might be because loans generally carry more risk than indexes, but I've found that if you actually do research on each loan you buy into, the credit history, years of employment, missed payments in the past, etc, then it helps you out a lot in the long run.

I'm not even a major outlier either. As long as you aren't retarded you should be looking at least SOMEWHERE around 8%

I have 200k to invest. I would have to look more into it, but if it checks out I'd probably be willing to put like 10k into it. What would you say is the biggest risk?

because if shit hits the fan again these kinds of loans given on those websites are the first ones people are going to default on. if you borrow money there you do that because you don't get it through regular banks which are way cheaper. they have a reason for not lending money to those people. as long as the economy is relatively stable it's all good but when people start loosing jobs the money lent out is mostly likely gone

Invest it in cheap index funds.

You can adjust risk by using your index funds as security to buy more index funds with loaned money.

I'm already stickng 120k in index funds. I want to stick about 50k in good divend yielding stocks and a max of 30k in high volatility stocks likes these. These seem like a good option for my high volatility stocks as long as I diversify and I keep an eye out for big market crashes.

But I've read that the good deals are being scooped up very early. Doesn't that ruin your chances of decent research?

I've heard that in the EU, banks are getting in many of these platforms to the point that 80% of a project's funding comes from banks and the most promising are insta-funded. Some bloggers were bitching about that because they thought P2P lending was about fighting the system or something.

What they don't tell you is that it's mad difficult to get your investment back on l;ending club, you have to sell off the notes, and someone has to be willing to buy them.

So what happens if i take a loan out on this site for $20,000 and dont pay it back?

I want to see if I can be AA and then take out 20k to loan to c/d portfokios

You get a knock on your door next morning and you will spend $20,000 on hospital fees.
Seriously man, what the fuck do you think will happen?

The good ones do tend to go pretty quick, but I can generally find good ones regardless. There's quite a selection last time I checked. Although I should point out that I'm not super heavy into doing this either - It's more of a casual thing I sink a bit of time into, so if I happened to not find notes I liked, I'd just wait a few days and try again.

They have a collections agency for that. You should see some of the details on my charged off notes. After the first initial like 50 attempts, They'll turn it over to the third party for extra cheap, and the third party likes to do sneaky shit to get the money.

Something like this is common for delinquents. This was only half of the page too. Lol.

>knock on my door
>implying I'm not strapped up at all times
>implying I can't just take someone's money and go on a vacation

I'm not even memeing is that all that would happen? No jail time or the government coming after me? Just some guy who lent it to me? Sounds like an easy way to rob someone.

Yeah go ahead. Borrow 20k, turn it into vault gold or something and fly off to Southeast Asia, you can live for a decade on that sum without even bothering with a job.