Personal Investing Advice

Investors Get Better Returns With Social Lending

If you’ve been disappointed by the low interest rates offered on CDs or checking accounts recently, you might want to look into social lending.

Social lending is a new investment opportunity that matches individual lenders with individual borrowers. Platforms like Lending Club and Prosper cut out the complexity and overhead of traditional banks to offer better returns to investors and lower rates to borrowers.

How good are the rates for investors? Well, I’m currently averaging a 13.77% annual return on my investments at Lending Club and the average return there is over 9% for all investments since 2007.

Your personal rate of return there can vary significantly based on the types of loans you choose.

Here’s how social lending works for investors. First, you open an account online and deposit funds (typically $1000 is the minimum). Then, you decide if you would like to select loans to invest in specifically, or if you would like the system to choose loans for you based on your risk tolerance and other criteria.

Generally, investors choose to invest small amounts across tens or hundreds of different loans. For example, if you invested $1,000, you might choose to invest just $25 in 40 different loans, to reduce the impact of the risk of default from any one loan.

Loans you can invest in will carry different interest rates, based on the borrowers credit worthiness. Interest rates at Lending Club vary from about 6% to 21%, and borrowers must have a credit score of 660 or better. Your overall annual rate of return will depend on the mix of loans you invest in and how many of those loans end in default.

How risky is social lending overall? Does it really fit in the same category as investing in a CD or checking account? Social lending does carry certain risks that are greater than investing in an FDIC-insured prod Read the rest of this entry »

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It Does Not Matter When You Invest, Just That You Do

Investing can be difficult to understand because there are many moving pieces and lots of controversy in what works best. Just when you begin to think that you understand enough of the basics to begin investing you discover that there is even controversy in when to make your investments. Do the factors that affect investing never end?

When to make my investment? Yes, you have the choice of dollar cost averaging, lump sum investing (start of year vs. end of year) or continuous automatic investing and these are just the basic options with nothing fancy added on. Does this really matter? Do you need to go out and learn about all the intricate details behind each of these?

When looking at your physical fitness one of the areas that is important is cardiovascular exercise, cardio for short. This type of exercise helps with improving the functioning of your heart plus burns calories. When you first start working out you can quickly be overcome by all the choices for how to perform your cardio. Do you go for low intensity, high intensity, interval or some other combination and what is this plateau thing that everyone is talking about? Unfortunately there is not one answer to which is the best all of the time. Why? Each person has different goals, and we all have different time frames for accomplishing our goal plus other factors such as how much time we have to exercise on a daily basis. Instead we need to understand the basics of each style and select the one style or combination of styles that works best for us and our circumstances.

This also goes for deciding when to make your investment. Following are three easy steps to follow to help you decide what works best for you.

First, learn enough about each approach that you understand when and where to use it. By learning that interval training helps the heart become healthier fas Read the rest of this entry »

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Investment Diversification

I believe in the saying that says “Do not put your eggs in one basket”. In the business language, it means diversification. When I started trading in the stock market, I set aside that particular amount for it from the savings that I deposited into my bank account over the years. I also invested in a short term insurance. One of the biggest insurance companies offered an easy on the pocket, 5 years paying period with a 10 year maturity term. I compared the ones offered from other insurance companies but I only got this because it’s the only term insurance policy that I could afford.

And lo and behold without counting the number of years my term insurance matured and I received my return of investment. During the 80’s, $1000 is already a huge amount. If I consider from the cents that I saved through the years.

Along those years, I never stopped and never got tired of collecting coins even now. It really helped me a lot more so when I started a family. Every penny counts!

I also started selling pre need plans and from the commission I earned I was able to buy two policies for my two kids for college. My selling pre need was only a part-time job for me.

If you ask me how I started? I attended seminars on insurance and pre need plans. I did not and don’t always be convinced by an agent’s explanation hook line and sinker. You’ve got to learn young.

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Stock Investments

The stock market is probably one of the most well known ways to invest in the world today. However many people do not have a clue as to how to begin investing with stocks. The first thing you need to consider when investing is to do a lot of research into a company that you are thinking of investing in. You want to look at how well the company has done throughout the last year. Also take a look at the reputation of the company and its board of directors.

There is plenty of research material available if you know how to find it. One such research material is the 10K. The 10k is something that all companies that are publicly traded are required to file every year that shows every aspect of what the company has done. It holds all info that an investor would want to know about the company. What you will find on these reports are the company finances as well as the current operations that take place within the company.

Another good thing you can do if you know nothing about stocks is to talk to a stock broker. They are trained to know all about stocks and investing. It is their job to help others invest in stocks so this is one of the safest ways to invest.

However if you think you can manage on your own research is the key. Stumbling blindly will only lose you money. If you pick a company that find has a cheap buying price that is not always a good thing unless you know that the company has a good reputation and is slowly on the rise then you are wise to invest as you are sure to double or even triple your money. However if the buying price is cheap and the company has a bad name you may end up losing the money you invested and could end up broke. You always want to weigh your options carefully and plan ahead on what it is you want to do before you make any major decisions.

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